FanDuel and DraftKings Policy

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Numerous games exist today that people can participate in. Daily fantasy sports refer to the class of games where players plan and build a squad of athletes. The athletes may come from a particular competition or confederation. Participants would earn points based on the actual performance of the players. The sports are organized in such a way that the users pay for entrance when they want to participate, and they are rewarded in their pre-determined squad according to the results of the competition. The players use their skills in the game, not luck, when building the teams and, therefore, are exempted from the Internet gambling act of 2006 that prohibits gambling and regulates security of ports. The two companies procured external legal representatives to explore the ways of strengthening and securing sensitive information.

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The FanDuel and DraftKings incorporation prohibited all their employees from participating in games where they receive money at the end. The joint decision required the employees to refrain from participating in any online gambling for money or fantasy games. They should not engage in sports permanently. The ban was imposed on the employees after one worker from DraftKings Incorporation leaked some inside information that he could use to influence the outcomes of the competition to his advantage. He won $350,000 the same week he erroneously printed and published the information. However, the DraftKings confirmed that the data disclosure was inadvertent and the employee did not benefit from it.

The mistake committedby the employee highlighted the need for extra control mechanisms that make sure they do not get access to certain company data. The workers, however, do not have greater knowledge that assists them to win. The company has policies that ensure no worker gains access to sensitive information. The guiding principles also check for the misuse of any data at their disposal. Employees only get access to information that they need to perform their duties. Those that obtain such data undergo scrutiny by the team that controls fraudulence. The confirmation by the DraftKings and FanDuel companies that they do not have evidence of information misuse dispels any suspicion of the use of the corporation data for their advantage.

Insider trading happens when someone, who has classified information or material that is deemed non-public about the stock, is involved in buying or selling. A person becomes an insider when he/she shares information about the business that is not in the public knowledge. The insider trading is legal according to the American 1993 Act on Security Exchange when information becomes public. The person at that time cannot use the information to increase profits illegally. It becomes illegal when the community is unaware of such information or material that makes an insider gain unjust turnover over the other investors.

The issue of the employee winning $350,000 the week that he published the sensitive company information was suspicious. People believed that the DraftKings employee took advantage of the business information to succeed. Given that he worked for tthe same corporation, he was both a ‘tippee’ and a tipper, since he leaked and gained an advantage over the others. He practiced insider trading, an illegality punishable by the American law.  

The management of the DraftKings and FanDuel came to his aid and clarified the information did not help him win the money. Further, the game requires one to apply special skills in building the athletes to win. The player does not depend on luck. The issue becomes a non-insider trading not punishable according to Internet Gambling Enforcement Act of 2006. The 1993 Act of Security Exchange American laws was not violated (Spapens, Alan, & Cyrille, 184).

While it was morally upright for the two companies, DraftKings and FanDuel to permanently ban their employees from participating in any fantasy sport, the decision had far-reaching effects to the employees’ affairs. The decision was arrived at to safeguard the public image of the two companies and restore confidence of the investors. The new policy, however, did not favor the employees as it barred them from fortune. If the DraftKings employee was honest and did not use the information to his advantage, the move by their employer was not considerate.

The American laws on insider trading such as the 1993 Act on Security Exchange has helped the fantasy industry and its stakeholders conduct themselves in an acceptable manner. The illegality of one having classified information and using it to gain advantage streamlined the industry performance making it a fair game.

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