Fans are used to hearing the rhetoric from professional sports’ league offices. The No. 1 goal of the NFL is to “protect the shield.” Similarly, the NBA, NHL and MLB must protect and ensure the integrity of the game. There are clauses built into each league’s collective bargaining agreement that allow for discipline if a player violates that trust. Now the leagues must step up and protect the integrity of daily fantasy sites (DFS) after a possible insider trading scandal.
The NHL and MLB both have equity stakes in DraftKings. The NBA has an equity stake in FanDuel, and the NFLPA and 28 of the 32 NFL teams have deals in place with the leaders in DFS. DraftKings and FanDuel have shelled out insane amounts of money on advertisements and partnership deals, and now the leagues must address why they decided to partner with firms that seem have to lax controls on insider information.
MLB released an official statement on the scandal today:
This needs to be echoed by the NFL, NBA and NHL as soon as possible.
The problem is the leagues’ ownership stakes in the DFS companies. It’s hard to imagine that league leadership didn’t do proper due diligence on these organizations and their business practices. If it is illegal for an employee of a team or league to take part in fantasy sports, it’s logical that they should have asked DraftKings and FanDuel to apply the same rules.
The leagues have to take a strong stand, and do it now. They partnered — and invested money — with these companies. The leagues have the ability to force DraftKings and FanDuel to change internal rules on employees entering DFS contests. Until the technology for encrypting lineups so employees can’t gain an advantage is in place, the leagues need to force rules on the companies they technically own.
This doesn’t just extend to the leagues. Below are some major investors in DraftKings and FanDuel. (Note: This doesn’t include major advertising partners such as ESPN and MSN)
Major League Baseball
National Hockey League
Major League Soccer
Madison Square Garden Company
Legends Hospitality – Dallas Cowboys and New York Yankees
The Kraft Group – Robert Kraft, Owner New England Patriots
The Raine Group
Wellington Management Company LLP
National Basketball Association
Kohlberg Kravis Roberts
NBC Sports Ventures
Michael Colangelo is Managing Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.