Lindsay Krieger
Professor Layish
Finance 311
29 October 2015
Ethics Essay: Insider Trading in the Fantasy Sports World
The number of people playing online fantasy sports has exploded leading to huge profits for fantasy sports websites. As stated in the Wall Street Journal, “Daily fantasy games are expected to generate roughly $3.72 billion in entry fees and $370 million in revenue this year” (Needleman and Terlep 2015). With that much money entrusted to a largely unregulated industry, the stakes are pretty high.
Suspicious activity among online fantasy sports employees has fueled internal reviews and outside investigations, which resulted in policy changes. Industry leaders FanDuel and DraftKings banned their employees and competitor’s employees
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Although Haskell may have possessed superior knowledge, he did not use it to his advantage. Superior knowledge is nonpublic material information that is used to base your decision. If Haskell had the superior knowledge (line-ups) when he could manipulate his entry you can make the argument he exploited his position and improperly used the superior knowledge provided it was material. In the Haskell situation, the line-ups weren’t useful since his entry was locked-in at the time he received them. Therefore, he did not use superior knowledge to …show more content…
In order to say Haskell’s situation is one of illegal insider trading, the information obtained must be non-public, material, and used for Haskell’s decisions in the game. Even if the information he possessed was deemed nonpublic and material, he did not have it until after his entry was submitted. Therefore, the information was not a factor in his lineup decisions and didn't create an advantage for him. However, placing these bets while working for the companies can create a situation similar to illegal insider trading if non-public material information is available and used to make line-up decisions (assuming the employee holds a position of trust or has a duty to keep the information