November 20th, 2015 at 6:39 PM ^

No doubt that FanDuel employees are profiting from their customers in a way their customers can't.  

BUT, who is getting harmed here?  It's DraftKings' customers that are getting harmed.  And FanDuel has no fiduciary responsibility towards them.  FanDuel customers aren't harmed because FD employees playing at DraftKings does not affect the probability of anyone winning at FD.  It doesn't do things like affect prices.  I agree it feels slimy.  And of course, if FD and DK were getting together to win on the other's sites then it would be wrong.  But, as it is, I don't think it's nearly as bad as it feels.

Compare that to what happens on Wall Street.  There, banks will trade on info from their customer flows, which affects prices.  High-speed traders literally will see the flows and try to jump the queue.  That is unambiguously wrong if you ask me.


November 20th, 2015 at 7:21 PM ^

But I don't think there has been any discussion of collusion between the 2 companies.  So, apply the same logic as above, but reverse DK and FD.  It does get you to an equilibrium that feels bad, but I don't think a company has a responsibility to not screw their competitor's customers.

So, what appears to have happened is that the 2 companies essentially got together to ban their employees from the other site, which is then a benefit to the whole industry.  Such an agreement, either explicit or implicit, shouldn't draw the ire of antitrust authorities, as it's obviously a net benefit to consumers (other than their employees).

One thing I should add is that if a FD employee saw a particular customer's choices and then saw that the same customer was playing on the DK site and took advantage of that specific information, then I would argue that that use of information was wrong.

Mr Miggle

November 20th, 2015 at 7:44 PM ^

FD knew that their employees were cheating the customers of DK. By the same token they knew that DK employees had the same ability to cheat their customers. So what did they do to protect their customers from that threat? Did they ban DK employees from using their site? It appears that they did nothing until the story became public. That's tacit collusion.

Stu Daco

November 20th, 2015 at 7:54 PM ^

"I don't think a company has a responsibility to not screw their competitor's customers."

So as long as you stay away from your own customers, cheating people out of money is totally fine?  Shirley you can't be serious.


November 20th, 2015 at 7:16 PM ^

All the other customers who don't win because they aren't privy to insider information lose.

And let's be clear, if the employees weren't doing it, they were telling their friends to do it and split the profits.

This is a rigged game, and the company knew it. Forget it being legal or not, they should be going to prison.

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November 20th, 2015 at 7:37 PM ^

This argument risks  a "slippery slope" rejoinder.  Consider the financial industry where there are some guys sitting around in their pajamas making bets, and there are other companies paying analysts solid money to do in depth research.  There is no way that the pajama guy can come close to that firepower.  Is that unfair?

I think your analogue to insider information is spot on.  Why do we have insider information regs?  The whole economic theory is that society benefits when prices are "right" that is they correctly balance risks, profitability outlooks, etc.  It's natural to think that the way to get prices right is for them to incorporate as much information as possible.  Insider information regs, however, mean that some information is going to be excluded.  That, however, makes sense because there's the worry that without the regs, too few people would participate in the market, perhaps to the point of there not being any market.  Then, you'd be in a worse equilibrium then you would be if you just banned insider info.  So, the only way I see this working is to prohibit employees from betting on competitor sites.

My point, however, was that I didn't see this as a moral issue.  Just like, if there were no insider info regs, I wouldn't think it's immoral to act on insider info.  But, given that there are regs, then acting on it would be immoral.


November 20th, 2015 at 7:17 PM ^

Well, for one thing, many of the same people play at both sites, so the DraftKings customers who have been harmed are also FanDuel customers. Formerly loyal customers, now pissed off.

And even if they didn't share customers, they have a common interest in the public perception of the integrity of the game. People getting ripped off at another website by FanDuel employees does FanDuel's reputation and business considerable harm.

And even if they don't care about their reputation with customers, the sites share common regulators.

It's some of the most moronic management behavior I've ever seen. Of course the employees care more about the money they're making on the side playing the games with inside information than they care about the future of the company they work for, but the guys that own and run the company should have their priorities the other way around. Faced with the knowledge that their employees are ripping off industry customers, do they rein them in? No, they wink and say "try not to rip them off too bad" and shoot themselves in the crotch.

They think they're Wall Street, they think they're too important too regulate? I don't see any former FanDuel managers holding cabinet-level seats in state or federal government, or sitting on gaming boards. DraftKings' response to all this was to try to get their customers onto their twitters. "RT to protect your right to play the game you love." I think they might be about to find out how power really works.

They've probably still got time to clean up their act and avoid the worst, but I'm not seeing any evidence they will.


November 20th, 2015 at 7:28 PM ^

as those wall street barons who get all sorts of inside info on Stocks, companies, economic data and they make a killing on the market compared to Joe Q. Public.

Yeah inside info is wrong period!


November 21st, 2015 at 2:16 AM ^

Oliver did a great job on this, and also proved that it kinda ... kinda.. is a game of skill


The people with better algorithmic data win the money. 


yeah it's shady, yeah, there's inside shit going on that makes it likely criminal, yeah you have an 85% chance of being a loser over a given period of time on these sites... but for the dude's who wrote the programming to be able to beat everyone else.. that does kinda make it a game of skil


+1 for the nerds. 


I still hate these sites, just because of how dirty they've turned out to be and how many people are cashing in on fleecing people on something they advertise as easily competitive for the average guy who pays attention.


And I am a person who played poker for 6+ hours a day in casinos for 5 years during the boom and had a really good ROI. (and online)


These are rigged games, they are not honest.   Yes, you can actually jsut be "decent" at poker and stumble into a final table here and there or get to the point where you can play single table tournements and mainain or slowly build a bankroll..  If fanduel was like that, it would be fun... but people were using insider information... not only that, people with the programs to go over every single variable have an advantage you cannot overcome without all the same information. over time they'll win every dollar out there. There are probably people working on better and better programs and in large volumes...  even if these things stick around, it's just going to become a place for idiots to all lose their money to unbeatable computers. 

Clarence Beeks

November 20th, 2015 at 10:23 PM ^

It's interesting how there is a ton of outrage about what happened here, but none about the exact same thing happening every single day with people in government and their friends and family members.

OMG Shirtless

November 21st, 2015 at 12:30 AM ^

My absolute favorite part of this DraftKings/FanDuel saga is that there's a good chance that people would have ignored them if they didn't come out with the most annoying commercials known to man.  

DraftKings and FanDuel were both around for the 2014 football season.  Nobody cared because they weren't bothering us with the terrible commercials.


November 21st, 2015 at 12:43 AM ^

I think both companies should have told there workers not to play on the rivals sites just my opinion. The Ad's put the spotlight on FD & DK and why the government is going after them. I played DK for 4 or 6 weeks back in the spring never put money only played the free games since I don't like to gamble my money away and it just wasn't for me.