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On ESPN's "Outside the Lines," segment Tuesday afternoon, Bob Ley disclosed that the 24-7 sports network would be dropping DraftKings sponsored elements within its programing following allegations of possible insider cheating within the company.
"ESPN today continued running commercials for the two main daily sports fantasy companies, but has removed sponsored elements from within shows," Ley said at the start of the program.
Both DraftKings and FanDuel 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.
The statements were released after an employee at DraftKings, one of the two major companies, admitted last week to inadvertently releasing data before the start of the third week of N.F.L. games. The employee, a midlevel content manager, won $350,000 at a rival site, FanDuel, that same week.
“It is absolutely akin to insider trading,” said Daniel Wallach, a sports and gambling lawyer at Becker & Poliakoff in Fort Lauderdale, Fla. “It gives that person a distinct edge in a contest.”
The New York Times writes:
The episode has raised questions about who at daily fantasy companies has access to valuable data, such as which players a majority of the money is being bet on; how it is protected; and whether the industry can — or wants — to police itself.
Forbes went on to suggest that DraftKings partners such as ESPN may have been complicit in allowing such insider access to have taken place.
If the allegations described in the New York Times are indeed accurate, DraftKings committed a major error by failing to maintain sufficient mechanisms and controls to prevent employee access to highly sensitive data.
As a company that purports to be valued at upwards of $1 billion, DraftKings certainly should have maintained complex firewalls in place to prevent dissemination to company employees of this information in aggregated form. And if DraftKings did not naturally have these mechanisms in place, Major League Baseball should have implemented them upon becoming a shareholder.
- Aaron Goldstein, Gambling911.com
