Ethics Case Study Discussion: DraftKings
Backgrounder
DraftKings is an online fantasy sports provider that allows players to enter daily and weekly contests. Players earn money by competing against other teams on the site.
In September 2015, during the third week of the National Football League season, an employee of DraftKings won $350,000 playing a fantasy contest on a rival site, FanDuel. The employee, just prior to that contest, inadvertently released information to the public that listed the DraftKings site-wide player selection data about the most popular players being drafted out of the fantasy teams during that week.
Information in this case study is based upon publically available information. Compli, Mr. Ruden and Ms. O’Donnell are not affiliated with the companies or individuals mentioned below.
While no criminal indictments have yet been issued, there is speculation that the employee used insider information to gain competitive advantage. This obviously didn’t go over well with other players who thought that there was insider training going on, or an ethical breach of confidential information. The investigation is ongoing.
Case Discussion
Rick's View:
DraftKings took immediate action by stating that employees can no longer play fantasy sports on any site, and issued statements that integrity is of the utmost importance. They have a lot of high stakes investors like the NFL and Major League Baseball, so there is a lot of scrutiny. Even a hint of these allegations and violations can cause reputation and brand damage.
Ambyr's View:
Damage control is never fun. Under other circumstances, the company would be able to focus their time and resources on innovation and growing their business. When under investigation for possible ethics and compliance violations, the company has to focus not just on responding to the investigation, but also to developing and strengthening a corporate compliance program under great pressure and scrutiny. Then, the company has to convince the public and investors (and others) that they have a solidly run company. Future success may be dependent on the company’s ability to regain trust.
Meet our panel:
Rick Ruden
Rick is our Senior Product Marketing Manager here at Compli, and our resident subject matter expert when it comes to the topic of Ethics and Compliance.
Ambyr O'Donnell
Ambyr advises early stage technology companies preparing for an acquisition, IPO or scaling for high growth. She has served both public and private technology companies, most recently serving as Vice President and General Counsel of Tripwire, within the cybersecurity space. Ambyr’s practice focuses on corporate law, mergers and acquisitions, technology licensing and general business matters.
Advice for Leaders
Ambyr's Advice:
To keep from becoming a bad headline, like DraftKings has become, I recommend that companies be intentional about the ‘tone at the top’ of the organization regarding workforce compliance. Make sure your executives understand their ethical obligations and compliance expectations. Make sure that your executives articulate those expectations, early and often, to employees. A strong compliance program will be reinforced personally by the executive and management teams. In addition, periodic reminders, trainings and certifications may be automated. An automated compliance management solution can be tailored so it is appropriate for your company’s industry and business culture, and it will help engrain workforce compliance considerations into the day-to-day operations of the company.
Rick's Advice:
If an employee said they didn’t know that what they did was wrong, then either there was no way to track compliance management, or the compliance policy has not been initiated, managed or articulated. A robust automated compliance solution can make all the difference.
Join Rick and Ambyr dissect this case further, along with other ethics enforcement case studies in our on-demand webinar
