Yesterday, the fantasy sports world was rocked with reports of an “insider trading” scandal involving an employee at industry leader DraftKings. The reports indicated that prior to the start of the third week of NFL games, the employee inadvertently released information not available to the public. The employee incidentally won $350,000 through a FanDuel tournament that same week, though there have not yet been any allegations that the employee improperly used the inside information to his advantage, and DraftKings vehemently denies such.
What are the implications of this incident for the fantasy sports industry?
This news comes on the heels of related stories concerning the fantasy sports space. As we have previously blogged, both the gaming commission in Nevada and the Massachusetts Attorney General are currently undertaking reviews of the legality of paid fantasy sports contests. Additionally, California has taken steps towards regulating the industry. Finally, there have been recent calls from within the United States Congress to conduct hearings on the subject of daily fantasy sports, calls which have since grown louder with the revelation of the most recent episode at DraftKings.
Uncertain Times for Fantasy Sports Industry
The whirlwind of activity engulfing fantasy sports contests at both the state and national level should be of great interest to fantasy sports operators and gaming attorneys alike. It will be important for all players in the fantasy sports space to keep a keen eye on these developments to see where the increased scrutiny from regulators and lawmakers leads the industry. Accordingly, when setting up or operating a fantasy sports contest or other gaming venture, it is absolutely critical to retain knowledgeable legal counsel to become/remain compliant with applicable law.