Daily fantasy sports are fun, but the industry in the United States is quickly turning into a mess. Sites are being forced out of individual states, class action lawsuits are being filed, and major sites are being investigated for the legality or potential lack thereof. And now one of the two leading DFS sites is projecting a bad look because of an internal policy that has now been made public.
Recently, the New York Attorney General, Eric Schneiderman, ruled that DFS was against New York law and ordered DraftKings and FanDuel to exit the state (in a virtual manner – FanDuel is actually based in New York). The sites fought back, filing a lawsuit against the AG in an attempt to not have to stop serving New York players. FanDuel had to enter various pieces of private information as evidence, one of which was its employee policy for playing daily fantasy sports on competing sites. Deadspin acquired a copy of the policy and posted it on its site. It is quite interesting.
The policy, that employees were asked to sign, starts by delineating its goals, which read like the policy aims to simply cover up any possible problems rather than prevent them:
Goals: These outline what we’re hoping to accomplish by asking you (and other employees) to agree to this policy.
• Limit ability of employees to exploit “inside information” such as the picks of top users, or the win rates of potential opponents.
• Reassure any concerned site users that employees aren’t exploiting inside info.
• Reduce chance of users questioning ability of employees to exploit inside info against them when they play on other sites.
The next section addresses the “Principles” of the policy, that is, why the specific rules were made. Much of it, like the above, has to do with perception rather than outright problem prevention.
After that are the “Risks” involved with not implementing the policies. They are fairly reasonable and not really worth discussing here, but a little of it does look like the company trying to justify a less-than-sound policy.
The “Internal Controls & Guidelines” section only has two bullet points:
• Only discuss our users’ success and lineups where necessary. The less awareness of this information internally, the less chances for exploitation.
• There is an expectation that employees will only look up info such as user lineups or user win rates where needed to do job.
And then there are the “Rules for Employee Play on Other Sites,” which reads like a guide for clandestine foreign agents:
• Never be among the top five players by volume on any one site (based on site leaderboards). Never be among the top ten overall on the RotoGrinders leaderboard. Top players frequently become targets for accusations by other users.
• Never account for more than 2% of entries in any tournament of more than 1,000 entries. Never account for more than 5% of entries in any tournament of more than 100 entries. Players who swamp big tournaments with entries frequently become targets of accusations.
• Don’t be the 2nd person into a head to head contest against the same opponent in more than one contest per day. This rule will greatly limit the ability to exploit information about user performance, and will also limit the likelihood of complaints from users.
• Never use information gained from viewing users’ lineups.
• Seek to avoid playing anyone whose lineups you saw for that time period.
• You must provide FanDuel with a list of your usernames on all sites where you play for real money. We may or may not choose to reveal your employment status and identity to those sites or on other industry sites.
So rather than either forbidding employees to play on other sites entirely (which eventually happened after the “insider trading” scandal which wasn’t really a scandal) or putting in place much more specific, restricting rules, FanDuel basically trusted its employees not to do anything that wasn’t kosher. The company also seemed much more concerned about its image than about not actually doing anything wrong.
This isn’t to say that FanDuel or its employees actually did anything wrong, but it sure doesn’t make for a good look.
