Fantasy Sports Scandal: Employee Won Big Bucks on Rival Site Using Inside Information

Fantasy sports companies DraftKings and FanDuel are playing defense after it was revealed that the mid-level content manager at DraftKings used inside data that helped him with $350,000 on FanDuel.

Both companies issued statements on Monday in an attempt to defend their integrity and protect the multi-billion dollar industry from further scrutiny and possible regulation.

The websites, which offer daily and weekly games in which fans build fantasy teams using the stats of real athletes, allows fans to pay an entry fee for the chance to win prize pools that can reach up to $2 million.

The two companies released a joint statement on Monday that said "nothing is more important" than the "integrity of the games we offer," but didn't offer too many specifics about how they plan to do that.

According to a spokesman for DraftKings, this isn't' the first time that employees from both companies have scored a big pay day on one of the other fantasy sites. As a result, on Monday the companies announced that they've temporarily banned their employees for playing games on the other company's site. Both companies already had a ban in place barring employees from playing on the site they work at.

The cheating could cause a major shift in the industry, which has been under federal scrutiny, because until now it has been unregulated. Now questions are popping up. Who in these companies has access to the inside information and what do they do with it?

Adam Krejcik, a managing director at Eilers Research, said whether the DraftKings employee made an innocent mistake or not, the damage was done. “Certainly does not look good from an optics standpoint, and it strengthens the case for additional oversight and regulation,” he said.

Some have compared the use of data to play on the other site to insider trading on the stock market.

I used to think It takes time and knowledge to be a serious fantasy sports player, but knowing the system provides a pretty quick short cut.