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Scandal Erupts In Unregulated Online World of Fantasy Sports 174 writes: Joe Drape and Jacqueline Williams report at the NYT that a major scandal is erupting in the multibillion-dollar industry of fantasy sports, the online and unregulated business in which an estimated 57 million people participate where players assemble their fantasy teams with real athletes. Two major fantasy sports companies were forced to release statements defending their businesses' integrity after what amounted to allegations of insider trading — that employees were placing bets using information not generally available to the public. "It is absolutely akin to insider trading. It gives that person a distinct edge in a contest," says Daniel Wallach. "It could imperil this nascent industry unless real, immediate and meaningful safeguards are put in place."

In FanDuel's $5 million "NFL Sunday Million" contest this week, DraftKings employee Ethan Haskell placed second and won $350,000 with his lineup that had a mix of big-name players owned by a high number of users. Haskell had access to DraftKings ownership data meaning that he may have seen which NFL players had been selected by DraftKings users, and by how many users. In light of this scandal, DraftKings and FanDuel have, for now, banned their employees from playing on each other's sites. Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites and shouldn't be treated any differently than traditional sports betting. This would mean a high amount of regulation. Industry analyst Chris Grove says this may be a watershed moment for a sector that may need the legislation it has resisted in order to prove its legitimacy. "You have information that is valuable and should be tightly restricted," says Grove. "There are people outside of the company that place value on that information. Is there any internal controls? Any audit process? The inability of the industry to produce a clear and compelling answer to these questions to anyone's satisfaction is why it needs to be regulated."
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Scandal Erupts In Unregulated Online World of Fantasy Sports

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  • by tchdab1 ( 164848 ) on Tuesday October 06, 2015 @03:13PM (#50672719) Homepage

    I read that as Eddie Haskell first time through.

    • by invid ( 163714 )

      I read that as Eddie Haskell first time through.

      You look lovely today Mrs. Cleaver.

    • Re:Ethan? (Score:5, Interesting)

      by tripleevenfall ( 1990004 ) on Tuesday October 06, 2015 @03:41PM (#50673001)

      How this is not considered gambling I will never understand. If you bet on teams to win (thereby playing, through the odds, with or against every other bettor), that's sports betting and therefore gambling. If you bet on individual players and play against every other bettor, it's somehow not gambling?

      (It's also the same model as the online poker sites which were banned...)

      Either it all should be legal or all illegal. I'm not taking a position on that, but if I worked at one of these companies, I wouldn't be getting too comfortable in my current environs.

      • by pthisis ( 27352 )

        It's not illegal gambling because UIGEA (the federal anti-online gambling law) specifically exempts it. []

        (1) Bet or wager.— The term “bet or wager”— ...
        (E) does not include— ...
        (ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or

        • (ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions

          How is picking your NFL fantasy team members from the rosters of existing NFL teams not basing your team on the membership of an actual team? If Brees is on a team and the only reason you can pick him is because of that, then you've based your team on the membership of existing teams.

          What this exclusion would apply to is a fantasy league where you can pick past players, like Johnny Unitas or Brett Hull (for NHL).

          • by pthisis ( 27352 )

            It's saying that the fantasy team's membership can't be based on the membership of a current team. The idea is to prevent people essentially from betting on the Red Sox to beat the Yankees by having a "fantasy" league where one team's members are the current Red Sox, and another's are the current Yankees, and so on.

            It's a dumb law, but it's the law.

            • It's saying that the fantasy team's membership can't be based on the membership of a current team.

              Yes, I even quoted where it says that.

              If you cannot pick Drew Brees as your fantasy quarterback unless he's a member of an existing NFL team, then your team roster is based on the membership of current NFL teams. It doesn't say you are exempt unless you are betting on a team as a whole.

              The idea is to prevent people essentially from betting on the Red Sox to beat the Yankees by having a "fantasy" league where one team's members are the current Red Sox, and another's are the current Yankees, and so on.

