Daily Fantasy Sports Companies Face Lawsuits
Fantasy Sports are enjoyed by people all over the country, but a Kentucky customer who played daily has decided to file a lawsuit against FanDuel and DraftKings. He is accusing these companies of fraud, claiming that they both failed to properly disclose that all employees at the companies would have access to insider data that could potentially assist them in winning millions of dollars at the expense of their consistent customers.
The plaintiff in the case is Adam Johnson, and he filed a federal class action lawsuit in the state of New York. He is hoping to receive compensation for damages that have not been specified. The charges he is filing are on behalf of not only himself, but also others who find themselves in similar situations following a controversy regarding insider trading that made news in the expanding industry of daily fantasy sports.
How It Started
This all started when a DraftKings employee won a whopping $350,000 through a contest that took place on the FanDuel website. This occurred within the same week that the employee had accidentally leaked some impressive insider information regarding the hottest players that should be owned that particular week.
Even though both companies denied wrongdoing, this breach in data has raised many questions regarding whether or not employees have access to information that could be utilized to gain a huge advantage over other people on the sites.
The current lawsuit states that employees at DraftKings have been able to win roughly $6 million by playing on FanDuel, which is a rival website with a business model that is quite similar.
The lawsuit also notes that FanDuel had even created a profile for one of its employees that played on other websites and managed to win $50,000 within a short time frame. Since the lawsuit and this claim, that article has been removed from the FanDuel site.
How FanDuel and DraftKings are Responding
Both DraftKings and FanDuel have announced that they have taken steps to hire outside law firms in order to properly review all of their internal controls to prevent fraud. The companies have also forbidden their employees from playing any fantasy games for cash.
If insiders have access to valuable data about which players should be owned to make the most money, it is easy to capitalize on that information and improve their odds of winning against individuals who don’t have access to the same tips. That is the basis of this lawsuit, and time will tell how it plays out.