DraftKings Hit With $150,000 Financial Penalty for Proxy Betting in New Jersey

  • The NJ gaming regulator has reached a settlement with DraftKings over the proxy betting
  • DraftKings allowed a Florida man to wager through a friend located in New Jersey
  • The man was known to DraftKings as a high-stakes bettor, sometimes wagering $50,000 at once
  • The fine has added to DraftKings’ list of woes, which also includes a plummeting share price 
Penalty on calculator
DraftKings must pay a $150,000 financial penalty for allowing a man in Florida to wager through a friend in New Jersey. [Image: Shutterstock.com]

A large price for DraftKings

DraftKings has found itself on the wrong side of gaming regulation in New Jersey, costing the sportsbook operator a hefty financial penalty of $150,000.

allowed a Florida man to make online sports wagers from home

The New Jersey Division of Gaming Enforcement (NJDGE) announced news of the fine on Wednesday this week. According to the regulator, DraftKings allowed a Florida man to make online sports wagers from home by having a friend in New Jersey place the bets for him.

The NJDGE has reached a settlement with DraftKings over the illegal proxy betting incident. In a statement, DraftKings said: “In this instance, our systems failed to detect the violation of our terms of use,” adding that the firm had now “taken corrective action” to address the issue.

Getting around the system

As confirmed by the NJDGE, the Florida man involved in the incident often bet large sums of money, on certain occasions wagering as much as $50,000 in a single bet. He created his DraftKings account in 2019 and supposedly attended the Super Bowl in 2020 as a guest of the sportsbook operator.

logged in via a Florida location and a New Jersey location in a matter of minutes

DraftKings issued the man with a written warning after noticing that his account logged in via a Florida location and a New Jersey location in a matter of minutes. However, the company also said it would allow the man and his friend to proceed with the proxy betting as long as they logged into the account at least two hours apart.

During his time at the Super Bowl in 2020, he even bet on the game through his New Jersey friend with the approval of DraftKings staff in his presence. The regulator also said DraftKings knew the man had used the same proxy betting system to make wagers in Pennsylvania.

Adding to DraftKings’ woes

Despite cementing its place as one of the giants of the US betting scene, DraftKings has had a turbulent time of late. Over the past 12 months, the operator’s shares have fallen around 66% to $20.91 due to missed financial targets, lawsuits, and regulatory punishments.

Most recently, stockholders filed two new lawsuits over the operator’s pending $1.56bn takeover of Golden Nugget Online Gaming. The pair of complaints allege that the former Golden Nugget chairman and CEO Tilman Fertitta agreed to stock exchange terms that unfairly benefited him.

The lawsuits followed an investigation into the deal launched by US class action law firm Monteverde & Associates in December 2021. The firm wants to assess whether the agreement violates securities law.

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