DraftKings Denied Verbal Authorization for Proxy Betting

Boston-based daily fantasy sports (DFS) and sports betting operator DraftKings responded to reports related to a recent case of proxy betting. A spokesperson for the operator denied claims DraftKings director of sports book Johnny Avello had some kind of a verbal agreement with the Florida resident to engage in proxy betting.

$3 Million Parlay Bets Winning $8.5 Million

According to the initial report from SportsHandle, 2 identical parlay bets totaling $3 million placed on October 6 on DraftKings New Jersey mobile sports book, led to the bettor’s account being frozen on October 23, less than 3 weeks after the winning more than $8.5 million bets were placed.

The bettor is a Florida resident and placed the bet on his New Jersey account through a proxy located in the Garden State, the report revealed. And this was not his first case of messenger betting, as he used to bet in a similar fashion at Wynn in Nevada by the time current director of sports book at DraftKings Johnny Avello used to work there as an executive director of race and sports.

The Florida bettor further revealed that since Johnny Avello was hired by DraftKings in October 2018, he received verbal authorization from Mr Avello to place bets on his New Jersey DraftKings account via proxy betting, on the basis of which he took his business to DraftKings.

“We never authorized the customer in question to engage in proxy betting. Any claim by this customer that he received a verbal agreement from Johnny Avello to place out of state wagers on his New Jersey mobile account through a proxy is patently false.”

Spokesperson, DraftKings

DraftKings firmly refused to comment on matters of ongoing investigation from the regulatory authorities, but unlike in Nevada where the law does not prohibit messenger betting, proxy betting is illegal in New Jersey. In this aspect, the freezing of the customer account by DraftKings looks like the required step to formally protect the business from proxy betting rules violations.

The permanent sports betting rules of the New Jersey Division of Gaming Enforcement (DGE), Rule 13:69N-1.10, do not allow for any licensed operator to knowingly accept a wager from a person on behalf of another person. Licensees should not knowingly allow a person to place a bet by utilizing the account of another person. Even on federal level, proxy betting is a transmission of information from one state to another, and is a violation of the 1961 Wire Act, regardless of the amount of bet placed.

The bettor from Florida feels being burnt by the sports book operator, claiming betting companies allow proxy betting as long as the wagers are not winning. He further shared some details with the reporting media about some VIP practices from DraftKings, which was recently fined by the regulator in Iowa.

The bettor had to spend 6 weeks at home to recover from a surgery in mid-summer, and during his recovery period he got multiple phone calls from a DraftKings VIP host, who was interested in his intentions to place large bets. It is not clear, though, whether the company knew where his physical presence was, yet the bettor is strongly considering taking legal action against the operator, with which he had some history of large bets.

It will be up to the New Jersey DGE to decide whether funds and winnings can be seized or should be returned to the customer, but a seizure of $10 million would definitely create waves in the industry, the report concludes.