Answering seven biggest questions on the DraftKings data leak
— -- The integrity of the daily fantasy sports industry is under heavy scrutiny due to employee access to advantageous data that is unavailable to the public. While industry sources suggest the initial incident is being overblown, critics -- and some players -- say it has exposed dangerous flaws in the unregulated billion-dollar industry. Here are seven questions -- along with answers -- that many fantasy players as well as casual observers are asking right now.
What happened?
On Sunday, Sept. 27, after the early NFL games had kicked off but before the late afternoon slate had begun, an employee for daily fantasy sports operator DraftKings published data revealing what players were included on the most rosters. The same weekend, the employee, written content manager Ethan Haskell, finished second in a million-dollar fantasy contest on competing daily fantasy site FanDuel. He won $350,000.
According to a statement from DraftKings, Haskell did not receive the data until 1:40 p.m., 40 minutes after rosters locked on FanDuel.
The daily fantasy sports industry is unregulated, and thus no independent investigation is available.
A week later, the controversy has escalated into an international story, and industry insiders believe it is a prime example for why daily fantasy needs outside regulation.
Why does the ownership data matter?
Including players who are owned by only of a small percentage of entries is a prominent strategy in daily fantasy, especially in large contests with hundreds of thousands of entries. Winning entries in these huge guaranteed prize pool tournaments, where millions of dollars are at stake, often feature a player or players who are owned by a small percentage of entries, but go on to have better-than-expected performances. For example, a team with New England Patriots running back LeGarrette Blount (owned by just 2.2 percent of entries) won a million-dollar tournament on DraftKings tournament in Week 3.
There is debate over how big of an edge knowing the ownership percentage of players produces, but the majority believes it is indeed an edge, and one that is magnified by high-level players, who often enter hundreds of lineups.
"It would be an advantage," David Kaplen, a high-level daily fantasy player, said of knowing accurate ownership data before rosters lock. "What we're dealing with is information. The better information you have, the more it's going to help you in the long run. It wouldn't guarantee you anything, but over the course of time, it would help you in the long run. There's no doubt."
Ownership data, under normal circumstances, is not revealed to the public until after games start. FanDuel publishes ownership data after the Thursday night game kicks off, and rosters for the week are locked and cannot be changed at that time. However, many DFS players do use the FanDuel ownership to form and estimate of ownership percentages for other sites, including DraftKings, which does allow rosters to be adjusted after Thursday's game and up until the early Sunday kickoffs.
One additional concern that multiple DFS players told ESPN Chalk about employee access to data is the ability to look at high-level players' lineups, copy them and enter them on another site. Some are saying that's more of a concern than the ownership percentages.
On Tuesday, FanDuel spokesperson Justine Sacco told ESPN Chalk that only 0.3 percent of total money won on its site has been won by DraftKings employees, which would be less than $10 million.
Who has access to the data?
According to DraftKings, "a very limited number of people" have access to ownership data. "It is confined only to those that require this info to perform their duties," DraftKings spokesperson Sabrina Macias told ESPN Chalk in an email.
Why is the data not readily available to the public?
DraftKings currently believes keeping ownership data hidden until rosters are locked creates a better overall experience for players.
"We have considered whether it would be a cool feature to have people be able to see trends and other overall player utilization info in real time as selections are being made," Macias said. "But the reason we haven't done that is because we don't want to create an incentive to wait until the last minute to submit your roster. We also don't want to create an incentive for people to submit dummy lineups to manipulate the data being presented to the public. So [it is] better to wait to provide info like this until after lineups are locked."
There will be further discussion about whether player experience is more important than providing a level playing field.
What are DraftKings, FanDuel and the Fantasy Sports Trade Association doing about it?
With attacks on their integrity, FanDuel and DraftKings have banned employees from playing fantasy games for money. DraftKings said the ban is temporary and only for full-time employees.
The Fantasy Sports Trade Association released the following statement: "The Fantasy Sports Trade Association (FSTA), DraftKings and FanDuel have always understood that nothing is more important than the integrity of the games we offer to fans. For that reason, the FSTA has included in its charter that member companies must restrict employee access to and use of competitive data for play on other sites. At this time, there is no evidence that any employee or company has violated these rules. That said, the inadvertent release of non-public data by a fantasy operator employee has sparked a conversation among fantasy sports players about the extent to which industry employees should be able participate in fantasy sports contests on competitor sites. We've heard from users that they would appreciate more clarity about the rules for this issue. In the interim, while the industry works to develop and release a more detailed policy, DraftKings and FanDuel have decided to prohibit employees from participating in online fantasy sports contests for money."
Why did this story escalate to an international level?
Daily fantasy sports saturated the advertising market at the start of football season. DraftKings spent more than $24 million the first week of the NFL season, more than any other company in the U.S. in that time span. (ESPN accepts advertising from DraftKings and FanDuel). The abundance of ads combined with the sites' insistence that daily fantasy sports is not a form of gambling has not been well-received by the public and has drawn the attention of both federal and state lawmakers.
The Unlawful Internet Gambling Enforcement Act of 2006 includes language precluding fantasy sports that meet certain criteria from being a "bet or wager." This is now the statute daily fantasy operators point to in terms of their legality.
Arizona, Iowa, Louisiana, Montana and Washington state currently do not allow daily fantasy sports. Several additional states prohibit some form of daily fantasy.
U.S. Congressman Frank Pallone has called for a hearing to assess the daily fantasy industry and its relationship to the professional sports leagues. The hearing has not been granted as of early October, but officials from the House Energy and Commerce Committee were aware of the controversy and planned to discuss its impact.
Officials in Massachusetts, New Jersey, Nevada, Michigan and California are among those reviewing the legality of daily fantasy sports.
How are the sports leagues involved and what are they saying?
Major League Baseball and the National Hockey League own equity in the DraftKings. The NBA owns equity in FanDuel.
Major League Baseball, which prohibits employees from participating in money fantasy games, said Tuesday in a statement that it was surprised DraftKings allowed its employees to participate in fantasy games and said it has reached out to DraftKings.
The NBA was working on a response.
The NFL doesn't have a league sponsorship deal, nor can teams have a sponsorship deal with DFS operators. But teams are allowed to have advertising relationship and stadium signage. And most teams do.
The NFL also prohibits teams from owning daily fantasy sites, but allows the companies of the owners themselves to invest. Dallas Cowboys owner Jerry Jones and Patriots owner Robert Kraft are investors in DraftKings. Kraft, through a team spokesperson, declined to comment on the controversy.