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Everything You Need To Know About The DraftKings/FanDuel Scandal

Fitz Tepper
2006
When lawmakers passed theu00a0Unlawful Internet Gambling Enforcement Act in 2006, they specifically didn’t banu00a0″skill-based” contests. Whileu00a0Arizona, Iowa, Louisiana, Montana, Nevada and Washington made their own laws with more restrictive requirements on what is “skill based,” most states went along with the federal decision.”Image Credits:Wikimedia Commons (opens in a new window) under a Public Domain (opens in a new window) license.
2009
Three years later, FanDuel was started. The company has since raised over $360M in funding from investors like NBC Sports Ventures and Comcast Ventures. They have also partneredu00a0with 16 NFL teams, 15 NBA teams, and have given an equity stake to the NBA.”
2012
Founded in 2012, DraftKingsu00a0has raised $375M from investors like the MLB, The Kraft Group (owner of the Patriots), and Fox Sports. Additionally, the company has two, $250M advertising deals with both ESPN and Fox Sports. DraftKings is also partnered with the NFL, NASCAR, UFC, Staples Center, Madison Square Garden, five NFL teams, and 25 MLB teams.”
September 27th, 2015
On Sept. 27th, DraftKings employee Ethan Haskell accidentally posted team ownership data on DraftKing’s blog. Anyone possessing this data has an immense competitive advantage, mainly because daily fantasy sports revolves around picking key players that your opponents haven’t drafted.”Image Credits:DraftKings (opens in a new window)
October 4th, 2015
FanDuel’s large Sunday Millions contest ends, and guess who finishes in second place with a prize of $350,000? None other than Ethan Haskell, the DraftKings employee who had access to the previous weeks lineups! While DraftKings quickly deny that Haskell had access to the information before FanDuel lineups for the week locked, it definitely looks extremely suspicious.”Image Credits:Fanduel (opens in a new window)
October 6th, 2015
DraftKings, FanDuel, and Theu00a0Fantasy Sports Trade Association (FSTA) release a joint statement temporarily restricting employees from playing on any competitors sites.”
October 14th, 2015
The WSJ reports that both the U.S. Justice Department and the FBI have opened anu00a0investigation intou00a0whether daily fantasy sports is a form of gambling, thus violating federal law. Additionally, the New York Attorney General’s office asked both companies for internal data including win/loss records and player pricing algorithms.”Image Credits:Wikiwopbop (opens in a new window)
October 14th, 2015
The same day, Politico reports that FanDuel hired its first D.C. lobbying firm, as well as joined the Internet association, a D.C. trade group for tech companies. Additionally, the blog reported that the NFL is having its D.C. office contactu00a0House member to prevent a hearing on daily fantasy sports.”
October 15th, 2015
The Nevada Gaming Control Boardu00a0rulesu00a0that daily fantasy sports isu00a0traditional gambling, meaning it needs a state-issued gambling license. In the interim, all daily fantasy companies have to cease operations until they receive a license. This is a big deal, since most states look to the Nevada Gaming Board as a trendsetter in gamblingu00a0regulation.”
October 19th, 2015
After explosive growth early in the season, the daily fantasy sports industry fumbles.u00a0Bloomberg reportsu00a0thatu00a0last weekend was the slowest yet for both FanDuel and DraftKings. This could be a sign thatu00a0fans are responding negatively to these allegations, and pulling back from what they may now conceive to be unfair contests. While the future of daily fantasy sports is still up the air, its clear that both companies have a lot of work ahead of them if they want to convince the nation that their games are 100 percent skill-based.”
Oct 27th, 2015
Illinois introducesu00a0legislationu00a0to regulate DFSu00a0sites like Fanduel and DraftKings.u00a0Specifically, the legislation will apply a stricter definition to daily fantasy sports, ensuring it isnu2019t gambling or sports betting, which would violate the stateu2019s criminal laws. It will also require that anyone under the age of 18 is banned from participating in the daily games.”
Nov 10th, 2015
NY State Rules Daily Fantasy Illegal, Ordering FanDuel & DraftKings To Stop Taking Bets.u00a0Sites like them have been categorized as u201cillegal gambling sitesu201d andu00a0have ordered them to cease taking moneyu00a0from the residents of New York state.”
It’s been a crazy few weeks in the world of daily fantasy sports. What originally started as a data leak from DraftKings has now morphed into a federal investigation and total ban across the state of Nevada. Feel like you don’t know the story? You’re not alone. Read on to get caught up on the insanity that is daily fantasy sports.

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Fitz Tepper is a junior in the Marshall School of Business at The University of Southern California. He’s been a passionate Apple fan and developer for over 10 years, and loves covering the business-side of startups.
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