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DraftKings downplays insider trading talk but regulators are listening

TAGs: daily fantasy sports, DraftKings

draftkings-insider-tradingThe increasing calls to regulate the daily fantasy sports (DFS) industry will likely grow even louder after it was suggested that a DraftKings employee had used inside information to win a six-figure prize.

Earlier this week, a thread was started in the RotoGrinders forum in which a DFS player complained that DraftKings’ written content manager Ethan Haskell had publicly posted stats showing DFS player percentage ownership for Week 3 NFL contests that hadn’t yet started. The original poster argued that this was information to which an analyst ought not to have access and wondered how many other DraftKings employees had access to this type of information.

DraftKings’ Ethan responded to the post, taking responsibility for the release of the information, which he said had been an accident and that DraftKings would be “putting checks in place to make sure it doesn’t happen again.” Ethan also stated that he was the only person who had received this data and that company rules prevented him from playing on the DraftKings site.

However, DraftKings doesn’t prevent its employees from playing on rival DFS sites, including FanDuel, where it turns out Ethan placed second out of 230k lineups in that week’s biggest contest, earning a cool $350k in the process. This revelation has prompted many observers to question whether Ethan used his access to the DraftKings data to customize his FanDuel team lineups, which closely mirrored the DraftKings data.

After news of the controversy spread, RotoGrinders co-founder Cal Spears posted a response to the thread, saying “from what I’m told [Ethan] received the ownership report well after lineups locked on FanDuel … Ethan was not using this data to pick his week 3 teams on Fanduel,”

While this may well be an accurate description of what transpired, many posters have pointed out that they only have DK’s word on which to rely for reassurance. Whatever the truth, the uncertainty regarding what other industries would characterize as insider trading will leave a bad taste in players’ mouths as well as provide more ammunition for the politicians and legal authorities currently arguing for regulation to be imposed on the DFS sector.

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