Scandal erupts in unregulated world of fantasy sports

Sports have rules – even fantasy sports.

The Internet’s two largest fantasy sports companies, FanDuel and DraftKings, are mired in scandal this week after allegations of what amounts to insider trading. But the multibillion-dollar industry in America is largely unregulated, leaving everyone scratching their heads as to what to do about it.

The New York Times reports both companies released statements after an employee at DraftKings admitted last week to inadvertently releasing data before the start of the third week of NFL games. The employee, a midlevel content manager, won $350,000 at a rival site, FanDuel, that same week. A spokesman for DraftKings acknowledged employees of both companies had won big jackpots playing at other daily fantasy sites using data obtained through their own sites and both temporarily barred their employees from playing games or taking part in tournaments at any other site.

Fantasy sports have grown drastically in popularity as of late with near blanket coverage on networks such as ESPN and mention in popular culture such as the TV show “The League.”

According to the NYT, critics have complained the setup is hardly different from Las Vegas-style gambling that is normally banned in the sports world. However, a 2006 federal law has allowed them to operate as fantasy play, deemed games of skill and not chance, thanks to lobbying from professional sports leagues.

Congress recently requested a hearing to explore the relationship between fantasy sports and gambling.

As of now, the games are legal in all but five states.

Read more from the New York Times.