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USC experts look at ‘insider trading’ allegations in fantasy sports

It’s a multibillion-dollar industry with giant prize pools every weekend, but new revelations about the business have some questioning its integrity

Daily fantasy sports sites like DraftKings and FanDuel will no longer be able to operate in Nevada without a gambling license, Nevada regulators announced Oct. 15. The move came a week after allegations of insider trading. Two USC sports business experts look at the legality of daily fantasy sports, which is being reviewed by the American Gaming Association.


A problem waiting to happen

Daniel Durbin

Daniel Durbin (Photo/USC Annenberg)

“This problem was waiting to happen. The lack of regulation in fantasy sports, which involve elements of gambling, has been an open door for people who would like to manipulate the system. So it’s not at all surprising that there are claims that this is happening. The gambling industry in Nevada and elsewhere have safeguards to prevent these sort of things from happening – and even those safeguards won’t always stop cheating. Fantasy sports grew so quickly with so little regulation that claims of manipulation were almost bound to appear sooner or later.”

DANIEL DURBIN
Director of the Institute of Sports, Media and Society at the USC Annenberg School for Communications and Journalism


Protections need to be put in place

“The biggest concern is a hypothetical situation where a DraftKings employee takes his or her insider information from their place of employment and uses that information to gain an advantage on a competitor’s site. Is it fair that a DraftKings employee can see what the daily fantasy site’s sharps are setting for their lineups, and then essentially copy said lineup in a FanDuel tournament? The answer is simple: No, it isn’t fair and protections should be put in place to make sure employees don’t have insider information or they shouldn’t be allowed to play on any daily fantasy sites.”

MICHAEL COLANGELO
Assistant director of the Sports Business Institute at the USC Marshall School of Business

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