DraftKings and FanDuel Under Investigation: Mo’ Money Mo’ Problems


The Investigation

If you’ve watched any type of sporting event in the past 6 months, odds are that you’ve seen advertisements for DraftKings and FanDuel. The websites allow users to “compete in 1-day fantasy contests and win.” According to the New York Times, an investigation is underway into whether employees of the sites have won big payouts using data and information that is not available to the public.

Mo’ Money Mo’ Problems

The alleged payouts aren’t just chump change. In fact, the whole investigation may have been kicked into gear after DraftKings writer Ethan Haskell leaked data related to the Millionaire Maker contest before any games had kicked off. Questions have been raised about whether Haskell used the insider information to enter a $25 contest at FanDuel; a contest in which he walked away with second place and a cool $350,000.



If that number doesn’t surprise you, ESPN reports that DraftKings employees have won 0.3 percent of all money that FanDuel has awarded. The percentage may seem low; but as ESPN points out, the number is actually around $6 million. Employees from both sites were never allowed play on their own sites, and now they have been banned from playing on any other 1 -day fantasy site.

Both DraftKings and FanDuel have launched independent investigations into the claims. As for the investigation led by New York Attorney General Eric Schneiderman, he’s demanding any data that may have been used for an advantage over the public.

This isn’t the first time the sites have been called into question. Frank Pallone, a member of the House of Representatives from New Jersey, wrote a letter to the Energy and Commerce committee requesting a hearing to examine the relationship and legality of sports betting and fantasy sports. “Historically, professional teams have been strongly opposed to sports betting,” Pallone states.

In the letter, Pallone lists several examples of ways that professional sports organizations have worked to fight against sports gambling. “At the same time, the professional sports leagues are fully embracing fantasy sports. Within the past two years, both the NBA and MLB have purchased ownership stakes in daily fantasy sports operators, which include exclusive sponsorship deals,” Pallone claims.

As Pallone points out, fantasy players are more likely to tune in to games. More viewers means more advertisement money, which, of course, boosts the bottom line.

Keepin’ it Real

Lawmakers aren’t the only ones who have weighed in on the 1-day fantasy practices. DraftKings apparently dropped it’s sponsorship of Comedian Bill Burr’s podcast after he went on somewhat of an epic rant. The rant happened after Burr claimed he received a letter instructing him not to compare DraftKings to gambling. No matter where you stand on the 1-day fantasy issue, or what comes of the investigations, I think we can all agree that Bill Burr is hilarious.