DraftKings, FanDuel play defense against 'insider trading' allegations

Both companies say they've found no evidence of employee wrongdoing after a critical New York Times report on Monday about the unregulated industry.

NEW YORK: DraftKings and FanDuel have stressed the integrity of their fantasy sports websites in response to a critical article in The New York Times that explained how an employee of one platform could make large sums of money on the other in a practice akin to "insider trading."

The Monday report in the Times said a DraftKings employee inadvertently released data before last weekend’s slate of NFL games, then won $350,000 playing on FanDuel, the rival to his company’s platform.

The article likened the alleged practice to insider trading, saying an employee of one company could use information not publicly available to gain an advantage over other paying customers on a similar service.

On Tuesday morning, DraftKings pushed back against the report, saying the scenario laid out in the New York Times article was not possible.

"Some reports are mischaracterizing the situation and implying there was wrongdoing. We want to set the record straight," the company said in a statement on Tuesday about its investigation.

DraftKings said an internal investigation found the employee in question did not receive player-utilization data until 1:40pm EST, well after the first NFL games of the day had kicked off and lineups on FanDuel had locked.

"This clearly demonstrates that this employee could not possibly have used the information in question to make decisions about his FanDuel lineup," DraftKings said in a statement. "Again, there is no evidence that any information was used to create an unfair advantage, and any insinuations to the contrary are factually incorrect."

DraftKings brought on DJE Holdings’ United Entertainment Group as its PR agency partner in July following a review.

FanDuel also published an updated statement on Tuesday noting that "at this time, there is no evidence that any employee or company has violated the [Fantasy Sports Trade Association’s] rules on employee access to information and use of other websites."

The article in the Times also shone a light on the unregulated nature of short-term fantasy sports websites, which do not tie customers to the same roster of players for one or more seasons. The report cited data from Eilers Research that found daily gaming sites will generate $2.6 billion in revenue from entry fees this year, with that number climbing to $14.4 billion by 2020.

On Monday, both websites released a statement in conjunction with the Fantasy Sports Trade Association, the industry body for the sector. While FanDuel and DraftKings posted statements about the matter online, neither has used its social media accounts in response. The FSTA has posted the joint statement on Twitter.

"While there has been recent attention on industry employees playing on FanDuel and DraftKings, nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers," they said in the joint statement.

Both companies said they banned employees from playing online fantasy sports for money until the industry can develop more rigorous standards for staffers.

A representative from United Entertainment Group forwarded a statement on behalf of DraftKings to PRWeek. A FanDuel representative could not be immediately reached for comment.

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