The Draftkings/FanDuel Scandal

[Giantmetfan07]

A major scandal is erupting in the multibillion-dollar industry of fantasy sports, the online and unregulated business in which players assemble their fantasy teams with real athletes. On Monday, the two major fantasy companies were forced to release statements defending their businesses’ integrity after what amounted to allegations of insider trading, that employees were placing bets using information not generally available to the public.
 
The statements were released after an employee at DraftKings, one of the two major companies, admitted last week to inadvertently releasing data before the start of the third week of N.F.L. games. The employee, a midlevel content manager, won $350,000 at a rival site, FanDuel, that same week.
 
“It is absolutely akin to insider trading,” said Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff in Fort Lauderdale, Fla. “It gives that person a distinct edge in a contest.”
 
The episode has raised questions about who at daily fantasy companies has access to valuable data, such as which players a majority of the money is being bet on; how it is protected; and whether the industry can — or wants — to police itself.
 

The data that DraftKings acknowledged was released by its employee, Ethan Haskell, showed which particular players were most used in all lineups submitted to the site’s Millionaire Maker contests. Usually, that data is not released until the lineups for all games are finalized. Getting it early, however, is of great advantage in making tactical decisions, especially when an entrant’s opponents do not have the information at all.
 
A spokeswoman for DraftKings said that Mr. Haskell simply made a mistake and that the company was certain he did not use the information improperly. She declined to go into specifics about the safeguards or the company’s auditing policies.
 

“There’s a significant amount of crossover,” said Chris Grove, an industry analyst and editor of legalsportsreport.com. “The nature of the industry is so specialized and so new that, at the speed which they grew, they relied heavily on the player population.”
 
Many of these employees set the prices of players and the algorithms for scoring. In short, they make the market.


 

 


 
And now it sounds like ESPN is pulling their in-programming advertising for DraftKings. 

 

[bosoxlover12]

To be honest here, I really fail to see how one can get an advantage like this. Can someone illustrate it more in depth to me, because while yes they can see other people's predictions, it doesn't give them any advantage towards the actual game being played. It's not like the employee knew the Chiefs would kick 7 FGs and therefore pick Santos for his team...

 

[elcheato]

The key to winning on those sites is picking guys who most other people aren't picking, and hoping they have good/great games. Obviously they can't control how well the players play, but they can find out which guys have low ownership percentages. 
 
(At least I think that is it) 

 

[Giantmetfan07]

The main issue that's being brought up is how tight are their safeguards? 
 

The key to winning on those sites is picking guys who most other people aren't picking, and hoping they have good/great games. Obviously they can't control how well the players play, but they can find out which guys have low ownership percentages. 
 
(At least I think that is it) 

 
Exactly. How do you know who is not being picked? They don't show that information until the player's game begins. So in a way, these guys could be using that info to know who is not being drafted. 

 

[Giantmetfan07]

And the best way to win in those is to put in A LOT of lineups, because you can do multiple entries. Just looking at this past sunday's big contest, one guy had over 400 entries, two in the top 26. $25k total. Fuck that guy. 

 

[Pugz]

well now ill never do this

 

[cruzg24]

I played on fanduel and its always a crapshoot and guys get so lucky.

I dont think its as big a scandal as people are makimg it out to be.

 

[elcheato]

You can win big monies, like Bradley here:
 

 

[BwareDWare94]

I play Fanduel and I guess I don't see what could have been used as an advantage?

If you don't know your hwad from your ass when it comes to selecting players with ideal matchups, don't play.

 

[Fuhgeddaboudit]

You can win big monies, like Bradley here:
 

 
What a shitty fucking watch

 

[Fuhgeddaboudit]

I won 10 bucks last week. You cna't join the big tournaments, that's the only way you really lose. 

 

[elusive]

This is the equivalent to insider trading, and it's likely much worse than it's made out to be. Employees likely have access to individual's lineups, thus one could copy the lineup of someone who actually is talented at picking teams in DFS and makes money consistently.
 
That assumption aside, simply knowing the ownership percentages is a great advantage. Like has already been mentioned, you win a lot of money in DFS when you pick players that nobody else own who end up going off. If you are deciding between two players you see as comparable for that week, but one is owned by 15% of people in that pool and one is owned by 3% in that pool, you're obviously going to choose the latter. Employees are likely throwing out hundreds of entires (which shouldn't be legal for anyone to do, but that's another issue), so when you couple those two things it's much more likely they will win that your average player (they feed off each other).
 
Here's the biggest issue with this entire scandal: employees were allowed to partake in any DFS, period. That's absolutely absurd and will inevitably lead to corruption. That isn't allowed in the financial industry, and it isn't allowed in Vegas sports betting.

 

[Giantmetfan07]

The problem is there's no oversight. And because of this issue, that's going to change. There's going to be oversight, and I guarantee you MLB or NFL will have people at Draftkings and Fanduel this week wanting to see their entire security - because when you're investing that much $$, you need to make sure, after an incident like this, that their business is locked down tight and that nobody is hacking in to their software. 
 
That's why it's a big deal. It's not that they were taken advantage of, but it starts to raise red flags that these companies haven't been around that long, are bringing in BILLIONS of dollars, and there's no oversight. Plus you have tallented hackers who see a big pile of $$ on these sites, I wouldn't be surprised if they've already compromised them in some way.
 
Past-posting is a serious issue in sports gambling, especially horse racing - it really makes you wonder if there's a way to take advantage of it on Draftkings or Fanduel. 

 

[Fuhgeddaboudit]

It's gonna go away next year, guaranteed. Probably even sooner, this whole thing is gonna close up. Doesn't matter though because the owner of Fanduel is a billionare already and has his own jet apparently..

 

[Giantmetfan07]

Nah it won't go away. It's just going to be tightly regulated. The business is growing so fast the government would be crazy to shut it down. They're estimating these sites will bring in over $14 Billion by 2020. You don't shut that down, you take advantage of it.