The fantasy sports space is about to start policing itself

Steven Loeb · October 28, 2015 · Short URL:

Companies in the space are creating a control board to set standards, audit and monitor leagues

(Updated with comment from FanDuel and DraftKings)

With the recent betting scandal hitting daily fantasy sports leagues FanDuel and DraftKings, and state governments already starting to look into them, now the industry itself it going to start policing itself.

That will come in the form of an outside control board, which is being set up in order to ensure ethical behavior in the industry, it was announced on Tuesday.

Led by Seth Harris, the former Acting U.S. Secretary of Labor under Obama, the Fantasy Sports Control Agency will monitor daily and non-daily fantasy sports companies, as well as setting industry standards, auditing companies and creating an enforcement mechanism to deal with misconduct.

“We are committed to working with the Fantasy Sports Control Agency, the FSTA and all relevant government authorities to ensure that our industry operates in a manner that is completely transparent and fair for all consumers. At DraftKings, we recognize our responsibility to the millions of fans who are captivated by the excitement and interactive nature of daily fantasy sports, and ensuring a level and fair playing field for all players is a fundamental tenet of our company. We believe the Fantasy Sports Control Agency will help our industry establish best practices that further this important goal," said DraftKings Co-Founder and CEO Jason Robins.
The timing of the creation of this new agency isn't a coincidence, as those same two companies recently found themselves in hot water earlier this month after it came to light that employees from both companies were using insider information to play on each others leagues

After that, New York Attorney General Eric Schneiderman opened an investigation into the matter, sending letters to both companies, asking both of them for internal data, as well as details, on how they prevent fraud. He also wants details on any internal investigations that the companies have done into their employees.

In response, both FanDuel and DraftKings banned their employees from betting on fantasy sports leagues, and  created advisory boards to advise the companies and give them recommendations when it comes to the law. These companies are, by far, the two biggest in the space, each having raised over $350 million and paying out hundreds of millions of dollars each year.

Despite those steps, the scandal seems to have opened up the floodgates for state and local regulators to take a closer look at these leagues. On Tuesday a lawmaker in Illinois proposed a bill that would, among other things, prohibit players under 18 from participating, and also allow sites to check to see if players owe child support or have tax liens.

“FanDuel has always focused on maintaining the integrity of our games and the trust of our players. We welcome the opportunity to work with Rep. Zalewski and lawmakers in Illinois to safeguard consumers, introduce best practices that the entire fantasy industry can adhere to, and ensuring that sports fans across Illinois can continue to play fantasy sports," a FanDuel spokesperson told VatorNews.

Five states, Arizona, Iowa, Louisiana, Montana and Washington, have already made daily fantasy sports illegal.

There have also been questions raised about the fairness of both companies, with a Bloomberg report in September finding that winnings are heavily skewed toward a very few elite players who use algorithms and software to enter hundreds of contests every single day.

Analysis from Rotogrinders found that the top 100 ranked players enter 330 winning lineups per day. Even more alarming, the top 10 players combine to win an average of 873 times daily, or nearly 99% of contests.  The other 20,000 players win just 13 times per day, on average.

The creation of a control board wouldn't fix all of those problems, obviously, and it also wouldn’t affect the continuing investigations, but it would at least show that the industry is aware of the problem and is interested in at least trying to solve it.

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Hubdub Ltd is a VC funded start-up based in Edinburgh and San Francisco that aims to be the world’s largest developer of premium social games for sports fans. Its main product, FanDuel, transforms traditional fantasy sports ($1bn, 30m people market) into an instant gratification daily game where users win cash prizes every day. It is played on, via white label partners such as, and in future on Facebook and mobile.