Latest dispute surrounding Edinburgh firm
FanDuel drawn into fantasy sports ‘insider trading’ row
Fantasy sports company FanDuel is being drawn into a dispute in the US over allegations of “insider trading”.
It has prompted further calls for the fast-growing industry be be more closely regulated.
An employee FanDuel rival DraftKings has admitted to accidentally releasing data about the National Football League before the start of the third week of the season. That same week, the employee won $350,000 playing games through Edinburgh and New York based FanDuel’s website.
Social media was immediately swamped with claims that the employee was guilty of “insider trading”, in that he used confidential information in the same way as a Wall Street trader.
DraftKings was adamant that its employees do not engage in insider trading.
In a statement it said: “There has been some confusion regarding a recent piece of data that was inadvertently posted on DraftKings’ blog containing information about players and fantasy games. Some reports are mischaracterising the situation and implying that there was wrongdoing. We want to set the record straight.
“This employee could not possibly have used the information in question to make decisions about his FanDuel lineup. Again, there is no evidence that any information was used to create an unfair advantage, and any insinuations to the contrary are factually incorrect.”
Despite the denial of any wrongdoing both companies announced on Monday night that they were temporarily restricting employees from participating in fantasy sports for money.
A joint statement said: “At this time, there is no evidence that any employee or company has violated the FTSA charter that restricts employee access to and use of competitive data for play on other sites.
“That said, the inadvertent release of non-public data by a fantasy operator employee has sparked a conversation among fantasy sports players about the extent to which industry employees should be able to participate in fantasy sports contests on competitor sites.
“We’ve heard from users that they would appreciate more clarity about the rules for this issue. In the interim, while the industry works to develop and release a more detailed policy, DraftKings and FanDuel have decided to prohibit employees from participating in online fantasy sports contests for money.”
This is the latest controversy to surround the industry after a US congressman demanded a hearing into whether fantasy sports breach the country’s strict rules banning online gambling. The companies say they are protected by special rules defining them as “games of skill”.
Critics, however, point to the huge prize money on offer which is luring tens of thousands of fans to play the games.
DraftKings and FanDuel offer daily and weekly games in which users pay an entry fee of 25 cents to $1,000. Users choose players in fantasy teams (actual athletes) and earn points based on how their players perform in real games. The prize money varies and can go as high as $2 million.
The gambling row led one television channel to ban FanDuel’s advertising, an announcement that came on the same day that FanDuel chief executive was telling an Edinburgh audience (pictured above at Dynamic Earth) that the company was now in the top five of US television advertisers.
>> As I See It – Terry Murden comments