If you’ve recently watched professional sports on television, you have undoubtedly been exposed to commercials for daily fantasy sports leagues. Sites like FanDuel and DraftKings have spent upward of $300 million on advertisements that promise fast-paced games with payouts reaching $1 million. The fantasy sports industry has grown rapidly in recent years, with 58.8 million active players in 2015, comprising 18 percent of all U.S. teens and 14 percent of adults. Placing money on your fantasy team at the end of the season has been commonplace for years, but the recent development of daily leagues allowing players to make bets and receive payoffs in just a single day has been the subject of recent criticism. Detractors allege that these sites violate federal gaming laws, glorify gambling and can be easily exploited by players with insider information. For daily fantasy leagues to remain a valid source of entertainment to the U.S. public, the industry must embrace regulation to ensure fair and equitable play.  

The lack of transparency within the fantasy sports industry has come under particular scrutiny after a DraftKings employee allegedly released confidential data on team rosters and subsequently won $350,000 on FanDuel. Outraged players have accused the employee of having insider information that gave him an unfair advantage, and the New York Attorney General has launched a formal investigation into the data practices of the two sites. Others point to false advertisements where daily leagues make their high-stakes competitions seem easy and accessible to the standard player, when in reality they are not. A recent report by the Sports Business Journal found that during the 2015 MLB season, 91 percent of profits on daily fantasy sites were won by just 1.3 percent of users. Allegations are also surfacing that DraftKings executives advised customers on how to circumvent state laws that expressly prohibit fantasy sports betting.

All of this strongly underscores the need for responsible legislation in a widely unregulated industry that rakes in billions of dollars in revenue every year. Users must be assured that none of their competitors have access to data that can be used to gain an unfair advantage. Regulations restricting access to sensitive user information and prohibiting employees at fantasy sites from participating in daily leagues are important steps in regaining consumer trust in the industry.

However, it is also important to not stifle a very popular form of competitive entertainment by over-regulating daily leagues. Unlike many examples of traditional gambling, fantasy sports betting involve a good deal of skill and legitimate analysis, exempting it from a 2006 bill outlawing general sports betting nationwide. Given the popularity of fantasy sports websites, it would make no sense to ban them outright, but an increased focus on transparency and fairness is paramount.

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Email Anand Balaji at [email protected].