- Cheating allegations rocked the daily fantasy sports
industry this week and as scrutiny mounts, a largely
self-aimed spotlight has grown blindingly bright on
DraftKings and FanDuel, which have flooded televisions,
phones and computers with advertisements promising
million-dollar payouts to a lucky few.
began when players noticed a DraftKings employee — and
frequent winner in competitor FanDuel's contests —
posted a list online that ranked which NFL players were
picked the most for a DraftKings contest that was still
accepting entries. The employee said it was a mistake,
nothing more, acknowledging the information shouldn't have
been posted before the contest closed. But suspicions grew
about the use of insider knowledge when people noticed the
employee's particularly lucrative win on FanDuel around
the same time for $350,000.
a flashpoint for more concerns about the unregulated
industry that had already faced questions about its
behind-the-scenes practices to ensure a fair game.
the basics on the industry, the debate and what might
DAILY FANTASY SPORTS WORK?
take traditional season-long fantasy leagues — where
points are earned each week based on a roster of players
picked before the season's start — and squeeze the stats
down to a day or week. Customers playing for free or
paying for an entry, as low as a couple quarters or as
much as thousands of dollars, get a "bankroll"
to spend on players to create a fantasy team for the day.
Like most games, the competitor who earns the most points
based on those players' statistics wins. Unlike
traditional sports betting in Las Vegas, customers play
against others, not the house, and winning isn't
determined by a single game's outcome.
GAMBLING? IT'S NOT ILLEGAL?
and their defenders argue the games are based more on
skill, not luck like sporting bets in Las Vegas, and point
to a specific exemption carved out for fantasy sports in
the Unlawful Internet Gambling Enforcement Act of 2006. It
was enacted at a time when season-long fantasy sports
matchups, not daily ones, were becoming popular in work
places and online on Yahoo and CBS Sports. Daily fantasy
sports emerged years later. New York-based FanDuel started
in 2009. Boston-based DraftKings came along during the
2012 baseball season. Still, both say the law that
addresses processing payments for online gambling applies
to them. That law doesn't necessarily make the sites OK in
states where the definition of gambling can vary wildly
depending on if the contest is entirely skill-based or
mostly skill-based. That's kept both out of at least five
INVOLVED ARE THE MAJOR SPORTS LEAGUES?
has a stake in FanDuel. MLB, the NHL and Major League
Soccer are DraftKings investors. The NFL hasn't made any
direct investments or partnership deals but its teams are
allowed to accept advertising from the sites. The league
has said the contests aren't gambling because players need
skill to play and win. ESPN said it was cutting sponsored
DraftKings elements from within its news shows but not the
ABOUT THE NCAA?
governing body for college sports, which has strict rules
for its players prohibiting sports betting, has expressed
its discomfort with daily fantasy sports. Seeing a
parallel between it and gambling, the Southeastern
Conference recently asked sports network ESPN to remove
the companies' ads from the SEC's network. And
commissioners for the Football Bowl Subdivision want
DraftKings and FanDuel to stop offering college sports
fantasy contests on their sites.
DraftKings and FanDuel agreed this week to immediately bar
their employees from playing daily fantasy sports on other
sites and said they are taking measures to ensure
employees from other sites aren't playing in their
contests. Both had already prohibited employees from
playing on their own sites.
companies have also said that internal investigations
revealed no wrongdoing on the part of the DraftKings
employee who prompted the scrutiny, but both said they
hired outside law firms and former prosecutors to review
lawmakers have called for hearings to review what happened
and New York's attorney general is investigating.
already one lawsuit, at least, pending against FanDuel and
DraftKings alleging fraud and conspiracy and hoping to
become a class-action claim.