DraftKings stock tumbles amid hack scare as operator pledges to refund $300k to users

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DraftKings’ share price has fallen more than 7% on a one-week basis following customer reports that accounts were compromised and money was withdrawn.

On Sunday evening (20 November), an unknown number of users discovered unusual activity associated with their DraftKings account that led to withdrawals from their bank accounts, as first reported by Better Collective-owned The Action Network.

DraftKings’ co-founder Paul Liberman later turned to Twitter to announce that roughly $300k in customer funds had been affected, but that DraftKings would “make whole any customer that was impacted.”

“DraftKings is aware that some customers are experiencing irregular activity with their accounts,” he said.

“We currently believe that the login information of these customers was compromised on other websites and then used to access their DraftKings accounts where they used the same login information.

“We have seen no evidence that DraftKings’ systems were breached to obtain this information,” he added.

DraftKings co-founder Paul Liberman: “We have seen no evidence that DraftKings’ systems were breached to obtain this information.”

Several users noticed withdrawals from their accounts but when they tried to log in by changing their passwords, it transpired that the phone numbers connected to the account had also been changed.

Moreover, customers complained they couldn’t get through to DraftKings to report the irregular activity.

Meanwhile, DraftKings’ rival FanDuel confirmed it has also seen a recent uptick in activity of hackers trying to access accounts.

 

“We remind our customers about the importance of good cybersecurity hygiene,” FanDuel told CNBC.

“FanDuel encourages customers to please stay vigilant and immediately report any suspicious activity if they suspect their account has been compromised.”

DraftKings’ share price fell more than 10% after the news of the compromised accounts spread on Monday.

However, in spite of the current issue, Morgan Stanley was bullish on the DraftKings stock after publishing updated guidance on the US sector.

While the bank said it was cautious on the US gaming industry due to current economic conditions that could affect consumer spending on gambling, it called DraftKings the top overall sector pick with 34% upside for the base case.

MS analyst Stephen Grambling predicted a positive catalyst path near term for the stock as losses are pared amid a more rational promotional environment, fewer states launch, and continued growth in consumer spending on online sports betting.

About the author

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Sonja Lindenberg

Sonja Lindenberg is an experienced editor and journalist, with a strong focus on business, finance, trade and investment. She holds a degree in business journalism and throughout the past two decades has covered companies and industries in various markets and for different media, including newspapers, news agencies, inflight magazines, country reports and trade publications. Sonja joined iGaming NEXT in June 2022.

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