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DraftKings, FanDuel team up to defend integrity of games

Inside-information leak riles contestants

DraftKings, based in Boston, issued a statement with competitor FanDuel that they are taking steps to protect the games’ integrity.
DraftKings, based in Boston, issued a statement with competitor FanDuel that they are taking steps to protect the games’ integrity.Stephan Savoia/Associated Press

The fantasy sports rivals DraftKings Inc. and FanDuel Inc. scrambled to defend the integrity of their big-money contests Monday, following a leak of inside information that raises questions about whether some of their employees have an unfair advantage when playing.

A DraftKings worker, Ethan Haskell, acknowledged last week in a comment thread on a fantasy news site, RotoGrinders, that he had released proprietary statistics too early — before all NFL games kicked off on Sept. 27.

The stats, posted online, showed the rates at which real players had been selected in DraftKings’ “Millionaire Maker” fantasy contest for the third week of the NFL season and could have given late entrants, or those making last-minute changes, an edge over competitors who had submitted rosters.

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More troubling to fantasy contestants who vented their anger on online message boards, the leak suggested employees like Haskell might regularly use such information to put in their own entries and rack up winnings.

While Boston-based DraftKings and New York-based FanDuel do not allow employees to play on the sites for which they work, it is common practice for workers to enter contests held by competitors.

In fact, on the same day that he posted stats too early, Haskell finished second in a FanDuel contest that had almost 23,000 entrants. He won $350,000.

The ensuing online furor and media inquiries prompted the rivals to issue a joint statement in which they assured users that “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. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.”

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“However, we continue to review our internal controls to ensure they are as strong as they can be,” the statement continued. “We also plan to work with the entire fantasy sports industry on this specific issue so that fans everywhere can continue to enjoy and trust the games they love.”

The incident comes at a sensitive time for the companies. DraftKings and FanDuel this summer raised $300 million and $275 million, respectively, and are spending heavily on marketing to lure players early in the NFL season. Meanwhile, some lawmakers and regulators have called for review of the companies’ exemptions from gambling prohibitions.

The New York Times reported that both companies have temporarily banned workers from playing on rival websites. A FanDuel spokeswoman did not respond to a Globe inquiry. A DraftKings spokeswoman said in an e-mail that the Times story is “factually inaccurate” but did not allege specific errors or respond to a request for clarification.

A move to block inter-site fantasy gaming would probably be highly unpopular among employees of both companies. Speaking at a conference at Babson College on Sept. 25, DraftKings cofounder Paul Liberman said, “We have some people who make significantly more money off of our competitors’ sites than they do working for DraftKings.”

Liberman went on to explain that allowing workers to play on FanDuel is a key to retaining top talent.

“I was actually talking to my VP of analytics yesterday, and he was like, ‘Well, this guy that’s on our team can only work 9 to 5 during football and hockey season because he spends way too much of his time playing online,’ ” Liberman recounted. “We have to let him do that; otherwise he’s never going to work for us. He adds a lot of value in terms of understanding product, understanding content.”

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Qualms about the integrity of fantasy sports present a new challenge for an increasingly scrutinized industry.

The short-term fantasy sports contests run by DraftKings and FanDuel generally require entrants to put down money for a chance to win cash prizes — a system that recently prompted Attorney General Maura Healey of Massachusetts and US Representative Frank Pallone Jr. of New Jersey to question whether they should be considered illegal online gambling.

DraftKings and FanDuel maintain that in all but a handful of states, their contests are perfectly legal, based on an exemption to the federal Unlawful Internet Gaming Enforcement Act, which distinguishes between betting on point spreads and entering fantasy sports contests that “reflect the relative knowledge and skill of the participants.”

In football contests, DraftKings and FanDuel users draft real NFL players for their imaginary teams and score points based on how well those players perform on the field.

FanDuel has been the daily fantasy sports leader for several years running — a fact it touts proudly in commercials — but DraftKings claims to be catching up. At the Babson conference, Liberman said he expected DraftKings to collect more money in entry fees than FanDuel during the third business quarter of the year, adding that DraftKings had asked FanDuel to stop calling itself the “leader.”

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FanDuel appeared to reject the request, as its marketing messages were unchanged over the weekend.


Callum Borchers can be reached at callum.borchers@globe.com. Follow him on Twitter @callumborchers.