December 7, 2022

Draft Kings crashes due to reported unauthorized withdrawal of funds

Draft Kings crashes due to reported unauthorized withdrawal of funds

(Bloomberg) — DraftKings fell Monday after some customers reported that their accounts had been hacked and funds withdrawn.

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Paul Lieberman, co-founder of DraftKings, said in a statement that the company believes customers’ login information was hacked on other websites and then used to access their DraftKings accounts.

DraftKings has seen no evidence that its systems were hacked to obtain information, according to Lieberman, global technology and products chief at the sports betting giant.

“We have identified less than $300,000 of customer funds that were impacted, and we intend to fully make any customer impacted,” he said.

Shares of DraftKings fell as much as 11% after a report Monday by Action Network reported that three customers had unexplained withdrawals from their user accounts. Shares fell 5.2%, to $14.27, at 2:36 PM in New York. The company’s stock is down 48% this year, compared to a 17% drop in the S&P 500.

DraftKings is competing with FanDuel, a division of Irish bookmaker Flutter Entertainment Plc, and other sportswriters for market share as more US states legalize online sports betting. The company is under pressure from Wall Street to turn a profit after years of pouring money into ads and free promotions to sign up users. Earlier this month, it reported slowing user growth in the third quarter, which caused its shares to drop by the most in their trading history.

(Updates with company statement starting from second paragraph)

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