Daily fantasy football sites FanDuel and DraftKings are facing an insider trading scandal that has now spurred a class action lawsuit.
A class action lawsuit filed Thursday against daily fantasy football sites FanDuel and DraftKings alleges employees had access to lineup information that gave them unfair advantages over other competitors.
Fantasy football player Adam Johnson sued both sites Thursday in Manhattan Federal Court. Johnson claims that participants in both sites’ daily games were unfairly disadvantaged by employees of each company being allowed to play the other’s game. The daily, salary-based team-assembly games at DraftKings and Fanduel are similar in concept.
Johnson, who lives in Kentucky, deposited $100 at DraftKings before The New York Times reported a DraftKings employee had won big on FanDuel, setting off allegations that employees had unfair advantages. Johnson says he would not have spent that money had he known the deck may have been stacked against him. The suit seeks damages that will be determined at trial.
New York attorney general Eric Schneiderman on Tuesday opened an inquiry into whether employees from the company won money using insider information. FanDuel and DraftKings had previously banned employees from playing on their own site but allowed them to play on other daily fantasy sites. Earlier this week, both banned their employees on a temporary basis from betting on fantasy sports and playing the games, amid the allegations they have been using that information to win large payouts.
“In addition to years of data on optimal strategies, which gives Defendants’ employees a huge advantage over even the most ‘skilled’ (daily fantasy sports) players, Defendants’ employees also have real-time access to data on current lineups of every player in every contest, and the overall ownership percentages of every player,” the suit says, according to the New York Daily News.
“All people want is a fair game. What has come out is that it’s clearly not a level playing field. If people knew there were insiders with access to the info they have they wouldn’t play on these sites,” Johnson’s attorney Jasper Ward told the Daily News.
Both daily fantasy sites have denied wrongdoing. In a joint statement earlier this week, they said they have "strong policies in place to ensure that employees do not misuse any information at their disposal."
- Jeremy Woo