              As someone who is smart enough to avoid wasting money on this, I'll assume that your legal honest ethical fantasy sports betting -- I mean non-betting -- sites prohibit in some way picking a fantasy team composed of mem

  • by Anonymous Coward

    I am so fucking sick and tired of seeing commercials for fan duel, draftkings, and whatever the fuck the other one is every 15 god damned minutes on my tv.

  • Outsider (Score:5, Interesting)

    by Luthair ( 847766 ) on Tuesday October 06, 2015 @03:17PM (#50672773)
    I'm not sure this would qualify as insider trading since they aren't betting on their own sites. This would be more akin to Apple employees investing in Microsoft based on their internal market research about the Surface.
    • Re:Outsider (Score:5, Insightful)

      by OverlordQ ( 264228 ) on Tuesday October 06, 2015 @03:21PM (#50672807) Journal

      Still insider trading as he had access to data that the public doesn't.

      • Re:Outsider (Score:4, Interesting)

        by Anonymous Coward on Tuesday October 06, 2015 @03:42PM (#50673015)

        Actually, the public does have access to that data. They just choose not to do the work necessary to gather it.

        If I understand correctly, the person in question made the assumption that the players who were picked by the most people were probably the best players, and that an optimal team would contain those players. This turned out to be correct, though it was not necessarily so. He got that information by looking at the private data of users of his site. That's certainly a violation of the users' trust, which makes it ethically (and maybe legally) wrong.

        Insider trading is illegal because it involves making money by knowing secret information that would materially affect the performance of a security if known. Ignoring the fact that the information, if known, would materially affect the number of people choosing particular players, and thus the maximum possible gains, it would not affect the fundamental performance of the player—how many points they make, running yards, etc.—so it isn't really in the same category.

        Besides, anyone in the general public could get that same information with enough effort by taking a poll of fantasy football players and aggregating the results. If anything, that would likely result in a more statistically accurate result, because you'd be taking a random sampling of players on every site rather than only the players who happen to play on a single site.

        • by quetwo ( 1203948 )

          The data they are accused of using is the popularity of the various players on their own site. They can reasonably predict that similar "claim" percentages are on the completing site.

          The sites don't list that, for example, 75% of the people on the site have Tom Brady on their teams. The insiders would know this, and would adjust their own picks based on that knowledge.

      • by Luthair ( 847766 )
        Wrong, insider trading requires inside knowledge from the company that other investors do not have. The information the employee of company A does not have access to information from B (unless they have some sharing agreement I suppose), ergo they do not have inside information.
        • Leaving aside the fact that the second sentence is grammatically shit, you're talking bollocks.

          If the industry is close to an oligopoly, then inside information on one still gives clues about the others.

          For example, if I worked for VW and had advance knowledge of the emissions shenanigans I could shorted VW or I could have bought into BMW and/or Mercedes.

      • You don't understand what insider trading is. I doubt you've ever even bought stocks. Insider trading has a VERY strict definition within the law, so strict in fact that insider information passed 2 degrees away from the source which resulted in a prosecution was recently thrown out by the supreme court because it didn't meet the material rewards test the law requires.

        This isn't insider trading. It's filthy and dirty and throws the whole industry into disrepute but it's not currently illegal. Though if the

    • Actually, since the information they have is essentially the same, it's more like a slot machine tech working at one casino making slot bets at another. There's still a chance that the guy will lose, but his odds are way better than most, especially if he knows of certain bugs in certain machines and can leverage them.

      It's a big reason why folks like the Nevada Gaming Commission demand that technicians not gamble at all (IIRC, it came in the wake of a technician exploiting a bug by way of a palmed magnet ba

    • Re:Outsider (Score:5, Insightful)

      by rockout ( 1039072 ) on Tuesday October 06, 2015 @03:23PM (#50672819)
      I think it's closer to insider trading than that. After all, the two sites provide almost exactly the same service, and aggregate data from a huge number of users can probably be assumed to be almost identical from one site to the next. It'd be more like if you worked at HTC, and you found out news that the US gov't was going to adopt Android as the official platform for all phones issued in every single gov't agency, and so you go out and buy a bunch of Samsung stock.
    • You guys! Can I just get a clear car analogy already??
    • by Junta ( 36770 )

      Except market research is an indirect and often flawed amount of knowledge. It's also generally based on data sources generally available to the public.

