Man Sues DraftKings Over Allegations It Aided $500K Gambling Extortion Attempt 

A New York man is suing U.S. gambling operator DraftKings, alleging that someone at the company leaked his personal data to an irate gambler. Meanwhile, that gambler says the plaintiff owes him $500,000 in profits from an account sharing scheme they agreed upon.

The plaintiff is known as John Doe in court documents filed by lawyer Steve Jacobs of Herbert Smith Freehills Law Firm. Doe alleges that he was the victim of an extortion campaign from professional gambler Gadoon “Spanky” Kyrollos, aided and abetted by DraftKings. 

The lawsuit claims that Doe was at a New York City subway station in March 2023 when a masked man accosted him. The man assaulted him and threatened to kill him if he did not turn over $500,000 to Kyrollos. He reportedly told Doe that Kyrollos knew high-up people in DraftKings that could provide Doe’s address and other details.

However, in a turn of events reminiscent of a legal thriller, Kyrollos hit back with his own account of the story this week.

He says the John Doe in the filings is actually Jacobs, representing himself. Kyrollos says he and Jacobs previously formulated an agreement whereby Kyrollos would place wagers using Jacobs’ DraftKings account, as Kyrollos is banned from the platform. They would then split the profits.

This is a scheme known as “bearding” among online gamblers. It is against DraftKings’ terms of service and could be considered fraud under some state gambling laws.

The plan initially worked, and Kyrollos’ winning bets went undetected for months. However, Kyrollos says that Jacobs refused to pay out when the winnings racheted up to more than $500,000. 

The Lawsuit 

The lawsuit was filed on June 25 on behalf of Doe, represented by New York-based lawyer Jacobs. Who may or may not be both parties.

It alleges not only extortion, but also gross privacy breaches by DraftKings. It says that Kyrollos told the plaintiff he could easily find all of his contact information via a contact at the Boston-based gambling operator. 

“DraftKings loaded the proverbial gun, and put it in Spanky’s hand,” the suit says. “Plaintiff’s life was never the same.”

It seeks $1 million in damages from DraftKings, as well as court and lawyer fees. 

The Response 

DraftKings has completely denied all the allegations. It has also filed for the court to dismiss the complaint as baseless. 

“DraftKings has found no evidence of anyone at DraftKings providing the plaintiff’s information to a third party, and DraftKings denies acknowledging any such ‘security breach’,” a spokesperson said, speaking to the New York Post. 

“Nor has DraftKings uncovered any improper activity by a DraftKings employee, or any activity on plaintiff’s account, relating to the allegedly unauthorized change of the email address associated with plaintiff’s DraftKings account. DraftKings is moving to dismiss the complaint by June 28.”

Meanwhile, Kyrollos, who was not named in court documents, published a lengthy account of his side of the story on social media. 

He sensationally claimed that not only is the plaintiff John Doe actually Jacobs representing himself, but also that Jacobs is a gambling addict who owes millions to bookies and other bettors on top of what he owes Kyrollos. 

The professional gambler claims Jacobs stalled him on paying out the agreed returns when he won $500,000 through high stakes betting at DraftKings using Kyrollos’ betting knowledge. He said Jacobs told him DraftKings was responsible for stalling the payout. 

Bluffing Bets

Kyrollos continued to say that he “bluffed” Jacobs by telling him he could get his betting information from an insider at DraftKings, to see if the lawyer would change his story. 

“My strategy of following up on my suspicion was a test for Steve Jacobs. I told him — bluffing —  that I had the ability to receive information on the status of the payout from DK (I obviously do not have that power, nor am I connected with anyone who does have that power, given I am banned from betting at DK!,”) Kyrollos wrote.

When Jacobs didn’t change his tune, Kyrollos says he encouraged the lawyer to report the delay to the New York Gaming Commission. Which he did, and he sent the email to Kyrollos as proof. 

Freedom of Information

However, Kyrollos filed a freedom of information request to the New York gambling regulator for the full email thread – which revealed an interesting twist.

Kyrollos says that minutes after Jacobs screenshotted his complaint and sent it as proof, the lawyer sent a second email to the NYGC saying the first email was a training email sent by mistake and should be discounted. 

“I believe one of three things happened: Either 1) Steve Jacobs wound up stealing the money, or 2) he gambled it all away or 3) he just booked our bets himself (instead of placing the bets at DK) – hoping we would lose,” Kyrollos wrote. 

“The evidence seems to show that Steve Jacobs is either a sick compulsive gambler or a thief. My bet is on both. Either way, he needs help.”

Jacobs has yet to comment on the story, although he has reportedly been fired by his former employer Herbert Smith Freehills. The court is set to decide if they will dismiss the case against DraftKings or not by the 29th of July.

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