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DraftKings and FanDuel

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More Controversy For FanDuel, DraftKings In NY Class Action
By Benjamin Horney

http://www.law360.com/articles/714637/more-controversy-for-fanduel-draftkings-in-ny-class-action

Law360, New York (October 15, 2015, 3:21 PM ET) -- FanDuel and DraftKings were hit with a putative class action in New York federal court Thursday over allegations that they hoodwinked users through claims that their games are based on skill when in reality employees of the sites have held significant advantages thanks to inside information.

According to John Weaver's complaint, the sites must be held responsible for their deceitful operations, which allegedly include false advertising and actions akin to insider trading. Weaver is a user of both FanDuel and DraftKings, and according to the complaint his success playing their games has gone up significantly since it came out earlier this month that a DraftKings employee won $350,000 in a contest operated by FanDuel Inc., which led to both sites permanently banning employees from playing daily fantasy sports for money and announcing that they are conducting internal reviews.

"By the Defendants’ own admission, in daily fantasy sports games, such as those operated and conducted by the defendants, the single biggest 'edge' that any participant can have comes from having data and information," the complaint says. "The employees of DraftKings and FanDuel have access to an incredible amount of non-public data and information."

According to the complaint, the sites have "repeatedly, systematically, and continuously" marketed their games as skill-based activities comparable to chess or investing in the stock market, despite the fact that up until Oct. 6 their employees were able use "material, non-public, internal, proprietary, and valuable data and information to gain an enormous edge over competitors."

Meanwhile, the suit says that the sites initially attempted to explain away the aforementioned $350,000 in winnings enjoyed by a DraftKings employee playing FanDuel as "mere happenstance," before being forced to prohibit such practices in early October. According to the complaint, DraftKings and FanDuel employees and insiders won at least $6 million as the result of their "material omissions and misrepresentations."

"At all relevant times, Defendants misrepresented that their [daily fantasy sports] contests were contests of skill when, in fact, individuals with inside information were playing and winning," the complaint says.

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Lawsuits keep mounting for fantasy sites
Fantasy to nightmare

http://www.bostonherald.com/news_op...5/10/lawsuits_keep_mounting_for_fantasy_sites

Lawsuits aimed at fantasy sports betting sites DraftKings and FanDuel are mounting in federal court as the FBI launches its own probe and some states move to ban the embattled games.

One of the lawyers suing the heavyweights of the fantasy sports world said the lawsuits could be joined into massive multi-district litigation where hundreds or thousands of gamers could seek damages.

“That could be the situation,” said Alan Milstein, an attorney who brought suit yesterday in New York. “If enough suits are filed in different jurisdictions, there’s multi-district litigation. When they’re combined like that, the attorneys involved essentially appoint an executive committee and that committee runs the show.”

The popular fantasy sports sites that allow betting already face a number of class-action complaints in federal court. Some of those suits allege that Boston-based DraftKings and New York’s FanDuel were taking part in a type of insider trading by allowing employees to bet on their competitor’s site using valuable user information.

The New England Compounding Center fungal meningitis scandal is a recent example of a case that ended up in multi-district litigation.

As the daily fantasy sports giants prepare to fend off a wave of civil litigation, states have been declaring the games illegal. Last night, the Nevada Gaming Control Board decided that unlicensed, “pay-to-play” fantasy sports are illegal.

Nevada has skin in the game. The Herald reported last week that the sites, each valued at more than $1 billion, are expected to rake in a combined $110 million in entry fees per week in the early part of the NFL season, compared with the $50 million Las Vegas sports books are expected to generate from NFL betting.

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I sued Draft Kings and won $1 million dollars! It was easy and sooo much fun!

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Going to zero. At least as far as whatever VC morons invested money in this. And I think about a billion total went into the two of these.

The regulatory risk on this is just off the charts. And there are so many potential interest groups with potential motivation to lean on congress and state regulators. These sites have the sports leagues on their side, sure, but against it you have the gaming industry, Indian tribes, every single anti-gambling nanny (seen amongst both Republican and Dem constituencies), religious types - good fucking christ. This shit will be so illegal by this time next year.

I'm all for gambling being legal as a libertarian-ish sort. Would never play this crap, though. 95% of the money gets picked up by about 5% of players, who tend to be quants running heavy analytics and playing dozens of computer-selected teams every weekend.

Saw some article a little back about this Iranian guy who knew nothing whatsoever about sports just playing dozens of computer-generated fantasy teams every week and throwing 50k at it in total. Generally would expect to get 60k back every weekend.

The whole money-raising pitch was predicated on that ruling that these were "games of skill" and thus legal. Well yeah, legal within the contemplation of some idiot politician thinking "oh, fantasy sports. Sounds harmless."

But I would compare the dynamic to living in some HOA community that doesn't want you to have any flags or whatever on your house. You put a little one on and maybe no one hassles you. But if you erect a 300 foot tall car dealer-sized flag in the front yard? The authorities (such as they are) will be knocking. And advertising on literally every commercial break of every sporting event is pretty much that car dealer flagpole. One just imagines some politician in his living room and his little 7 year old saying "wow, daddy, did you hear that? Put $20 in and won $2,000,000! How can I sign up for this?"
 