      Here the knowledge is a more direct representation of the needed data. You are betting according to the very straightforward assumption that all popular 'fantasy sports' sites have similar behavior among their members. Essentially, those with access to one site's membership data knows the odds to payoffs of a typical site, while the rest of the participan

    • by clintp ( 5169 )

      Fantasy sports leagues are boring as hell. But I design financial systems, and I find cheating fascinating. :)

      In a betting system (horses, sports, etc...) you have to base your bets on your own external information (scores, statistics, etc...) and possibly with some help from the betting system itself (300-to-1 odds indicate that this is a long shot).

      However these guys had access to the betting information from other players -- in greater detail than the externally stated odds. The articles don't say how

  • Incredible (Score:5, Funny)

    by JustAnotherOldGuy ( 4145623 ) on Tuesday October 06, 2015 @03:20PM (#50672799)

    It's genuinely astounding just how little I care about this. My lack of interest probably couldn't be measured even with the most sensitive scientific equipment.

    I'll just sit back and let others who have some stake or interest in it do all the shooting and flaming and arguing. Carry on!

    • by delt0r ( 999393 )
      You cared enough to not just click the post, but to also post. Care less?
  • PT Barnum (Score:3, Insightful)

    by s.petry ( 762400 ) on Tuesday October 06, 2015 @03:21PM (#50672801)

    While there is debate regarding the authenticity of the quite, PT is attributed with "There is a sucker born every minute." Gambling is for the majority is simply a fools game. I know one professional gambler, and the only game they play is poker and only face to face with cash pots. Think long and hard about all of the reasons why that would be...

    Sorry if you were suckered or know someone that did.

    • Agreed. The only machine-type game that has any kind of consistent hope is playing odd/even on a roulette wheel with a single "0", which gives you a 48.6% (or so) chance of winning (a "00" on the wheel drops your chances to to 47.4%). Any other game that uses a machine will only get worse from there.

      At least with single-deck poker (and no card-counters) you have some sort of chance... but only if you know what you're doing and are more skilled than your opponents.

      • Blackjack and baccarat are also good games if you find the right rule set or situation. For blackjack you need to count cards and for baccarat you need to be paying attention as it is basically an even game but if you are lucky where only 0 value cards are left you bet tie big at the end of the deck and walk away from the table after you collect your huge pile of winnings. Also in general stay from anything that uses a PRNG as they suck harder than a black hole with daddy issues. Table games have better odd
    • Why anyone would gamble online is beyond me. You can't really know what's going on at the other end, and trusting that the site is playing straight with you seems adorably naive at best, and utterly imbecilic at worst.

      I know a woman who gambled away $40,000 at online poker, and I always marveled at how incredibly gullible and trusting she was. Going to a real casino is bad enough, but online? That's just asking to be fleeced.

    • LoL, because your gambling friend is only playing the cards as a secondary, his primary game is playing the other players.
      • by s.petry ( 762400 )

        You are mostly correct, but that is the nature of poker. Poker professionals pay the house for the tables if they pay at all. Casinos can draw some large crowds from high stakes games, so often give the pros free time, food, and booze to play. The house usually gets a cut of the pots when people cash out. Poker players play against each other, and the game is as much psychological as it is the luck of the cards.

        The reason he won't play anything else is because the House always wins the games they run.

    • Poker isn't gambling - it's a game of skill. Put another way, if poker is gambling then so is capitalism.

      Gambling requires a game of pure chance, which means that the player has no way to effect the outcome.

