Fantasy sports betting may be a rigged game

Online fantasy sports leagues have become a multi-billion dollar business. But revelations this week that insiders may be using information that is not publicly available to gain a betting advantage may rock the currently unregulated industry.

Two of the leading fantasy sports sites, FanDuel and DraftKings, announced that their employees had recently been found using inside information to win big jackpots on other fantasy sports sites, according to the New York Times. A DraftKings employee won $350,000 on the FanDuels site using data released ahead of games that is not usually released until the lineups for the games are set.

Access to such information conveys a significant betting advantage over members of the public who usually would not have this information. In addition, payouts to employees of betting companies reduce the amount available to the public.

Gambling on fantasy sports is permitted under a 2006 exemption the industry won when Congress prohibited online poker and other games of chance, but allowed fantasy sports betting as the industry argued that their games are skill-based. Only five states regulate online fantasy leagues.

In response to the scandal, DraftKings and FanDuel have prohibited their employees from playing on other online fantasy sports sites. The companies issued a joint statement noting that the integrity of their leagues was their highest priority.

But experts believe the revelations may prompt a Congressional inquiry. Already Representative Frank Pallone Jr. of New Jersey has called for hearings to evaluate the league’s connections to gambling.