A major scandal is erupting in the multibillion dollar industry of fantasy sports, the online and unregulated business in which players assemble their fantasy teams with real athletes. On Monday, the two major fantasy companies were forced to release statements defending their businesses' integrity after what amounted to allegations of insider trading, that employees were placing bets on information not available to the public.
Last week, a DraftKings employee admitted to inadvertently releasing data before the start of the third week of NFL games. The employee — a midlevel content manager — won $350,000 at rival site FanDuel that same week.
The incident has raised questions about who at daily fantasy companies has access to valuable data, how it is protected and whether the industry can — or wants — to police itself.
The industry has its roots in informal fantasy games that began years ago with fans playing against each other for fun over the course of a season. They assembled hypothetical teams and scored points based on how players did in actual games.
But in recent years, companies, led by DraftKings and FanDuel, have set up online games in which fans pay an entry fee to a website — anywhere from 25 cents to $1,000 — to play dozens if not hundreds of opponents.
On Monday DraftKings and FanDuel released a joint statement that said that "nothing is more important" than the "integrity of the games we offer," but offered few specifics.
Late Monday, the two companies temporarily banned their employees from playing games or in tournaments at any other site; they already had prohibited their employees from playing on their own company sites.