DraftKings Disputes Claims in $3M Parlay, Expert Says Bad Look for US Sports Betting

Posted on: November 9, 2020, 11:55h. 

Last updated on: November 10, 2020, 05:31h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

The US sports betting industry, just 30 months removed from the US Supreme Court’s landmark ruling that opened the door to expansion, may have its first major controversy in the post-PASPA era. That’s thanks to last week’s blockbuster report that a bettor claimed DraftKings previously allowed him to wager from out-of-state by using a proxy in New Jersey.

DraftKings
A bettor makes a wager at the DraftKings retail sportsbook, located at the Resorts Casino in Atlantic City, NJ. (Image: The Press of Atlantic City)

That story, which SportsHandle broke last week, came out after the bettor, speaking on the condition of anonymity, told the media outlet he was contemplating legal action after DraftKings suspended his account.

The bettor is the individual who made $3 million in parlay bets in early October on the Green Bay Packers to win the NFL’s NFC North Division and for Georgia and Alabama in college football to win the SEC East and West divisions, respectively. That wager was reported by several media outlets, and sports betting reporters on Twitter noted its the size, unusually large for a parlay.

Boston-based DraftKings has said the matter is under investigation by authorities, but did not reveal which agency is conducting it. A spokesperson for the New Jersey Attorney General’s Office, which oversees the Division of Gaming Enforcement, told Casino.org it would not comment.

Not What States Intended for Sports Betting

As Richard Schuetz, a longtime gaming industry executive who also served on gaming commissions in California and Bermuda, told Casino.org, “There’s more that we don’t know than we do know” at this point.

And that will likely be the case for some time, as few investigations become public affairs, at least not until a decision is made in the case.

But one thing that is known right now, Schuetz said, is how this looks for the industry.

Even if it were the case that technically no laws were broken along the Daisy chain, the optics of this are not good for the sector,” Schuetz told Casino.org. “In my opinion, I don’t think anybody intended a guy living someplace else, working through an agent, to make huge bets… Because that’s going to attract all kinds of nasty attention. That’s going to give the enemies of sports betting ammunition. That’s going to get those that believe we need federal oversight of betting… some ammunition.”

And given the amount of money that’s involved in the matter, Schuetz thinks it’s highly likely federal investigators would at least check it out as well.

DraftKings Disputes Proxy Claim

According to the SportsHandle report, the bettor switched to DraftKings about two years ago when the fantasy sports and wagering outfit hired Johnny Avello as its director of race and sportsbook operations. He also claimed Avello gave him verbal permission to place online bets with DraftKings through a proxy. Proxy betting is where an individual places a wager on behalf of another person.

Sports betting is not legal in Florida, and per New Jersey’s sports betting law, sportsbooks are required to reject bets from anyone “who is an agent or proxy for any other person.”

The company issued a statement to Casino.org saying, “While this matter is under investigation by the appropriate regulatory authorities, DraftKings has no comment on that investigation.”

However, a representative for the company did dispute the customer’s claim.

“Johnny Avello… did not have a verbal agreement with this customer to place a bet on his sportsbook app from New Jersey from outside the state using a proxy,” the representative told Casino.org.

In addition, the representative said DraftKings does not accept any bet that it doesn’t intend to pay out, refuting some claims on social media that the customer’s account was frozen because he was winning.

“That’s not the case. $3 million is not going to make or break our company,” the representative said.

While the bet itself wouldn’t be graded until the end of the NFL and college football regular seasons, its chances for success took a big hit over the weekend, as Georgia lost to Florida. With that loss, the Bulldogs are now in second in the SEC East, a half-game behind the 4-1 Gators.

In order for Georgia (4-2) to win the division, the Bulldogs will need to win their last four games, while Florida must lose two of its last five games.