DraftKings gets $150K fine by New Jersey regulator for allowing proxy betting

The New Jersey Division of Gambling Enforcement has fined DraftKings $150,000 for allowing a Florida man to make online sports bets from his home by having a friend who was present in New Jersey place the bets for him. 

In an action made public Wednesday it was revealed the New Jersey regulator has reached a settlement with Boston-based DraftKings concerning the so-called proxy betting incidents that are forbidden under state regulations. 

The operator also agreed to a series of corrective actions, including voiding 21 bets the Florida man had made that were still pending, closing his account for proxy betting, and better training its employees to recognize and prevent such activity. 

The Florida man is known as a big-time gambler, who created an online DraftKings account in 2019, and it was not unusual for him to bet $50,000 on a single game or event. The operator became aware that the man’s account was being accessed by a proxy user when it was signed in from Florida, and then New Jersey within minutes. The company issued him a written warning.  

However, it also verbally informed the man and his friend that they could still do so provided the friend waited at least two hours after the Florida man had last used the account in order to make a bet, according to court documents. 

New Jersey authorities also said the Florida man was a guest of DraftKings at the Super Bowl in Miami in February 2020 from their company suite, during which he bet on the game through his friend in the presence of and with the knowledge of DraftKings personnel.

Regulators also said DraftKings was aware of the Florida man and his friend using the same arrangement to make bets in Pennsylvania once that state approved DraftKings to offer online sports betting.

As reported by The Associated Press, DraftKings said: “We strive to continuously improve our systems to detect violations of our terms of use. In this instance, our systems failed to detect the violation of our terms of use. We have taken corrective action to address that”.