Are Daily Fantasy Sports Rigged?
By Burt Carey
The multi-billion dollar daily fantasy sports industry has come under scrutiny this week following a release of information on teams built from National Football League players before their week 3 games began.
The New York Times broke the story Monday after a user on an online fantasy forum site recognized that an employee of the daily fantasy sports company DraftKings released data on player ownership for its Millionaire Maker contest before those NFL games started. The employee, identified as Ethan Haskell, won $350,000 that same week playing on FanDuel, a rival daily fantasy sports company.
Officials from both companies released a joint statement saying the data release was inadvertent, and declaring that the integrity of their games is intact. The companies, while acknowledging that their employees play at rival sites, claim to have protocols in place to detect employee misuse and that none has been detected. On Tuesday DraftKings pulled its advertising from ESPN.
The incident underlined the possibility that these high-dollar fantasy game stakes could be rigged.
New Jersey Congressman Frank Pallone (D-3rd District) has called for a congressional review of the industry for its exemption from gambling laws. “It’s clear now, with million dollar jackpots and the advertising that goes on, that this is straight-out gambling,” Pallone said.
It is certainly big money. The Fair Trade Sports Association estimates there are 42 million players in the United States and Canada. On average, they spend about $465 per year. FanDuel and DraftKings reportedly spent $100 million on advertising in September alone, attempting to capitalize on the new NFL season and bolster the number of people playing their games.
With Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert K. Kraft as investors, DraftKings has signed a three-year deal with the NFL as a partner of its International Series in Britain. Sports gambling is legal in the UK. FOX Sports has invested hundreds of millions of dollars in DraftKings. FanDuel investors include Comcast and KKR.
Fantasy sports players act as owners who build a team of players in a given sport. They accumulate points based on each player’s statistics. Traditional fantasy sports leagues stretched over a sport’s entire season. That’s where daily fantasy sports differs. Players at DraftKings and FanDuel pay an entry fee to build a team of professional athletes for a particular day or week. Entry fees range from 25 cents to $1,000. Those who accumulate the most points win money from that day’s entries.
Here’s the rub: Employees at DraftKings and FanDuel have access to data that tells them which professional players have garnered the most bets, allowing them an advantage for making tactical decisions before making their own bets. Haskell’s winnings during week 3 of the NFL season raise the question about who has access to such valuable data when millions of dollars are at stake.
A fantasy player’s odds of winning are low – way low. Research released in July by Sports Business Daily showed that over a three-month period 91 percent of profits collected by players at DraftKings and FanDuel were won by just 1.3 percent of the players. FanDuel claims to have paid out more than $2 billion in winnings; about $6 million of that went to DraftKings employees.