    • I don't know, betting on sports results should be pretty easy to game. The odds given are just designed to hedge the bookie's bets, not on the actually best guess on who is going to win. People are stupid, so will bet wrong in general; So you only need to figure out when the odds given do not match the real life odds to such a degree that you have a monetary advantage. You won't win every time, like the bookies do, but you should be able to easy get a positive expected value. The problem with poker is that
  • Either the companies will fix this, or the market will. If guys from Fanduel are winning big by playing at Draftkings and vice versa, no one who is not in the know will play.
    • Either the companies will fix this, or the market will. If guys from Fanduel are winning big by playing at Draftkings and vice versa, no one who is not in the know will play.

      Only if they're found out. Who knows how many DraftKing and FanDuel employees have been using this strategy? This kind of scam can be very hard for the users to detect so you end up with a lot of people getting scammed and legitimate businesses with no easy way to distinguish themselves from the crooked businesses.

      Plus there's an externalization problem, it's the FanDuel users that were harmed by the actions of the DraftKing employee. Those two are big enough to cooperate in keeping their employees playing

  • Don't fucking play.
  • People might be wondering how this blurb about sports betting was selected for Slashdot publication...

    The headline contained the word "fantasy."
    • Because fantasy football has traditionally been a geek thing since it doesn't require getting dogpiled or bounced around on the field, nor does it involved sitting on uncomfortable bleachers exposed to the sun for hours, as well as it tends to be a cerebral exercise if you care to indulge. With the rise and ubiquity of computers, it's happening on computers, so even if it includes a million armchair quarterback jock wannabe's, many still consider it the domain of geeks.
  • If you go into a casino expecting the house to be fair, or your opponents not to have procured every edge you're a fool.

    If it wasn't knowledge of the ownership patterns, it would have been something else, like health information to the old school fixing or shaving.

    • If you go into a casino expecting the house to be fair, or your opponents not to have procured every edge you're a fool.

      Yes, yes, and yes.

      Casinos aren't in business to let you win any more than insurance companies are in business to pay claims.

  • It seems like this is the first year I have actually seen fantasy sport company propaganda and it is EVERYWHERE I look.

    Obviously it is a huge industry with millions to throw at advertising. But how is it not gambling again?

    Do we still have anti-gambling legislation? Not that I really care. If you want to throw away your money, by all means, go ahead. I just thought that places like Atlantic City and Las Vegas existed because they were bastions where gambling was legal.

    • They aren't betting on sports... They are betting at FANTASY sports. That's totally different! Kind of like how bingo isn't gambling because the church does it.

    • When the online gambling sites first came out, they got shut down really quick. I am not sure why the same is not the case for the these online sports gambling sites.
      • by pthisis ( 27352 )

        When the online gambling sites first came out, they got shut down really quick. I am not sure why the same is not the case for the these online sports gambling sites.

        They got shut down when Congress passed anti-online-gambling legislation in the form of UIGEA. It specifically says that fantasy sports of this sort are exempt: []
        (1) Bet or wager.— The term “bet or wager”— ...
        (E) does not include— ...
        (ix) participation in any fantasy or simulation sp

  • but this type of gambling will continue

    the NFL got a specific carve out for this crap when sheldon adelson and other las vegas oligarch assholes got online gambling in the usa shut down a few years ago as threat to their business (welcome to capitalism! aka, cronyism, but this is what most american morons don't understand about unregulated "capitalism"... also amazing that adelson donates to republicans, you know "free enterprise, get government out of business"... lies the poor morons believe for some reas

  • I am setting up a website where I am going to allow online betting based on the weight of Steven King's next bowel movement. I need to sneak into his house tonight to put pressure sensors under his throne and a turd cam just under the seat.

    So everyone come check out [] and give me all your money.
  • A community set up for betting, a community that few (if any) outside of it even care about, a community that has little or no regulation.

    How in the world would anyone expect anything but this type of scandal to occur?

  • How is this not the same as placing bets on real sports?
    Betting is betting.

