Another Twist in the Fantasy Lawsuit

Just over a month ago, the daily fantasy sports (DFS) lawsuit against FanDuel and DraftKings had begun and tensions between the company and its customers (fantasy sports players) were high after accusations of insider trading had surfaced. As of last week, a new twist that not even James Cameron or Steven Spielberg could have thought of has now been thrown into the mix. Two DFS employees have filed a lawsuit against over 50 companies that had invested into DFS companies or facilitated DFS gaming.  The logic behind the lawsuit is that these companies were investing and facilitating "illegal gambling" operations.  Per Sports Illustrated, the companies that are being sued include, but are not limited to:

• The National Basketball Association (NBA) , Major League Baseball Ventures (MLB), National Hockey League Ventures(NHL), and Major League Soccer (MLS)
• The Kraft Group (owned by New England Patriots owner Robert Kraft), Legends Hospitality (co-owned by Dallas Cowboys owner Jerry Jones and the New York Yankees), and MSG Sports and Entertainment (owned by New York Knicks owner James Dolan)
• Turner Sports, Time Warner, NBC Sports Comcast Ventures, 21^st Century Fox and Fox Sports Interactive Media
• Visa, MasterCard and American Express
• J.P. Morgan, Capital One Bank, Google Capital, Piton Capital and Scottish Investment Bank
• PayPal, Paysafe and Vantiv (payment processors)
• DraftKings, FanDuel and Jason Robins

Theses companies are some of the largest and most successful organizations in the world, so this should be interesting to see where this lawsuit goes. The legal claims behind the lawsuit include theories of negligence, breach of contract, and the felonious crime of racketeering.  If it is approved as a class-action lawsuit, it is expected that thousands, if not more, will join for reimbursements.  It will be interesting to see the defense of these companies against such charges. There will be more posts on this lawsuit as the case develops.

The Other Lawsuit..

Since most of my blogs have been about fantasy sports lawsuits, specifically football, I believe it is time to shed light on another lawsuit that involves football.  The Concussion lawsuit.  There has been a couple different lawsuits suing the NFL, the CFL, NCAA and certain helmet brands such as Riddell and Schutt.  This lawsuit has been brought to the public after research suggested that football players whom have suffered head injuries or concussions can lead to permanent brain damage and early onset of dementia. Some of these side effects include, but are not limited to change in personality, depression,  ringing in ears, chronic headaches, memory loss and suicidal thoughts/tendencies.  This has been studied from the professional level all the way down to high school. 
If this is your first time hearing this and you are interested in learning more about the NFL and concussions, there will be a movie featuring Will Smith and Alec Baldwin called "Concussion". In the film, Smith plays Dr. Bennett Omalu,  a Nigerian-born forensic pathologist in Pittsburgh who knows nothing about football when he performs the autopsy on a former NFL player. He soons learns how brain injury can be caused by playing football and the long-term effects that it has on the players.  It also shows the controversy that this started when the findings were revealed to the Roger Goodell and the NFL.  The movie is based on true events and uses real names of actual players who were used for research. The film hits theaters December 25, 2015.

NFL Player sues FanDuel

With a major lawsuit alleging daily fantasy sports providers DraftKings and FanDuel of insider trading about to go on trial, you can imagine the lawyers are ready for a tough legal battle ahead.  These allegations began when it was found that employees from DraftKings were using nonpublic information about fantasy players and using this to make "money-winning" lineups at their competitor's site FanDuel (due to employees not being allowed to play at their own sites) and vice versa.  This not only gave these fantasy players a competitive edge while making their lineups, but it also may have caused other fantasy players to lose money or win less than they should have.  This has cause a lot of bad publicity for both fantasy sports providers, but their troubles haven't ended there...
Now an article from The Washington Post states that NFL wide receiver Pierre Garcon of the Washington Redskins is suing fantasy football provider FanDuel on behalf of all NFL players.  In his lawsuit, Garcon claims "I am bringing this lawsuit against FanDuel for using my name, image, and likeness in both daily fantasy contests and through advertising on TV ads and infomercials. FanDuel has taken the liberty to engage in these actions without my consent and without proper licensing rights. As a result of these activities, FanDuel daily fantasy contests have shown increasing revenues leading to large profits. Therefore, on behalf of myself as well as any other players who are being treated unjustly, I chose to file a complaint.."
What Garcon is essentially stating in his complaint is that FanDuel is using his image, as well as other NFL players, to promote their website without the consent or any proper licensing or legal papers.  This is a problem because FanDuel are making LOTS of money off NFL player's images and performance like Garcons in their commercials and they aren't getting compensated for it.  Another complaint that Garcon had with FanDuel was that they were "knowingly and improperly exploit[ing] the popularity and performance" of Garcon and other NFL players without their consent.  All this leads to another lawsuit that will have to be settled in court for fantasy provider FanDuel.

A Fantasy Sports Control Agency

As of recent, daily fantasy sports providers such as FanDuel and DraftKings have been under public scrutiny after several lawsuits have been filed against them.  These lawsuits claim that employees of FanDuel and DraftKings used nonpublic information in order to create a more profitable fantasy line-up and used the line-up at their competitors website.  This is what is known as "Insider Trading" and so far DraftKings employees have won more than 6 million dollars by doing this.  It's safe to say there will probably be more lawsuits filed against these multi-billion dollar corporations, but the real question is how will they regain the fantasy player's trust?

