Tuesday, November 24, 2015

DraftKings and FanDuel under Scrutiny

Daily Fantasy sports are starting to get questions about legitimacy as well as legality.

by Enoch Patterson

Daily fantasy sports are one of the fastest growing and most popular trends in Fantasy games currently. The two major websites in the industry, DraftKings and FanDuel, have fallen under scrutiny in the past few weeks when a DraftKings employee admitted to “inadvertently releasing data before the start of week 3 NFL games.” That same employee went on to win $350,000 that same week on Rival site, FanDuel. While DraftKings continues to say that this employee did not use inside information to set his winning lineup, users of both sites are starting to become more skeptical about the legitimacy of the sites. When games that surrounding risking money to win money start to receive questions about their own employees cheating, it is not a very good look for the company at all. 

While this is the first incident of its kind by either of these websites, most players probably will cut them some slack; I know I am as a user personally of DraftKings. This may have been merely a coincidence that that employee won that money, or perhaps he did have inside information we will truly never know more than likely, but most people including me are willing to give them the benefit of the doubt, at least this time. However some other interesting statistics have increased my concerns. According to recent research by Sports Business Daily over a three month period 1.3% of the players on DraftKings won 91% of the money given out by the site. This bring up a couple of questions, Are these 1.3% just the elite players in the world in a game they involves a good deal of luck? Or is there something else behind this that we normal players just don’t have access to? People are generally quick to try and say something is a conspiracy and I’m not willing to go that far just yet but they are certainly some interesting statistics. 

Legality of Daily Fantasy Sports

The recent scandal is only a small setback compared to what problems DraftKings and FanDuel could potentially face down the road. Problems that could virtually end 90% of their business. It was announced recently that the U.S Department of Justice and the FBI are in the early stages of investigating the legality of Daily Fantasy Sports and are trying to figure out if it is a form of gambling. DraftKings has responded and basically states that it is a game of chance and therefore it is legal. While this recent story is not directly related to the scandal of the Draft Kings employee who won $350,000 on FanDuel, you would have to think that that story certainly didn’t help by bringing negative attention that wasn’t previously there. 

Whether or not these daily fantasy sites are considered a form of gambling is yet to be seen, however some players are already taking legal action, with three class-action lawsuits being filed in just the last week. As with any business with increased popularity comes increased scrutiny as you are placed under a larger microscope. It will be interesting to see how this all plays out and to see if daily fantasy sports can continue to thrive. 

Enoch Patterson is a business administration major at Middle Tennessee State University from Murfreesboro, TN,