DraftKings Extortion Lawsuit Involves Cast of Characters

Call it one of the oddities of New York’s online sports betting. A play involving $500,000, colorful characters including a masked man, and DraftKings. Need we say more?

DraftKings Extortion Lawsuit Involves Cast of Characters

Once you cut through some of the fat, create a leaner story line, the case of Spanky and Oscar Jones vs Steve Jacobs would make a darn good action film. Maybe a streamer for Netflix.

It’s got high rollers in the sports betting world, alleged death threats, lawsuits, and a respectable sportsbook. And you could probably find a kernel of humor to interject here and there.

Let’s begin the story in January 2022, not long after New York introduced online sports betting. A VIP host from DraftKings by the name of Joe Di Chiaro touched base with Jacobs, an attorney with a penchant for sports betting. DraftKings showered Jacobs with perks and bonuses which “induced plaintiff to play substantial volume.”

The substantial volume attracted Spanky—sports betting influencer Gadoon Kyrollos—and Jones with a plan, a partnership, per Next.io.

Spanky and Jones placed bets using Jacobs’ DraftKings account, to get around a ban on their own accounts. Spanky used Jacobs’ status as a major player to extract higher betting limits.

Jones reportedly gave Jacobs $82,375 to get the partnership started. Money rolled in, a lot of it, according to Spanky.

But Jacobs refused to repay winnings at the end of the scheme two months later, Spanky said, telling his alleged partners DraftKings had requested him to sign an “affidavit of eligibility”. Spanky thought Jacobs was trying to scam him and Jones out of what was rightfully theirs.

Spanky discovered that Jacobs is involved in multiple lawsuits, featuring claims for hundreds of thousands of dollars on both sides.

Jacobs’ lawsuit picks up the thread now.

In March of 2023, Jones told Jacobs he now had the personal information he needed to reach Jacobs. A few days later, Jacobs was assaulted by a masked man who claimed Spanky and Jones sent him with a warning. Allegedly, a camera caught all the action of the attack.

Di Chiaro allegedly sympathized with Jacobs about the release of the information but did not have a clue how the breach happened. That said, what transpired between Spanky and DK was a “private internal matter,” Di Chiaro said.

“The complaint filed against DraftKings in March 2024 by an unnamed plaintiff is full of inaccuracies and baseless allegations,” the company said in a statement to Next.io. “In the complaint, the plaintiff does not identify any DraftKings employee, but rather alleges on ‘information and belief’ that an unknown and unidentified DraftKings employee provided private account information to ‘Spanky’ and to additional unnamed third parties.

“DraftKings has found no evidence of anyone (here) providing plaintiff’s information to a third-party, and DraftKings denies acknowledging any such ‘security breach’. 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.”

Jacobs filed the lawsuit “to put a stop to DraftKings’ campaign of harassment and to recover for the physical, mental and severe emotional damages he has sustained, as well as to seek punitive damages for DraftKings’ malicious, willful and wanton behavior,” according to the filing.

Jacobs is petitioning that compensatory damages should be no less than $1 million, the lawsuit says. Punitive damages, interest and attorney’s fees are also requested.

Why sue DraftKings?

DraftKings is trusted by customers because of its “sheen of legitimacy as a licensed sportsbook.” The plaintiff “would have never dreamed that DraftKings would willfully conspire with a dangerous man with an ax to grind,” the suit added.

Jacobs’ life has “not been the same” since the death threat, the lawsuit alleges. He lives in a constant state of fear, even at home, and no longer enjoys life in New York the same way. The suit alleges that he suffers “severe emotional distress.”

Not so, Spanky said. The well-known bettor took to X to share his side.

“I never threatened Steve nor sent a masked man to threaten him; however, given that Steve Jacobs owes over a million dollars to so many people, his claims don’t surprise me,” he wrote.

Spanky admitted to what he called a test for 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!)

“I wanted to gauge Steve’s response to my bluff; in particular, I was hopeful that if he was doing something wrong, that this bluff might encourage him to fess up. Steve maintained that DK was holding up his withdrawal request, and that he was waiting on a response to a complaint he filed with the state gaming board.”

Jones, said Spanky, then had the idea to file a freedom of information request under New York law to request a copy of the complaint filed against DraftKings. The Freedom of Information law “was all we needed to prove this guy to be a shyster.”

Jacobs was not the only one to litigate. Jones sued Jacobs, charging that he defrauded him out of the $500,000. Jacobs did not challenge the $500,000 part, but his lack of access to the money. He said DraftKings suspended his account thus he could not get the money.

Keep in mind that DraftKings supposedly had no issue processing the withdrawal request for Jacobs.

In a motion to dismiss, Jacobs argued Jones himself admitted to violating federal laws.

He said: “Jones… is an extraordinarily sophisticated and predatory professional bettor, who is sufficiently shrewd to allegedly beat DraftKings out of hundreds of thousands of dollars in three months.”

The judge agreed with Jacobs’ argument and dismissed the case, ordering Jones to pay attorney fees.

She also ordered Jones to pay Jacobs $250,000 for violating a signed agreement between the two, mandating he not sue him.

Jones is currently attempting to appeal the case.

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