    How is it any different that an online casino? Apart from the online casinos locating themselves in countries with lax gambling laws. These are American companies operating in America.

    • by pthisis ( 27352 )

      Because the law banning online gambling specifically exempts fantasy sports. See (1)(E)(ix) here: []

      • I don't believe that the link answers his questions:

        "How is this not the same as placing bets on real sports?"
        "How is it any different that an online casino?"

        Yes, I read the law in the link. It shows the "what", not the "why".

        • The why is because the NFL and other sports leagues didn't want it banned and got congress to deliberately exempt it. It's not illegal because Congress said it isn't.

      • Ok, so I've never played fantasy sports so I had no idea how it worked.

        Reading that, it's basically like playing the lottery. Instead of picking numbers you pick players. The outcome is based solely on the stats of the players in each team.

        Makes sense now. It's a tough one though, since they're not betting. They're paying a fixed entry fee that doesn't determine how much they could win.
        It's not strictly a lottery because it's not based on chance, but an algorithm and the selection of other players.

        It makes

  • "Scandal Erupts In Unregulated Online World of Fantasy Sports"

    The title implies that fantasies should be regulated. Wow! What a bizarre totalitarian notion. What next, your dreams?

  • I see people talking about this magical information that somehow these guys had access to that "the general public" didn't.... but seriously... you make up the best team you can, then on sunday your #1 running back goes out with a torn acl on his first play and some idiots think these guys had that information BEFORE the game happens or something?

    Years ago i ran a small fantasy league for me and some friends, and i did pretty good each year. In a sense i did have information others didn't, but only becau
    • by cdrudge ( 68377 )

      This is exactly what I thought too and wondered if I missed something. It'd be like picking your fantasy team solely based on average draft position. Yeah you get to see who's hot, but there little guarantee that it will matter much.

      Maybe FanDuel and DraftKings needs to ban contestants from using fantasy game stat prediction sites too???

  • unregulated online sports is a very kind way of saying online gambling. Either its a sport, or its a website you pump money into in the hopes of winning big. Gambling is never a winning proposition, kids. No matter how closely its tied to sports, which are fun to watch, gambling always means over a long enough timespan the house always wins.
  • Regulation is anti-business. people are good and won't do things like this. Let the market sort it out. /s

  • is an idiot and deserves to lose all their money.

    Here's a hint: if there's money involved, someone will or already has figured out how to cheat.

  • Here you go... (Score:4, Insightful)

    by Chris Mattern ( 191822 ) on Tuesday October 06, 2015 @04:03PM (#50673233)
  • Finally make the ruling and be done with it so I don't have to see those stupid fucking commercials.
  • I tried to read the article, but I don't see how this relates to Blood Bowl in any way.
  • We need to establish a fantasy grand jury to get to the bottom of this immediately! If anyone is breaking the law, they need to be doing hard time in fantasy prison!

    • "Fantasy Prison"!

      Let's see, one can choose from the various prisoner numbers in all the jails and prisons. One can bet on if they'll get parole, or get into trouble, or...

      bbl, I have a business plan to write up.

  • Sports are regulated. Sports betting is regulated.

    eSports WILL be regulated. Fantasy sports betting WILL be regulated.

    It's a sign of maturity when regulation comes down. This is a milestone, though the existing model will be shaken up. Great lecture from PAX on the subject: []

  • With any reasonable data mining, these middlemen will be able to figure out which players are ready to play and which are not. Their customers are not anonymous and their relationship to NFL teams ought to be mappable.

    This ought to provide the principals of these gambling businesses quite an edge in betting on real games.

  • *anyone* who has played a field sport of any kind will tell tell you it's about what the team can do, not what a team of egos can do. All to often you can take a bunch of top athletes and put them in a team and the team dynamic is created by the interactions between them. It's completely different from the environment that makes them the player they are.

    The only people who would bet on this crap have never played sport in their life or want to make a killing on knowing the results and gambling on a sure th

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