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Preet Bharara is now involved. That's Game Over.

http://www.wsj.com/articles/u-s-prosecutor-probing-daily-fantasy-sports-business-1445400505

U.S. Prosecutor Probing Daily Fantasy-Sports Business
Preet Bharara’s office in New York is investigating whether the business model violates federal law

The New York federal prosecutor who shut down the U.S. online poker industry four years ago has now set his sights on the daily fantasy-sports business, according to people familiar with the matter.

U.S. Attorney Preet Bharara’s office in the Southern District of New York is investigating whether the business model behind daily fantasy-sports firms like DraftKings Inc. and FanDuel Inc. violates federal law, some of the people said.

The investigation is at an early stage, they added, and even as New York prosecutors try to build their case, senior Justice Department lawyers in Washington are undecided on whether daily fantasy-sports betting violates federal gambling statutes.

The Wall Street Journal has previously reported that the Justice Department wasinvestigating the industry, but the central role of Mr. Bharara’s office wasn’t previously known.

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http://digiday.com/brands/fantasy-fights-back-draftkings-fanduel-take-page-ubers-playbook/

DraftKings and FanDuel are both using grassroots approaches to fight potential bans against their businesses. FanDuel sent a petition to Nevada-based customers asking them to support them; DraftKings plans to do the same too. Its vp of content Corey Gottlieb told Digiday it also is looking into paid advertising, not unlike a political campaign, to make its case. The industry, flush with investment, has come under scrutiny from regulators after a Times article unearthed instances of insider trading. Nevada has already banned them from operating without a license.
 
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Shaun Goater said:
I'm all for gambling being legal as a libertarian-ish sort. Would never play this crap, though. 95% of the money gets picked up by about 5% of players, who tend to be quants running heavy analytics and playing dozens of computer-selected teams every weekend.

Saw some article a little back about this Iranian guy who knew nothing whatsoever about sports just playing dozens of computer-generated fantasy teams every week and throwing 50k at it in total. Generally would expect to get 60k back every weekend.

The whole money-raising pitch was predicated on that ruling that these were "games of skill" and thus legal. Well yeah, legal within the contemplation of some idiot politician thinking "oh, fantasy sports. Sounds harmless."
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Doesn't this make your case that it's a game of skill? The people who are best at it win all the money from it... not unlike any other game of skill. I can't win The Basketball Tournament and it's $1M prize because I'm not good enough at basketball. If it was a game of random chance, then the money would not be concentrated.

FWIW, a group of friends and are I doing exceedingly well at it - we're not playing it on nearly the scale that some of these guys do, where they're betting thousands a day, but our ROI is pretty incredible. We definitely all have an analytical bent, but quants = business degrees from OSU, etc and the "heavy analytics" we run are using basic player/team evaluations from PFF, Football Outsiders, etc. and then identifying players with match-ups we can exploit and putting together teams. It's not anything that a person with high-school level math couldn't do.
 
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BengalsAndBucks said:
Doesn't this make your case that it's a game of skill? The people who are best at it win all the money from it... not unlike any other game of skill. I can't win The Basketball Tournament and it's $1M prize because I'm not good enough at basketball. If it was a game of random chance, then the money would not be concentrated.

FWIW, a group of friends and are I doing exceedingly well at it - we're not playing it on nearly the scale that some of these guys do, where they're betting thousands a day, but our ROI is pretty incredible. We definitely all have an analytical bent, but quants = business degrees from OSU, etc and the "heavy analytics" we run are using basic player/team evaluations from PFF, Football Outsiders, etc. and then identifying players with match-ups we can exploit and putting together teams. It's not anything that a person with high-school level math couldn't do.
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None of which makes the case that the govt isn't getting their cut. Which, you know, they like.

Mili posted earlier that they're hosed because Nevada banned them... he they're the experts. Well... Yes in the sense that it threatens their market share. They are indeed experts at protecting that.
 
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It's all about disrupting, and these geniuses have moved beyond the stale Interweb 2.0 notion that they need to first disrupt and destroy an existing industry before the big payoff. Nope, these guys have figured out a way to reach directly into millions of rubes' bank accounts and disrupt the fuck out of them.
 
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ORD_Buckeye said:
It's all about disrupting, and these geniuses have moved beyond the stale Interweb 2.0 notion that they need to first disrupt and destroy an existing industry before the big payoff. Nope, these guys have figured out a way to reach directly into millions of rubes' bank accounts and disrupt the fuck out of them.
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What is glorious is that their greed is their undoing.

They could have sailed under the radar for years pocketing millions on word of mouth and well targeted Internet ads, but instead they decided to buy out all sports TV and radio programming and bombard sports fans in an effort to ramp sustainable gains into a massive valuation ahead of the eventual IPO. It's the same idiocy that occurred with poker ten years ago.

People never fucking learn that Vegas, eventually, will always win.
 
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