LAS VEGAS (AP) — Stock market traders and chess players — that’s who’s playing DraftKings, according to CEO Jason Robins, who told a crowd of casino executives last week in Las Vegas that fewer than 15 percent of the players on his site make wagers in traditional sports books.
What he didn’t mention was growing online criticism at the time that his site may have allowed activity being likened to insider trading.
Daily fantasy players appear concerned a DraftKings employee who said he accidentally posted data online showing which NFL players were being picked the most for draft lineups for a day’s contest, may have also benefited from the information when he won second place and $350,000 on competing daily fantasy site, FanDuel, the same day.
There’s no evidence that the information led to the employee’s win and a FanDuel spokeswoman told The Associated Press that she did not believe there was an attempt to manipulate the contest.
Both sites posted identical joint statements on their websites Monday saying, “nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers. Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs.”
There’s no mention of what specific policies the companies have in place, but it appears the DraftKings employee was known to compete on other daily fantasy sites. “Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it,” the statements said.
The statements did little to quell questions from fantasy sports players on message boards dedicated to the daily fantasy sports industry and observers who have said the industry was traveling head-long into being regulated.
“It is tantamount to insider trading,” which would greatly harm the industry, said Daniel Wallach, a sports betting law expert based in Florida. He said the statements offered more questions than answers.
“It’s essentially, ‘trust us, we’re looking into it,’” he said.
Regardless if insider trading occurred or not, Wallach said the episode highlighted the lack of safeguards in place and had suggested during last week’s Global Gaming Expo in Las Vegas that the industry could be a possible haven for money laundering.
The daily fantasy sports industry has gone to great lengths to distance itself from traditional sports wagering and Robins, the CEO of the ubiquitous DraftKings website, made no effort to get cozy as he sat in front of a crowd of casino executives at the trade show last week.
Robins’ legal stance that daily fantasy sports leagues are not a chance-based gamble has done nothing to tamp down what has become an intensifying national debate around the country.
Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites, shouldn’t be treated any differently than traditional sports betting and, as a result, should be regulated.
“Fantasy is real gambling,” said Dennis Drazin, chairman of New Jersey’s Monmouth Park Racetrack, during a panel discussion. “A rose is a rose.”
Meanwhile, a New Jersey congressman has asked for a hearing on the legal status of daily fantasy sports, the commissioner of the NCAA’s Southeastern Conference has barred daily fantasy site ads on the SEC Network, and the casino industry’s American Gaming Association is looking into the industry as part of a broader look at legalizing sports betting beyond a few states.
“If it’s gray, our job is to make it black and white,” said Geoff Freeman, the association’s president and CEO. He said the casino industry sees fantasy sports as a potential partner “to grow both of our businesses.”
Robins cites an exemption in a 2006 federal law for fantasy sports that he believes allow his site and others including FanDuel to offer contests that normally spanned an entire season down to a single day. The NFL agrees with their legal stance.
The debate comes as the websites have flooded the airwaves with commercials in recent months touting how average fans became overnight millionaires by playing daily fantasy leagues. Daily fantasy sports allows online players to pick a roster of point-earning players from various teams for a single day of competition and win money, in some cases $1 million.
Observers, though, believe that after spending hundreds of millions of dollars on advertising during football games, the spotlight on the daily fantasy sports industry may ultimately lead lawmakers and regulators to keep a closer watch.
On the question of possible money laundering, DraftKings referred questions to a statement from the Fantasy Sports Trade Association that said the sites have “instituted monitoring systems to identify and prevent fraudulent or suspicious transactions.”
Signing up for a DraftKings account involves choosing a username, providing an email address, clicking a box that says the person is older than 18 or 19, depending on the state, and providing credit card information. No other identification is sought.
DraftKings spokeswoman Sabrina Macias said the company takes a multilayered approach to check age and identity.