DraftKings & FanDuel Facing Precarious Times

07
Oct

Daily fantasy sports legality relies on a fairly tenuous designation as a game of skill instead of a game of chance. The logic goes that a random fool could not choose a team, or a program could not randomly set one, that has a decent chance of winning. The choosing of players makes it more likely to win if you are a skilled chooser of fantasy athletes.

This becomes even more tenuous when you include that DraftKings and FanDuel both use salary cap rules, giving the best players a higher “salary.” This situation means that a fool or a program might be able to win just as much as a skilled player if you filled out the entire salary cap. If all your “money” is taken up in players, then you’re likely to have some combination of some of the best players in fantasy that week—meaning the skill portion gets turned to chance.

This is all a side issue with what is currently going on in the offices of DraftKings and FanDuel. A DraftKings employee won more than $350,000 in winnings on FanDuel, quite possibly using inside information to game the system at the opposing site. Unless this is an AshleyMadison type situation where insiders are facing only insiders, then this means that this DraftKings employee was using inside information to win daily fantasy games against normal fantasy players.

In a very NFL-like internal investigation, DraftKings determined that the employee didn’t use inside information to win $350,000 on FanDuel. The employee, Ethan Haskell, only received the alleged inside information 40 minutes after setting his FanDuel lineup. A bigger issue is still hiding in plain sight. Even if Haskell is clean, what about all the people who have access to this lineup information at all times and the people who create this information?

That’s what the New York attorney general is looking into after sending letters to the two biggest competitors in daily fantasy sports. The AG is seeking information on the employees that have access to this lineup information, likely in an attempt to tie them to winnings on other daily fantasy sports sites. The request from the attorney general is just that, merely a request for now. But there is supposedly a timeline. Next Tuesday. None of this will probably change the game of skill vs. game of chance designation that daily fantasy sports currently enjoys.1 But it certainly is an issue for an industry that is sitting on the brink.


  1. Several states already ban daily fantasy sports for various reasons 

About the author: Colby Rogers

Colby is the Editor-in-Chief, Founder and Lead Contributor to Other League. Also a law student focusing on Labor & Employment law and intersections with law and sports. You can find him on Twitter via @Colby_OL.