DraftKings employee data leak turns heads, from Web forums to executive suites

The DraftKings headquarters in Boston.
The DraftKings headquarters in Boston.

A couple of years ago, complaints about the internal ethics policies of a fantasy sports website hardly would have been noticed outside the world of stats-obsessed sports geeks. That was before fantasy sports became a multibillion-dollar business with support from the biggest names in sports and media.

Following a surge of investment cash and relentless advertising campaigns, Boston-based fantasy sports operator DraftKings and its top competitor, New York’s FanDuel, are now household names. And a controversy about insider access to valuable fantasy data is causing strong reactions far beyond the fan forums, turning heads in executive suites and congressional offices.

The discussion revolves around a blog post from a DraftKings employee, who accidentally published data about the site’s most popular NFL players a few hours early on Sept. 27. That same weekend, the DraftKings employee in question came in second out of nearly 230,000 players in a high-stakes contest on rival site FanDuel, collecting $350,000 in prize money.

DraftKings said that its employee didn’t have access to the data in time to use it for assembling a roster for his FanDuel contest. But the inadvertent data leak has players, investors, and lawmakers questioning whether the fantasy sports companies are behaving properly.

“It’s downhill in such a bad way,” one player said on RotoGrinders, a popular fantasy-sports discussion site. “All those commercials, attention drawn in and it’s crumbling.”

Major League Baseball, one of DraftKings’ most prominent investors, said it was unaware that daily fantasy employees were allowed to participate in cash-prize games on competing websites — despite the fact that MLB spent several years investigating the industry before becoming a significant financial backer.

“Major League Baseball has a policy that prohibits players and employees from participating in fantasy baseball games in which prize money or other things of value are available to participants. We were surprised to learn that DraftKings allowed its employees to participate in daily fantasy games. We have reached out and discussed this matter with them,” Major League Baseball said in a statement.

Fox Sports, which led a $300 million investment in DraftKings in July, did not return messages seeking comment.

ESPN, which inked a lucrative advertising deal with DraftKings earlier this year, pulled any sponsorship messages from its on-air programming while covering the story Tuesday. Commercials remained in place for both companies, however.

“It is a standard procedure for us pull these kind of sponsorships and integrations when we are covering breaking news. We look to avoid any suggestion of influence on our coverage,” ESPN spokesman Paul Melvin said.

New Jersey Representative Frank Pallone, who has called for Congress to examine the legality of daily fantasy sports, said the controversy over insider data access strengthens his case for a federal review. Pallone has advocated for legal sports betting in his state, which has battled the major sports leagues in court over a New Jersey law legalizing sports gambling.

“Daily fantasy sports is functioning in a Wild West void within the legal structure,” Pallone said in a statement Tuesday. “Like professional sports betting, fantasy sports should be legal, but both are currently operating in the shadows. With little legal oversight and deep investments into these sites by the same professional sports leagues that oppose traditional sports wagering, these issues are ripe for Congressional review.”

Players and industry insiders are also not happy with the situation.

“Anyone you mention this story to — without providing an opinion one way or another on DFS or anything— would agree that the wins look suspicious,” another player said on RotoGrinders.

Reaction on Twitter was also harsh.

 

 

Updated 6:45 p.m. to note Fox Sports not commenting.