What is the $500,000 extortion lawsuit against DraftKings all about?
The sports betting giant DraftKings is embroiled in a high-stakes legal battle that has captured the attention of the gambling industry and beyond. At the centre of the controversy is a $500,000 filed by former professional poker player Steven Jacobs, who alleges that DraftKings mishandled his personal information, leading to a violent attack and death threats. The case, which has taken several twists and turns since it was first filed in April 2023, is now proceeding to court after a New York federal judge partially denied DraftKings’ motion to dismiss the lawsuit. Here’s a detailed breakdown of the case, its key allegations, and what’s at stake for DraftKings.
Alleged extortion scheme
Steven Jacobs, the plaintiff in the case, claims that DraftKings employees leaked his personal information to third parties, including professional sports bettor Gadoon “Spanky” Kyrollos. According to Jacobs, this breach of privacy set off a chain of events that culminated in a violent extortion attempt.
In March 2023, Jacobs alleged that a masked associate of Kyrollos waited outside his apartment for over three hours, physically assaulted him, and demanded $500,000. Jacobs claims that the attacker explicitly stated the money was to be paid to Kyrollos. The lawsuit argues that this attack was a direct result of DraftKings’ negligence in safeguarding his confidential data.
Jacobs’ complaint also accuses DraftKings of aiding and abetting the assault and battery by failing to prevent the misuse of his personal information. He further alleges that the company locked him out of his account and stonewalled him when he tried to confront them about the security breach.
DraftKings’ defence
DraftKings has vehemently denied the allegations, calling them “implausible and baseless.” The company maintains that there is no evidence of a security breach or any involvement by its employees in the alleged extortion scheme. In a statement, DraftKings stressed that the plaintiff’s claims are based on “information and belief” rather than concrete evidence.
The sports betting giant filed a motion to dismiss the case, arguing that Jacobs failed to provide sufficient proof to support his claims. However, in a significant development, Judge Natasha C. Merle of the Eastern District of New York partially denied DraftKings’ motion, allowing the allegations of negligent supervision and aiding and abetting assault and battery to proceed. The court dismissed Jacobs’s claims of intentional or negligent infliction of emotional distress.
Role of Gadoon “Spanky” Kyrollos
Gadoon “Spanky” Kyrollos, a prominent figure in the sports betting community, has been named in the lawsuit as the alleged beneficiary of the extortion scheme. Kyrollos, who hosts the annual BetBash conference and has a significant following on social media, has denied any involvement in the incident. In a lengthy post on X (formerly Twitter), Kyrollos acknowledged his association with Jacobs but refuted the allegations of extortion or violence.
Kyrollos claimed that Jacobs, a compulsive gambler, had previously worked with him and another individual, Oscar Jones, to place bets on DraftKings. According to Kyrollos, Jacobs attempted to evade sharing the winnings, leading to a falling out. Kyrollos also suggested that Jacobs’s lawsuit is an attempt to deflect from his own financial and legal troubles.
Timeline of events
- January 2022: New York launches its legalised sports betting market. Jacobs becomes a DraftKings VIP customer.
- February 2023: Jacobs alleges that a DraftKings VIP host approached him and was later extorted by Kyrollos.
- March 30, 2023: Jacobs claims he was assaulted by a masked man who demanded $500,000 for Kyrollos. The incident is reported to the New York Police Department.
- April 2023: Jacobs files a lawsuit against DraftKings, accusing the company of leaking his personal information and aiding the extortion attempt.
- June 25, 2024: A new lawsuit surfaces, alleging that a senior DraftKings employee leaked sensitive information to Kyrollos. The plaintiff, initially anonymous, is later revealed to be Jacobs.
- June 26, 2024: DraftKings denies the allegations and announces plans to file a motion to dismiss the case.
- July 2, 2024: The anonymous plaintiff, Steven Jacobs, is named publicly after withdrawing his request to use a pseudonym.
- March 10, 2025: A New York federal court partially denies DraftKings’ motion to dismiss, allowing key allegations to proceed to discovery.
Stakes for DraftKings
The lawsuit poses reputational and financial risks for DraftKings, one of the largest sports betting operators in the United States. If the case proceeds to trial, DraftKings could be forced to disclose internal documents and communications, potentially revealing damaging information about its data security practices and employee conduct.
Moreover, the allegations of aiding and abetting a violent extortion scheme could tarnish DraftKings’ brand and erode customer trust. The company has already faced scrutiny over its handling of customer data, and this case could amplify those concerns.
What’s next?
The case is now entering the discovery phase, where both parties will exchange evidence and documents. If a settlement is not reached, the lawsuit could go to trial in late 2025 or early 2026. DraftKings has indicated that it will continue to fight the allegations, but the outcome remains uncertain.
SiGMA News has approached DraftKings seeking comments regarding the latest development in the court and the allegations of customer data breach. However, the questions have been unanswered until the time of publication.
For Steven Jacobs, the lawsuit represents an opportunity to hold DraftKings accountable for what he describes as a life-altering ordeal. For DraftKings, it’s a high-stakes battle to protect its reputation and defend its practices in an increasingly competitive and scrutinised industry.
