Scrutiny for daily fantasy sports was a matter of time … and money
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By DERON SNYDER
DraftKings and FanDuel couldn’t get enough exposure over the last few months. The leading operators in daily fantasy sports, they bombarded us with a multitude of ads, inundating the airwaves and cyberspace every waking minute.
Incessant commercials have done the job, making the websites’ connection to sports feel as natural as beer and pizza. Fantasy-related info has been incorporated into bottom-of-the-screen crawls, stadium scoreboards, TV show segments and even entire shows.
Yes, the industry has commanded a chunk of our consciousness. The leaders have drawn our attention, just as they intended. Congratulations.
Be careful what you wish for.
When you spend more than $150 million in three months on advertising alone, in a nascent arena that could rake $3 billion this year, with an unregulated product that some observers compare to illegal gambling, generating awareness is one thing.
But the last thing you want is scrutiny, especially from high places like Capitol Hill and State’s Attorney offices.
Too late.
Daily fantasy sports was speeding along in its shiny new vehicle. Now it’s being pulled over, with flashing lights in the rearview mirror.
New York attorney general Eric Schniederman is demanding information. The Federal Trade Commission has a letter from New Jersey Senator Bob Menendez and Representative Frank Pallone Jr., “urging the FTC to explore and implement safeguards to ensure a fair playing field for fantasy sports enthusiasts who participate in daily or weekly games.”
I suppose it was only a matter of time before lawmakers began to seriously contemplate the growing phenomenon of DFS. The industry is a virtual wild, wild west, where operators are free to conduct business with no checks or balances … unless you count the swollen coffers enabling million-dollar payouts each week.
Recent knowledge that DFS employees enjoy some of the bounty, perhaps with unfair competitive advantages, hastened the point where the spotlight morphed into a microscope.
Ethan Haskell, a midlevel manger for DraftKings, won $350,000 in a FanDuel contest during Week 3 of the NFL season. Just prior to winning, he inadvertently released potentially helpful DraftKings data, raising the specter of insider trading. His company said it’s impossible that he could have used the information in a corrupt manner.
“The evidence clearly shows that the employee in question did not receive the data on player utilization until 1:40 p.m. ET on Sunday, September 27, DraftKings said Monday in a statement. “Lineups on FanDuel locked at 1:00 p.m. that day, at which point this employee (along with every other person playing in a FanDuel contest) could no longer edit his player selections.
“… Again, there is no evidence that any information was used to create an unfair advantage, and any insinuations to the contrary are factually incorrect.”
That’s not the point. Whether Haskell (or any DFS employee) took advantage of inside information in the past, the public has no third-party interests to guard against impropriety in the future.
With millions of dollars at stake, we need more than “trust us” from the site operators.
Imagine if casinos in Atlantic City and Las Vegas ran their games without state officials looking on. How much confidence would you have that “the house” wasn’t rigging the contests to rip you off and make its pockets fatter?
DraftKings and FanDuel were slow to respond once the heat was turned up Monday, issuing a weak joint statement that didn’t address any questions or concerns. But they’re enacting all sorts of reforms now, hiring outside parties to review internal practices and banning employees from playing cash games on competitors’ sites.
“DraftKings’ explosive growth is a testament to our ability to deepen our fans’ engagement with the sports they love,” the company said Wednesday in a statement. “We are committed to reinforcing the trust and security of our millions of loyal customers.”
FanDuel also issued a statement Wednesday, throwing in a proclamation for lawmakers who have thoughts of prohibition. “FanDuel is one of the fastest growing companies in the world,” it said. “The way fans have embraced our games is a clear sign that fantasy sports is here to stay.
“It’s our job to ensure that as our company grows, so does our ability to ensure that our fans can be confident in the sanctity and integrity of every game, every day.”
Considering the deep-rooted interests – and deep pockets – of DFS investors such as Fox, MLB, NBC Sports, Turner Sports, New England Patriots owner Robert Kraft and the NHL, it’s a good bet that DraftKings and FanDuel aren’t going away.
But after forcing themselves on us through serial advertising, the sites are getting more attention than they bargained for.
Serves them right.
We shouldn’t be the only ones made to suffer.
