Someday we’ll all look back on the unregulated days of DraftKings, FanDuel and other daily fantasy sports sites and laugh.
How did they think they’d get away with it?
The latest DraftKings saga will go down as the moment that these “legal” gambling sites finally left the realm of the Wild West and came back to earth. A DraftKings employee reportedly won $350,000 while playing a FanDuel contest. There have been inferences that he used valuable user data to game the system, but the companies say it’s not true.
Whether or not this employee committed what would have been insider trading on Wall Street is inconsequential. Everyone — fans, lawmakers and the general public — learned a valuable lesson:
The heavyweights of daily fantasy sports can’t effectively police themselves.
“There could be hundreds of others out there throughout the DraftKings and FanDuel rank-and-file who are playing on each other’s sites and winning money with access to the type of internal information that only employees could have,” said Daniel Wallach, a sports law attorney. “These employees are in the industry because they love fantasy sports.”
After the news broke, FanDuel and DraftKings released a joint statement announcing a temporary prohibition on employees playing in any daily fantasy competitions while the companies develop new rules.
Too late, the damage has been done.
“If we don’t self-regulate effectively, then someone is going to come in and do it for us,” said Seth Young, COO of Star Fantasy League, a top-10 daily fantasy sports site. “I think the ship has sailed, though. To be frank, what I’m looking for is to help educate regulators on a state-by-state basis.”
Star Fantasy League has been what experts call a “conservative” site. It doesn’t hit people over the head with advertisements and it quickly exited states that appeared to be against the idea of daily fantasy sports.
But the DraftKings/FanDuel fiasco has made things difficult for the smaller guys. Already, federal lawmakers in New Jersey have called on the Federal Trade Commission “to explore and implement safeguards to ensure a fair playing field for fantasy sports enthusiasts who participate in daily or weekly games.”
Those days when DraftKings and FanDuel operated in an unregulated bubble are quickly coming to an end.
“If we weren’t already on the road to regulation — and we definitely were — we’re in the final stretch right now,” Wallach said. “FanDuel and DraftKings aren’t powerful enough to avoid it.”
