March 4, 2022 Sports Betting, Legal, Online

New Jersey fines DraftKings over proxy betting controversy

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To the company's knowledge, man had been placing sizeable New Jersey bets from Florida.

DraftKings has faced the ire of New Jersey regulators after it allowed a Florida man to place a bet via a friend residing in the Garden State. Mobile sports betting is legal in New Jersey, while efforts to bring it to Florida have been resoundingly defeated.  

The New Jersey Division of Gambling Enforcement fined the Boston-based gaming giant $150,000.  

As part of the settlement, DraftKings promised to step up action taken against so-called proxy betting, which is indeed forbidden under New Jersey regulations. 

Furthermore, it agreed that it would void the 21 outstanding bets the Florida culprit still had placed; the company would close his account for proxy betting; and, finally, it would provide better training to its employees so that instances of this sort can be avoided in the future. 

The bets in question were not paltry: the man’s DraftKings account dates back to 2019, and there were instances of him betting as high as $50,000 on a single event. While his identity remains unknown and is protected in the eyes of the law, it is known that he was a guest at the gambling company’s box at Super Bowl LIV in Miami in 2020.  

DraftKings became wise to the scheme after geolocation technology alerted the company to the fact that the account had been logged into in Florida and then again in New Jersey in a matter of minutes.  

Indicating a degree of culpability on the part of the gambling company, court documents revealed that DraftKings informed the man that he ought to wait at least two hours before logging into the same account in these separate jurisdictions that are over 1,000 miles apart from one another.  

In comments to the Associated Press, a representative for 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.” 

Besides this, the company had no further statements.

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