The day oversight finally came to the billion dollar daily fantasy sports industry

The popularity of daily fantasy sports betting has boomed in recent years. In the olden days, sports fans would assemble a team of players that would last the entire season. But now the preferred method is to form a new team every day with the prospect of winning millions of dollars.

Ten years ago, 12 million people in the U.S. and Canada participated in daily fantasy sports. A modest number, but nothing compared to the near 57 million that do it today.

The companies primarily responsible for the industry’s explosion are FanDuel and DraftKings. If you don’t know them, just watch sports for one minute, and you will. Their ads dominate telecasts on major networks. So much so that, in comparison, they almost make the Neil Patrick Harris Heineken commercials tolerable.

Their legality is not in question. The Unlawful Internet Gambling and Enforcement Act clarifies fantasy sports’ role in the gambling spectrum, defining it as a game that requires skill, and not chance. Although, five states outlaw fantasy sports gambling, because they claim it constitutes gambling — Arizona, Louisiana, Iowa, Montana and Washington.

Its morality, however, is another question. The two companies have major partnerships with professional sports leagues, including the National Football League and Major League Baseball, two organizations that have for a long time vehemently denounced gambling on sports. Just ask Pete Rose how strict the MLB is when it comes to gambling.

But yet, they have no problem teaming up with FanDuel or DraftKings. It’s disgustingly hypocritical at worst, morally questionable at best.

No one could have predicted the surge in popularity for the industry. And that’s probably why it’s faced such little oversight and regulations from the federal government. Until now.

A revelation emerged this week that employees of the two companies are allowed to bet on competing websites. As in, employees of FanDuel can bet on DraftKings, and vise versa. This is highly controversial when you consider that such employees have access to inside information within the industry that the public does not. It essentially opens the door for fantasy sports insider trading.

This was a problem just waiting to be exposed, and it was on Tuesday, when the New York Times reported that a DraftKings employee posted crucial information about what players have been most commonly drafted for Week 3 of the NFL season, before all of the games had begun. Though the employee, Chris Haskell, and the company claimed it was an accident, the problem was amplified when it was revealed that Haskell won $350,000 on FanDuel that same week.

This information has brought about valid questions of the two companies’ integrity and policing measures for its own employees.Draftkings

The New York Attorney General sent letters to both companies on Tuesday, requesting names, job titles and job descriptions of employees who aggregate and compile data that perhaps could be used to gain a personal advantage, among many other things, and demanded a response by Oct. 15.

The responses should finally shed light on the inner workings of the two companies, and what safeguards they have in place to prevent corruption.

At least one of its major sponsors, ESPN, said its going to back off a bit from advertising the two sites.

U.S. Rep. Frank Pallone, a Democrat from New Jersey, has called for a congressional hearing to review the legal status of fantasy sports.

The companies have also temporarily barred their employees from betting on other sites.

In short, I think it’s safe to say that the cloud of exemption the daily sports betting industry was living under has officially lifted.

It should be emphasized that the two companies are accused of no wrongdoing — yet. But it’s absurd that an industry that rakes rakes in multi-billion dollars annually is allowed to set its own rules.

Fortunately, government oversight has not reached the blogging world yet. But when it does, I have getaway bag ready to go, filled with necessary electronic devices, a Swiss army knife, and all seven Harry Potter books.

Come at me.

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