Well according to an article in the Wall Street Journal, these fantasy sports providers plan on creating an outside control board known as the Fantasy Sports Control Agency to ensure ethical behavior in the industry. This control board is led by former Obama administration official, lawyer Seth Harris, (Deputy Labor Secretary from 2009-2014).  Mr. Harris explains "We’re going to develop a set of industry standards,” by "ask[ing] all of the companies that are engaged in cash games to establish controls, processes, and leadership that will ensure compliance with those standards."  Even DraftKings Chief Executive Officer Jason Robins agreed that this new control agency “will help our industry establish best practices” and will give a level playing field for customers.

So what would happen if these companies or their employees were caught cheating again?  Mr. Harris said they would have strict controls such as audits and an enforcement mechanism to deal with misconduct. Depending on the severity of misconduct, legal actions may be used as well.  The creation of this control agency wouldn’t affect the continuing investigation of the insider trading lawsuits filed against the companies, but it is the right step in moving forward for these companies and maintaining a healthy relationship with their customers.

Who plays fantasy football?

Online fantasy sports, specifically football, is one of the largest growing industries in the United States over the past 10 years.  Fantasy sports providers such as DraftKings and FanDuel have had cash inflows of BILLIONS of dollars annually.  Even with a recent lawsuit involving both company's employees being investigated for insider trading, they are still growing in popularity!  So you might be asking yourself, "Who the heck are all these people playing fantasy football?"  Posted below is a graphic that will provide you insight on the growing population of fantasy sport players.

Fantasy Football: Where Entertainment meets Money.

Ever since the invention of the internet, mankind has been seeking two things from this revolutionary technology; ways to entertain one’s self and ways to make money.   So began new forms of entertainment including the popular Netflix, Spotify and Pandora and different forms of ecommerce, ranging from email providers to online retailers and online news subscriptions.  One of the most popular forms of entertainment that begin with the internet was Fantasy Sports leagues, in particular football.  These leagues consist of a player hand selecting different football players from different teams who play different positions in hope to obtain more points than their competitors.  These leagues originally were played amongst friends, co-workers or acquaintances and would last the duration of the sport’s regular season. Most of these fantasy leagues were played for money, where a single commissioner would be in charge of collecting the fee and payouts at the end of the year. 

This would all change when companies like FanDuel and DraftKings introduced a new revolutionary idea; daily fantasy sports competitions.  This new type of fantasy competition allows you to play in new competitions and tournaments each week, allowing the player to choose new players in each league and receiving payouts if they win each week rather than at the end of a sports season.  It also allows the user to spend as much money and enter as many competitions as they please.  There are different types of tournaments such as first place wins all, top 10%, double up, triple up and 50/50 leagues so the user can comfortably assess how they would like to gamble.

All this seemed to be fair until earlier this month a lawsuit had been filed against both DraftKings and FanDuel for insider trading.  It was discovered that employees at DraftKings made over 6 million dollars by using nonpublic info in their databases to help them choose higher scoring players and compete in FanDuel (since they were not allowed to play at their own company) and vice versa.  This leads to these employees having an unfair competitive advantage when playing in these tournaments and could potentially be the reason you lost money on these sites! So if you think you might have lost a couple games playing on these daily fantasy sites, now might be the time to consider filing your own fantasy football lawsuit.

NFL talks Fantasy Football

Earlier this month, a class action lawsuit has been filed against daily fantasy sports providers DraftKings and FanDuel for insider trading.  The Securities and Exchange Commission defines illegal insider trading as “buying or selling [of] a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.”  So when fantasy football player Adam Johnson filed his lawsuit, he claimed that the companies “had screwed participants by allowing employees with access to inside information to play the games at rival companies.” Essentially employees at DraftKings and FanDuel were able to access company’s databases with the most recent data on every player in every contest and able to use this nonpublic info to make better and higher-scoring line-ups. They would then take this information and use it at their competitor’s website to win money.  It’s been reported that employees at DraftKings have won at least 6 million playing FanDuel. 

With fantasy football being the most popular fantasy sport on both sites, NFL commissioner Roger Goodell has expressed his and the NFL’s concern over the daily fantasy sports controversy. Goodell made a point that since theses leagues are based on picking individual players from different teams and putting them together, that “It is hard to see the influence that it could have on an outcome of a game.” He then states “And it’s not based on the outcome of a game, which is what our biggest concern is with sports betting. So our position continues to be that way. But we recognize some states consider it legal, and some don’t. We’ll follow that law.” Daily fantasy football leagues are legal in all states with the exception of Arizona, Iowa, Washington, Louisiana and Montana.

Both DraftKings and Fanduel have spent millions of dollars on advertisement at NFL stadiums and live television broadcasts. Although the NFL doesn’t directly have any financial ties to these fantasy sports provider, 28 of the 32 NFL teams have either advertising or sponsorship deals with DraftKings or FanDuel. When Goodell was asked if the league would reconsider allowing teams to accept ads or sponsorships from these companies, he responded “Consumer protection and making sure companies operate responsibly is important to us” he then states “We’re going to want to make sure that our fans are protected, the consumers in general are protected, and that we expect anyone that’s involved in any way — whether this is an advertiser or a sponsor or any other relationship — we do that in a responsible fashion. And I hope they will do that.” In general, NFL commissioner Goodell does not believe the scandal will compromise the integrity of the league.