Insider Trading? DraftKings Employee Wins $350K on Rival Site Fanduel
Allegations of insider trading are hitting the multi-billion dollar fantasy sports websites DraftKings and Fanduel.
Rick Leventhal reported the latest on "America's Newsroom" on the story involving DraftKings employee Ethan Haskell.
Haskell triggered a firestorm of criticism from players by prematurely posting on the company's blog the lineups of those who were participating in the Millionaire Maker contest last Sunday.
Anyone who saw the information could have gained a competitive advantage, since the rosters in the contest had not been locked at that point.
It has also emerged that Haskell won $350,000 on competing website, Fanduel, in a $25 contest during the same week.
Employees cannot play in their own company's games, but now the companies are now extending that prohibition to competing sites.
DraftKings Chief Executive Jason Robins said Haskell won the money on Fanduel fairly and did not put to use any insider information.
"We interviewed everyone involved and they all corroborated what really happened. [Haskell] didn't do anything ethically wrong," he added. "He made a mistake in his job and he'll certainly hear about it."
The websites allow contestants to pick real-life players, with the NFL being the most popular competition, and earn points based on those players' actual game stats. Contest entry fees range from 25 cents to $1,000, with the companies giving away $1-2 billion a year in prize money.
It's likely that this scandal will trigger more calls for the industry to be regulated by the federal government. Last month, Rep. Frank Pallone (D-NJ) called into question why the fantasy games are legal, but wagering on a game's outcome is not.
Disclosure: 21st Century Fox is an investor in DraftKings.