Ethan Haskell, a midlevel content manager at DraftKings, admitted to accidentally releasing data before the start of the third week of N.F.L. games. That same week, Mr. Haskell won $350,000 at DraftKings rival website, FanDuel. Draftkings and FanDuel are the two largest companies in the multibillion-dollar fantasy sports industry, where prize pools can pay up to $2 million to a single winner. Prior to the apparent insider trading controversy that has resulted from Mr. Haskell’s leak and large win, the industry was under fire for being dangerously similar to Vegas-style gambling that is typically banned in the sports world, and currently unregulated – internally or externally.
The problem with Mr. Haskell’s $350,000 win on FanDuel is his access to insider information via his position at DraftKings. As an employee of DraftKings, Mr. Haskell had information on which players were being bet on the most, meaning he knew which players would be the most lucrative bets and giving him a leg-up in the competition. Last week’s data leak creates the same issue, but on a larger scale – it allowed players who created their line-ups after the leak to identify the most lucrative bets, while disadvantaging the players who had already locked in their line-ups. Shockingly, employees are not banned from playing on other websites despite the advantageous knowledge they possess over the public. In fact, Major League Baseball (MLB), a DraftKings investor, said in a prepared statement that it was “surprised to learn that DraftKings allowed its employees to participate in daily fantasy games.” Legal remedies under the statute include but are not limited to treble damages, reasonable attorney’s fees, punitive damages, or an injunction against the use of the unlawful trade practice.
The D.C. Consumer Protection Procedures Act (CPPA) is a very powerful statute that protects the rights of D.C. consumers. The CPPA was enacted to “assure that a just mechanism exists to remedy all improper trade practices and deter the continuing use of such practices.” D.C. Code § 28-3901(b)(1). Under the CPPA, it is an “unlawful trade practice for a business to, among other things: (1) “misrepresent as to a material fact which has a tendency to mislead”; (2) “fail to state a material fact if such failure tends to mislead”; (3) “represent that goods or services are of particular standard, quality, grade, style, or model, if in fact they are of another”; and/or (4) “represent that goods or services have a source, sponsorship, approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have. Under the CPPA, “a person, whether acting for the interests of itself, its members, or the general public, may bring an action” Given the number of consumers that have potentially been impacted, DraftKings and FanDuel have exposure to a class action lawsuit.
If you have participated on the DraftKings or FanDuel website, and feel you have been harmed been misled, defrauded, or a victim as a result of the website’s lack of transparency, please contact Klaproth Law PLLC for a consultation.