DraftKings Tumbles on Report of Unauthorized Money Withdrawals

(Bloomberg) — DraftKings Inc. tumbled on Monday after some customers reported that their accounts were compromised and money was withdrawn.

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The company believes customers’ login information was compromised on other websites then used to access their DraftKings accounts, DraftKings co-founder Paul Liberman said in a statement.

DraftKings had seen no evidence that its systems were breached to obtain the information, according to Liberman, who is president of global technology and product at the sports betting giant.

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

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

DraftKings competes with FanDuel, a division of Irish bookmaker Flutter Entertainment Plc, and other sportsbooks for market share as more US states legalize online sports betting. The company is under pressure from Wall Street to become profitable after years of pouring money into advertising and free promotional bets to sign up users. Earlier this month, it reported user growth had slowed in the third quarter, causing its shares to plunge the most in its trading history.

(Updates with company statement starting in second paragraph)

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