DraftKings Extortion Case Proceeds to Court

DraftKings will have to defend its stance in court after a New York federal court partially denied the company’s motion to dismiss an extortion action filed by former professional poker player Steven Jacobs. The ruling allows key allegations against the sports betting giant, like aiding and abetting assault and battery, to move forward, marking a significant development in the case.

The Plaintiff Alleges Data Misappropriation

Jacobs originally filed the lawsuit in April 2023, alleging DraftKings employees provided his personal information to third parties, resulting in him suffering harassment, threats, and a physical attack. The plaintiff claims his personal data fell in the hands of professional sports bettor Gadoon “Spanky” Kyrollos, setting off a disturbing chain of events.

The complaint reveals that in March 2023, a masked associate of Kyrollos waited outside Jacobs’ apartment for over three hours, assaulted him, and demanded $500,000 as part of an extortion scheme. Jacobs argues this attack was a direct result of DraftKings mishandling his confidential information.

DraftKings has denied involvement in this matter, arguing that Jacobs’ claims are meritless and should not proceed to discovery. The operator stressed that it found no evidence of a security breach that could have leaked the plaintiff’s personal data. However, the Eastern District of New York disagreed, at least in part, and allowed Jacobs to press his case. 

DraftKings Maintains Its Innocence

Judge Natasha C. Merle found Jacobs had sufficient claim to proceed with the lawsuit. However, the court dismissed the plaintiff’s claims of intentional or negligent infliction of emotional distress, and the case will solely focus on the accusations of negligent supervision and aiding and abetting assault and battery.

The plaintiff has sufficiently pled claims against DraftKings for aiding and abetting assault and battery.

Judge Natasha C. Merle

According to the court, it could not wholly dismiss Jacobs’ claims that DraftKings knew of this potential and did nothing to safeguard his information. The ruling means the company must move onto the discovery phase, where it may be forced to turn over internal documents and communications related to Jacobs’ claims.

If the two parties do not reach a settlement, the case could go to trial in late 2025 or early 2026. This outcome is less than ideal for DraftKings, as the company could face damaging revelations in discovery. The operator will likely continue to stand its ground as the case has garnered significant media attention and could lead to substantial reputational damage.