Thoughts On DraftKings Employee Data Leak “Scandal”

Most of you were probably put in a awkward spot this week when a friend, family member – or in my case – my dad was tweeting me about the “insider trading scandal” at DraftKings. I knew at that point it’d be useless to explain any of the backstory because perception was now reality. From now on, a segment of the population will always be convinced DFS games are rigged, the employees are shady, and it should be illegal.

Honestly, we shouldn’t be too concerned about people’s opinions of the DFS industry, or that the media took a story and ran with it. This is a free country after all. Remember how many ‘privacy’ hiccups Facebook had and the seemingly unapologetic response that often came from Mark Zuckerbergs’ mouth afterwards? Well … I’m sure after a few bitch slaps talks with investors, Mark handles the media much better now and Facebook’s (and Mark’s) billion dollar empire continues to grow.

Let’s remember that FanDuel, DraftKings and all the rest are still very early stage companies in an industry that is still in its early stages. Most, if not all sites, are managed by very young (and inexperienced) “CEO’s” … who, like the athletes we bet on, are going to make (lots of) mistakes. The big-wig venture capital investors likely sat down with the leaders of these respective companies years ago and explained to them that there’d be days like these. In fact, it’s certain that if DFS continues to grow at a rate that’s projected … you’re going to see more of these types of situations, and the investors know that – so should you as a player. If the venture capital guys don’t think the boys in charge can handle the job – they’ll find someone else to do it real quick. I’d expect everyone to get a free pass on this one, but any other situation like this and I’d bet a fairly sizable amount of money some new management is hired. How many glitches, #bendgates & mistakes has Apple made over the last 20 years?? …. yet they are the richest company in the world. Mistakes happen in business and in sports. The one’s that emerge from prior mistakes stronger, gain the trust/loyalty of consumers, and are ultimately successful.

The government breathing down the neck of the DFS industry is not good. Anyone that played online poker knows that in a blink of an eye the federal government can turn the light switch off. I don’t see that happening to DFS – but federal legislation could hurt the game as we know it today. We are all big boys in the DFS community, we don’t need the federal government to pass laws, impose (additional) taxes and regulate something politicians know nothing about. There’s far too much at stake for DraftKings & FanDuel specifically to allow corrupt insiders to compromise the integrity of the game, we don’t need a stiff politician in a 3-piece suit to tell us that.

One of the bigger cock pumps responses from a DFS site was Amaya Gaming (PokerStars/FullTilt/Victiv (StarsDraft) called for states to legislate DFS in light of the events this past week. PokerStars has been busy greasing up politicians for years in an effort to be involved in the regulated online poker market. Those efforts appear to be paying off after recently announcing PokerStars is returning to New Jersey. Instead of rubbing elbows with athletes & owners, PokerStars has been rubbing elbows with the scumbags people who actually make laws. In a ‘regulated’ DFS environment – look for the companies that grease politicians pockets the most to benefit the most. That’s how Washington works, right?

What I hope comes from this is better appreciation for the players that actually play on the daily fantasy sites. DraftKings & FanDuel have done an admirable job courting investors, leagues, athletes and partners – but all that wouldn’t be possible if it wasn’t for the average guy playing $2.00 50/50 games each week. The lifeblood of this industry isn’t the handful of “pro” grinders who makes a living playing DFS – it’s the average guy who just wants to sweat some games on Sunday before he/she goes back to work the next day. More needs to be done to make the $2 player feel comfortable & welcomed – because without them the games will dry up and be nearly impossible to beat in the long run. Much like golf has different sets of tees, DFS should work harder at creating contests where the playing field is less predatory if the grinder wishes to not swim with the sharks.

Right now, DraftKings & FanDuel really only have 2 class of players – beginners & non beginners. That’s like a cheap public golf course that has 1 set of tees and some lady’s tees that are haphazardly placed 20 yards down the fairway. DK/FD should be more like the country club – that has perfectly manicured tees for 4 or 5 different skill types. There should be “black tee” games for the pros, “blue tee” games for the well above average, “white tee” for the weekend player and “red tees” for the brand new players. As it stands now, DK/FD are forcing you to play from the black tees whether you like it or not. Instead of spending $500m on ESPN advertisements – hire some more developers so when those players sign up they aren’t turned off by losing every weekend.

Lastly, and if you’ve read this blog for any length of time – I slip this public service message in every once in a while because I once had money stuck on poker sites we all thought were rubbing money on titties had tons of money. The most important thing you can do as a daily fantasy player is only keep a cash balance on these sites that is enough to cover 1-2 days of entry fees. Since it’s so easy to deposit/withdraw – you should only have a small amount of money on these sites. Not to mention, with cash-back/reward credit cards – it’s more profitable to be depositing all the time, so you might as well take advantage of that. The exception being your first deposit on a daily fantasy site – you’ll want to deposit the max to take advantage of 1st deposit bonuses. Just remember, DraftKings & FanDuel are NOT BANKS – it’s your money, withdraw it.

Remember, there will be more days like these in the future if DFS continues to grow at current levels. Running ads on TV and offering massive guarantee prize pools is easy when you’re spending someone else’s money. The sites that gain the trust of players will be the one’s that ultimately succeed in any environment.

Good luck. I will get back to posting college football picks now. NBA too in a few weeks.

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