It is nearly impossible to turn on a television program, especially one devoted to sports and to not see an advertisement for Draft Kings vs FanDuel, the two organizations who have been promoting online fantasy gambling.
What is fantasy gambling? At its simplest, most basic explanation, it allows a gambler the ability to make up a fictitious team of players from many existing teams and to bet that the team will outperform every other team in the same sport during a given period. The gambler is given a fantasy budget with which to acquire players. When the fantasy team is assembled, the gambler competes against other gamblers in a large pool.
It is the perfect game for the internet age. There is nothing real about Fantasy Football or any other fantasy sport. The numbers of gamblers are unreal and the money being gambled is unreal in terms of the billions of dollars being spent. Am I against it? No, not really however I have no delusions about what is transpiring and how so many are being deluded.
Those who participate in fantasy sports would have the rest of us believe that it is a game of skill and cunning. In every commercial for the sites we see big winners of thousands, even millions of dollars, telling us how easy it is and how anyone can play. What they don’t explain are the almost impossible odds it takes to win. There are multiple players and multiple teams, and each player at each position must have a better day than every other player at his position. Of course there are injuries and other problems that conspire against the gamblers.
The inside scoop
If anyone at any level in fantasy sports knows the best odds, the best available players, and the most likely of the players to have a breakout game, as well as many other parameters, it is those on the inside. It is those who compile and keep statistics and follow all of the gambling action.
Now there has emerged a whole new wrinkle that shows the underbelly of the action. The news has broken on Reuters that a DraftKings insider has been playing it very loose with the FanDuel website. According to writer Matthew Speiser in an article entitled: “FanDuel bans employees from gambling amid huge scandal,” we learn:
“The fantasy-sports-gambling industry has faced a firestorm of criticism since news broke that an employee at DraftKings won $350,000 from a $25 entry in an American football contest on the rival FanDuel site.”
It appears as though employees at both DraftKings and FanDuel are betting on each other’s gambling sites with insider information.
“New York Attorney General Eric T. Schneiderman has opened an investigation into daily-fantasy-sports betting websites DraftKings and FanDuel, after reports emerged that employees at both companies had won major payouts betting on each other’s platforms”
This is far worse than employees at Coke and Pepsi trading inside information on soft-drink sales. This is more like employees at rival brokerage houses swapping insider stock information. The tip-off to this scandal was an employee of DraftKings winning $350,000 at FanDuel. The attorney general has now demanded the names of all employees at both firms who have been engaging in this practice.
Ethically, what this indicates is a lack of internal controls within both organizations. Obviously, some of the employees were treating this online gambling trend as one big party. They were not as concerned about their customers as in winning money for personal gain. One of the organizations has already admitted to inadvertently leaking information on player’s early, allowing insiders at the other organization to place bets.
There is really nothing new under the sun in this case. The SEC was created in the early 1930s to begin to curb manipulation and insider trading. While neither DraftKings nor FanDuel comes under the watchful eye of the SEC, consumers should be aware of improprieties. Both organizations are currently swimming in cash; their success is coming far in front of their ethical ability to regulate employees.
Whether you call it skill or gambling it is important to understand that there is the opportunity for ethical abuse in this unregulated industry. It is your money; spend it on gambling or not, but be aware employees at both organizations have been looking out for their interests ahead of yours. The industry is in serious need of ethical safeguards.
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