Daily fantasy sports (DFS) operators DraftKings and FanDuel have been hit with a class action lawsuit in the US after being accused of negligence, fraud and false advertising.
Brought forward by Adam Johnson of Kentucky, who deposited $100 (€88) into a DraftKings account, the case is made mainly through the recent revelation that both companies allowed their staff to enter contests on each other’s website to compete with other players for real-money prizes.
The revelations came last week when iGaming Business reported that DraftKings and FanDuel were forced to defend the integrity of their businesses after it was revealed that a member of staff at DraftKings inadvertently released data on fantasy teams for the NFL American football league and won $350,000 through FanDuel.
In response to the incident, New York Attorney General Eric Schneiderman has launched an inquiry into both operators to establish the advantages DFS staff may have gained using data to win prizes on competing operators.
The incident also led to calls from other operators in the industry for the US to take a stronger stance on regulations for the fantasy sports market.
DraftKings and FanDuel have now been dealt a further blow with the class action lawsuit, which highlights the fact that both operators allowed staff to take part in competitions on other websites.
“DraftKings performs analytics to determine winning strategies, return on investment of certain strategies and even how lineups on FanDuel would do if they were entered into DraftKings contests,” the suit said.
Since last week’s revelations, DraftKings and FanDuel have temporarily banned their staff from taking part in DFS contests on competing sites.
Speaking in an interview with Fortune, DraftKings chief executive Jason Robins defended the employee that was able to win the real-money prize on FanDuel, stating that he did not do anything “unethical” and that the operator has already addressed the issue.
“As it turned out, he did not do anything unethical, he made a mistake—but that was an error in his job, not an error in his ethical judgement,” Robins said.
“We’ve addressed the immediate issue, which is banning all employees from playing anywhere in the industry in public games. That’s a big step.
“I think that honestly solves this issue, and while there are certainly additional safeguards to enforce that, I think if we can successfully enforce that, and we will, then that solves this issue.
“While we acknowledge the problem of someone seeing the data, and certainly seeing that data would be helpful, it’s not insider trading because it’s not like he had a specific data point that guaranteed he would win.”
source : www.igamingbusiness.com
