Draftkings Is in the News – for the Wrong Reasons

DraftKings has been at the top of the sports betting industry for some time now. But once in a while, it suffers from unfortunate setbacks and finds itself in the headlines for all the wrong reasons. In particular, DraftKings is now under fire after it froze a Florida punter’s New Jersey sports wagering account in late October.

The punter in Florida had placed $3m parlays through messenger betting before his account was frozen. The man, who is now outraged, has claimed that he is considering legal action against the well-regarded sportsbook. The $3m worth of parlays was placed on behalf of the unnamed Florida man by a proxy-based in New Jersey. However, DraftKings’ terms and conditions of use state that a punter is not allowed to let another individual use their account to place bets.

 

The specifics of the DraftKings bet

DraftKings denied allegations suggesting that they had issued one of its VIP customers special permission that enabled him to place wagers outside New Jersey’s state lines. The VIP customer whose name has been withheld claims that he received the verbal go-ahead directly from DraftKings’ director Jonhhy Avello. The customer claimed that Avello had previously granted him similar special access in other instances, specifically when Avello was the executive director of race and sports at Wynn Las Vegas.

Whether the claims are true or not, this kind of special messenger betting is allowed in Nevada, but New Jersey has tougher measures in place and would therefore never permit messenger betting in any instance. But even in Nevada, messenger betting or the use of an out of state proxy to place wagers is only allowed as long as there’s no financial compensation to be gained.

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The punter is currently contemplating taking legal action against the sportsbook because he feels aggrieved since his account was shut down weeks after he had successfully placed $3m worth of parlays. The unnamed man-made one bet valued at $2.93m and another totaling $72,490.57. In total, the parlay had a potential profit of an impressive $5.6m. The New Jersey Division of Gaming Enforcement takes such accusations quite seriously as such claims no doubt impact the integrity of the market as a large.

Any seasoned punter or anyone in the gaming business in New Jersey can tell you that not a single sportsbook worker or executive has that kind of power to allow messenger betting in a state that vehemently prohibits it. Not even the Governor has that kind of muscle to supersede state regulations. Any attempt to undercut federal law would jeopardize DraftKing’s license-ship in easily the best and most vibrant betting market in the country.

Messenger wagering is also a clear violation of the federal Wire Act since the act permits betting information to be transmitted across state lines for purposes of real cash wagers, which is illegal. As such, it seems implausible that Avello authorized such a transaction. If New Jersey lawmakers discovered that Avello did indeed allow the transaction to take place, they would impose severe and serious penalties on DraftKings.

 

New Jersey gaming still on a high

But it hasn’t all been bad news for DraftKings sports betting empire as we’ve discussed here. Just recently, DraftKings announced an exclusive partnership with Bryson DeChambeau, who is set to become the very first active professional golfer to serve as the face of DraftKings golf. It also recently became a member of the International Betting Integrity Association as we’ve discussed here. Online gambling also continues to soar year comes to a close, which is excellent news for all sportsbooks.

The online gambling and sports betting market continue to record impressive results month after month, and October was no different. Online casinos and poker licensees in the Garden State generated revenue of more than $93 million in October, more than double the amount reported during the same period last year and almost 6 million dollars higher than the state’s previous monthly bets which were recorded in August during the lockdown.

DraftKings/Resorts Digital was second on the leader board managing to generate $14.6m. Borgata/BetMGM trailed behind DraftKings with $4.25m, but it was FanDuel that outlasted and outplayed the competition at the top of the industry with an excellent betting revenue of $29.8m.

The betting market will get an even bigger boost as long as betting continues to become accepted statewide. If states choose to ease restrictions on college sports bets, the industry could grow even more than it has grown today. Things are already looking bright though as states continue fight to have constraints on college sports bets removed.

Case in point, New Jersey recently introduced an in-state betting bill in readiness for March Madness and 2025’s NCAA Men’s Basketball Tournament. New Jersey, alongside many other states that currently enjoy legal sports betting, has some strict regulations in place against bets on college sports held in the state or involving state teams.

Lifting this ban will be instrumental for the growth of the industry. The 3 weeks in which March Madness games are held are typically some of the most profitable in the year for sportsbooks such as DraftKings. A prolonged in-state ban on college games, therefore, is costing legal sportsbooks millions upon millions of dollars in the handle.

 

Final Thoughts

The New Jersey Gaming Division is responsible for providing the NJ sports betting market with the proper and necessary oversight to make sure that the holders of sports betting licenses in the state abide by the regulations established.

This is not only important but also critical if the industry is to keep succeeding. It is the Gaming Division’s job to guarantee that all the parties are playing fair and by the rules. If any of the rules ate broken, the offenders need to be punished heavily. So even though the claim by the unnamed punter sounds preposterous to most, it is still a very serious accusation that DraftKings should handle to the best of its ability.

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