Ethan Haskell, the DraftKings employee who found himself at the center of the daily fantasy sports “insider trading” debacle has been exonerated of any wrongdoing by an independent investigation.
Haskell was the mid-level data manager who, in late September, posted player data online before the start of the week’s NFL games. That same week, it emerged Haskell had won $350,000 playing on rival site FanDuel.
The data leak was accidental, but it inadvertently drew attention to the fact that DraftKings employees are permitted to play at FanDuel, and vice versa, while potentially being party to insider information that would give them a significant edge over other competitors.
However, a third-party investigation, commissioned by DraftKings and conducted by international law firm, Greenberg Traurig (GT), has cleared Haskell of any malpractice in relation to the incident.
According to a press release released by DraftKings this week, GT conducted extensive interviews with all senior management at the company and also scrutinized DraftKing’s own internal inquiry. During the process of its own investigation it “secured complete access to individuals, documents and systems at the Company and identified sources of information outside the company,” according to the release.
The conclusion: that Haskell received the inadvertently leaked data 40 minutes before the line-ups were locked up for the week, and therefore, could not have exploited the information to his own advantage.
“GT has received complete cooperation from the Company at every turn, and has been given unfettered access to all documents, systems, and individuals,” said the law firm. “GT’s independent investigation has confirmed that the Company’s initial findings were correct, and that the allegations that Mr. Haskell gained an unfair advantage in the $5M NFL Sunday Million contest due to his possession of the Company’s non-public information are without merit.”
However, question marks remain. The findings of the investigation were disseminated via a DraftKings press release, rather than through a full publication of the GT report, which in itself is indicative of a symptomatic lack of transparency within the industry in the absence of a regulatory body.
And while Haskell has been cleared, this does not mean that no DFS employee has ever profited from being party to insider information.
An investigation launched by New York Attorney General Eric Schneiderman will minutely scrutinize the business models of DraftKings and FanDuel, the two leaders of this new multi-billion-dollar industry. And meanwhile, news emerged this week that Preet Bhahara, US Attorney for the Southern District of New York and the man who brought down PokerStars and Full Tilt in 2011, has joined the fray.
Hopefully, these investigations will ultimately restore faith in the daily fantasy sports industry, rather than initiating a new Black Friday.