A daily fantasy sports customer in Kentucky has filed a lawsuit against DraftKings and FanDuel, accusing the companies of fraud because they failed to disclose that their employees had access to insider data the suit claims could help them help win millions at the expense of regular customers.
Adam Johnson, the plaintiff, is seeking unspecified damages on behalf of himself and others “similarly situated” after a controversy about insider trading erupted this week in the growing new field of daily fantasy sports. The federal lawsuit was filed in New York on Thursday and is proposed as a class action.
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An employee for DraftKings had won $350,000 in a contest on FanDuel – the same week that he had inadvertently leaked insider data about the
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FanDuel and DraftKings announced this week have hired outside law firms to review their internal controls against fraud and have since forbidden employees to play fantasy games for money.
With access to data about which players are the hottest to own that week, the theory is that insiders can use that information to capitalize on market inefficiencies and improve their chances of beating those without such access.
DraftKings declined comment through a spokeswoman. FanDuel didn’t immediately return a message seeking comment about the lawsuit.
The case is “going to have to survive a motion to dismiss,” said attorney Daniel Wallach, an expert in sports and gaming law. “FanDuel and DraftKings are going to be pointing to their terms of use, which say, `If you sue us, it can only be decided by mandatory arbitration and no class
Overview of the Case: The Securities and Exchange Commission claims Mark D. Begelman misused proprietary information regarding the merger of Bluegreen Corporation with BFC Financial Corporation. Mr. Begelman allegedly learned of the acquisition through a network of professional connections known as the World Presidents’ Organization (Maglich). Members of this organization freely share non-public business information with other members in confidence; however, Mr. Begelman allegedly did not abide by the organization’s mandate of secrecy and leveraged private information into a lucrative security transaction. As stated in the summary of the case by the SEC, “Mark D. Begelman, a member of the World Presidents’ Organization (“WPO”), abused
SEC alleged that Mark Cuban violated misappropriate insider trading. To be qualified as misappropriate insider trading, an individual wrongfully obtains (misappropriates) inside information and trades on it for her or his personal benefit. In this case, Cuban actually traded his shares based on the material inside information he was told and saved him $750,000 in losses. Wrongful misappropriation means violation of a fiduciary duty.
Defendants, Starboard Financial Services (“Starboard” or “Defendant”), by and through counsel, respectfully submit their brief in support of Defendant’s Motion to Dismiss Plaintiff’s Complaint.
COMES NOW, Defendant, Martin Katz, by and through his attorneys M. David Stallings, Esquire, Bryant S. Green, Esquire, and Niles, Barton & Wilmer, LLP, hereby files this Response in Opposition to Plaintiffs’ Motion to Dismiss Count 1 of Counter Complaint, and in support thereof states as follows:
Dr. Darren Sewell filed the lawsuit in 2009. He actually worked at both plans, Freedom Health and Optimum HealthCare. Both plans were both based in Florida. Dr. Sewell worked for them from 2007 to 2012.
Additionally, in a similar case, Steinberg Moorad & Dunn Inc vs. Dunn and Athletes First 136 Fed. Appx. 6; 2005 U.S. App. LEXIS 5162, Leigh Steinberg sued his former co-worker David Dunn, alleging that Dunn breached a
In 2006 AOL, inadvertently, made public personal information, of some 650,000 of its members. “The members filed suit with California federal district court, on behalf of themselves and a putative nationwide class of AOL members, alleging violations of federal electronic privacy law, 18 U.S.C. § 2702(a). A subclass of AOL members who are California residents also alleged various violations of California law, including the California Consumers Legal Remedies Act, California Civil Code § 1770.” (Doe 1 v AOL LLC, 2009)
The insiders bought nearly 113,200 shares of the company, causing this rise in stock price. Anheuser-Busch should sue Paul Thayer along with the rest of the insiders for repayment of any profits made on insider trading in Campbell Taggart, treble damages, as a multiple of the profit made, and for punitive and exemplary damages from Mr. Thayer and the rest of the insider traders. This is the reaction and the course of action that should be taken after Anheuser found out about the suit filed by the Securities and Exchange Commission.
