DraftKings Tightens Procedures as Part of Agreement with NJDGE on Proxy Betting Case

DraftKings Tightens Procedures as Part of Agreement with NJDGE on Proxy Betting Case
By Lou Monaco
Fact Checked by Pat McLoone

Boston-based DraftKings will pay a $150,000 civil penalty as part of an agreement with the New Jersey Division of Gaming Enforcement (NJDGE) as a result of a case involving a Florida man and proxy betting that occurred in 2019 and 2020, according to court documents.

The man, who made “numerous large wagers,” according to documents, had his individual mobile sports betting account eventually closed by DraftKings in connection with at least one sports wager made in the Garden State.

At the time, the situation got the attention of the NJDGE, which launched an investigation into the matter.

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What Is Proxy Betting?

Proxy betting, which is a violation of New Jersey regulations, is having an individual who is not the actual account holder of a mobile sports betting account make wagers on behalf of the real account holder.

In the DraftKings case, another person allegedly made a bet or bets from New Jersey.

The violation was realized when the actual account holder accessed his DraftKings account while signed in from Florida. There was contact quickly thereafter with DraftKings allegedly representing the same party, except this time from a Garden State location. Often, that type of communication will raise red flags with operators. DraftKings said it utilizes “proprietary fraud detection systems” and other internal controls to identify potential account sharing.

“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,” DraftKings said in an official statement.

“Our extensive investigation into this matter revealed no evidence that the customer in question received authorization or guidance from anyone at DraftKings to engage in proxy betting.”

Terms of the Settlement

Under terms of the settlement, DraftKings voided 21 open wagers it notified the NJDGE about and agreed to submit “revised internal controls . . . that reflect the augmentations made to the training for player development personnel to enhance their ability to identify and prevent potential “one-user, one-account” and proxy play by players who live outside of New Jersey. Also, DraftKings will institute additional training for its employees.

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January Broke Records in New Jersey

New Jersey posted a new state total sports wagering handle record of $1.349 billion in January. The mark eclipsed the previous high of $1.303 billion, set in October 2021.

The number is even more impressive considering that many observers felt New Jersey handle numbers would suffer in light of neighboring New York beginning mobile sports

A new record was also set for mobile sports betting handle as the state posted a solid $1.21 billion, an increase of 9% from December ($1.11 billion) and up 36.4% from January 2021 ($886.65 million). The old record, also set in October 2021, was $1.18 billion.

Mobile represented 89.7% of the sports betting market in January.

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Lou Monaco had been East Coast Scene columnist for Gaming Today in Las Vegas since June 2019, covering the East Coast sportsbook scene with emphasis on NJ and PA. He also currently is a part-time writer for the high school sports department for NJ Advanced Media (NJ.com) in Iselin, NJ. Lou has over 30 years sports experience with previous stints at ESPN SportsTicker, Daily Racing Form and Oddschecker.

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