DraftKings agrees $150,000 New Jersey settlement over proxy betting
Operator found to have allowed Florida-based punter to place bets through Garden State sportsbook
DraftKings has agreed to pay a $150,000 settlement to the New Jersey Division of Gambling Enforcement (NJDGE) for allowing illegal proxy betting to take place via its sportsbook.
The NJDGE’s action concerns a series of bets made by a Florida-based punter between 2019 and 2020, bets of which were all made via a proxy situated in the Garden State.
This form of proxy betting is illegal under New Jersey online gambling regulations.
The unnamed Floridan created a DraftKings account in 2019, betting $50,000 on average on single games or events.
According to documentation surrounding the case, released by the New York Attorney General’s office, DraftKings became aware the account was being used by a proxy when a Florida-geolocated sign-in was followed minutes later by a sign-in on the account geolocated to New Jersey.
The account holder was issued with a written warning, but he and the New Jersey proxy were verbally informed they could continue to bet provided there was a two-hour window between account access in Florida and the same account being accessed in New Jersey.
New Jersey authorities have claimed the Floridian was a guest of DraftKings at Super Bowl LIV in Miami, with the individual betting via his New Jersey proxy in the presence of, and with the knowledge of, DraftKings personnel.
It is understood DraftKings was also aware the bettor utilized this arrangement to make bets in Pennsylvania, when the state approved online sports betting in May 2019, via the same proxy arrangement.
The account used by the Floridian and his New Jersey proxy was suspended in October 2020. DraftKings denied all assertions made when media reports implicated its sportsbook director, Johnny Avello, as authorising both the bets and the verbal agreement allowing the proxy betting to take place.
In a statement provided by the Associated Press, DraftKings acknowledged its failings in the matter.
“We strive to continuously improve our systems to detect violations of our terms of use,” a spokesperson for the sportsbook operator said.
“In this instance, our systems failed to detect the violation of our terms of use. We have taken corrective action to address that,” DraftKings added.
Corrective actions undertaken include the voiding of 21 pending bets, closing the account for proxy betting, and commitments made by DraftKings to provide better training for employees in spotting potential proxy betting.