On May 6, 2015, a motion to transfer pending actions to the U.S. District Court for the Central District of California was filed by a plaintiff on behalf of himself and others who paid $99.95 for the Pay-Per-View boxing match between Floyd Mayweather and Manny Pacquiao. The defendants in these cases are the two boxers, as well as Mayweather Promotions LLC, and Top Rank, INC. The plaintiffs filed suits after it was revealed the Manny Pacquiao, who was thoroughly dominated by Mayweather, failed to disclose a major shoulder injury before the match. The plaintiffs claim they would not have purchased the match if Pacquiao had disclosed of his injury, and are including all persons residing in California who purchased the fight in a subclass of plaintiffs.
DraftKings and FanDuel should not be allowed to operate because it is not a game of skill. The two companies both claim that their daily fantasy sport league games are of skill, while others such as the New York State Attorney General, Eric Schneiderman, believes it is a game of chance. In a statement to The New York Times, FanDuel said
Have you ever dreamed of what it would be like to own your own professional fantasy squad? Fantasy sports are a way to live out that dream. To make things easier, all illusion games are fundamentally the same, real number athletes and their real-living performances are used to generate full head for fantasy teams in fantasy conferences. For example, in a traditional fantasy league there is a set number of team owners. There is a set of rules that determine everything from team roster size, to scoring method, to strength of schedule. You and your fellow team owners are all in full control of your team.
These leagues have been lobbying to help overturn the old law and make sports wagering legal nationwide. The National Basketball Association is currently in talks to receive a 1% “integrity & rights” fee from all sportsbooks. The 1% fee not only allows the NBA to be compensated for its intellectual property, but also allows the NBA to control and monitor wagering data to keep the integrity of the game. (Liptak & Draper) By following the NBA’s model, the NFL has an opportunity to not only grow their fan base but also increase their revenue
A farmer in Louisiana, not an insider trading scandal, will destroy the multibillion dollar daily fantasy sports (DFS) industry. DFS is a rapidly growing segment of the online sports gaming industry where popular sites have grown by approximately 300% over the last year and are currently valued at over $1 billion (Miller & Singer, 2015). Leung (2015) describes the basic DFS tournament as a weekly tournament where professional athletes are allocated a value based on past performance. She says that participants are allocated a ‘salary cap’ and create a roster based on the sum of those athletes’ values, until they reach their cap. Leung also shows how a participant’s score is determined by the performance of their selected athletes that
Fantasy sports has evolved from its humble roots as the niche Dungeons & Dragons-esque intersection of sports fandom and statistical nerdiness. According to Fantasy Sports Trade Association market research conducted by Ipsos, there are over 36.6 million people playing fantasy sports in the United States and Canada and is a rapidly growing industry that generates over a billion dollars per year. The once maligned cult hobby has grown into an undeniable sports subculture, commanding regular coverage from all major sports networks, in addition to active online communities, podcasts, and even paid services catering to fantasy sports players.
I would like to start off by explaining what fantasy football is and how it works. Fantasy football is all about constructing a virtual team made up of NFL players. At the start of any football season, everyone who want to be in the fantasy league gets together to have a draft. These team owners proceed to pick NFL players that they want for their team. Depending on what league someone is in determines what type of players an owner can put on their team. Typically a starting team will consist of one quarterback, a couple receivers and running backs, a kicker, a tight end, and a team defense. The owner with the first pick starts, this is usually the manager of the league. After he picks a player from the NFL, the next owner will pick a player and it goes down the line until all the owners have one player on their team. To make this process fair the owner with the last pick gets the first pick in the second round of the draft and then it will go up the line to the owner who had the first pick, and after the owner with