DraftKings Push Back on Illegal Betting Claim

Leading US sports betting operator DraftKings has rejected claims made in the US media that it has allowed a VIP customer to benefit from a side deal enabling him to place sports bets outside the state of New Jersey.

The dispute has arisen after a DraftKings customer alleged that his account was locked after placing a potentially successful NFL parlay bet worth $3 million. The customer claimed that he was authorized to place an out of state bet through his New Jersey mobile account via a proxy by the company’s sportsbook director, Johnny Avello. 

In a statement, DraftKings said that there had never been any authorization for the customer to bet through a proxy. The statement said that any claim that Mr. Avello had allowed the customer to place out of state bets using his New Jersey mobile account was false. 

Questions Remain

Despite the firm denial, questions remain. The absence of a clear agreement between Avello and the customer does not mean that the customer did not take advantage of a proxy. In fact, the DraftKings denial notably doesn’t address this issue, instead of focusing on the lack of a handshake deal. 

According to media reports, the customer said that DraftKings took the step of freezing his account in late October, approximately three weeks after he had staked the winning parlay bet. The bettor said that he had placed his bets in New Jersey using a proxy, which he said was a similar method to one he used to make bets with the Wynn betting company in Nevada, at the time when Avello worked there.

Currently, it is legal to make sports bets through a proxy in Nevada, where proxy services regularly advertise their services, but the New Jersey betting rules are much tougher.  

DraftKings Garden State Footprint

The state of New Jersey played a prominent role in the campaign to overturn the 1992 PASPA Act, a campaign that led to the momentous decision of the Supreme Court in May 2018. 

Since then, the Garden State, which had already done much of the initial work in setting up a legal sports betting sector, has become one of the driving forces behind the US sports betting market, and DraftKings have been there from an early stage. 

The former Daily Fantasy Sports (DFS) operator went live in the state in August 2018 through a deal with Resorts Atlantic City. Two years on, the DraftKings/Resorts partnership is one of the most significant in the industry, taking over $4.7 million in online sports betting revenue, second only to the FanDuel and PointsBet operation with the Meadowlands racetrack. 

Legal Action 

At this point, it seems that the customer is determined to push ahead with his claim. He has said that he is considering taking legal action against DraftKings. For their part, the company has steadfastly refused to discuss any details of the story, citing the ongoing legal inquiries:

“While this matter is under investigation by the appropriate regulatory authorities, DraftKings has no comment on that investigation.”

Reports suggest that the incident is being looked into by the state’s gambling regulator, the New Jersey Division of Gaming Enforcement (DGE). But both the Office of the Attorney General (OAG) in New Jersey and the DGE has refused to comment, and an OAG spokesperson was not prepared to confirm or to deny any investigation. 

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