On talking too a 'GM' the other night, he said something that interested me greatly:
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Have a nice evening, and in the words of 'Murgle' - King of the Murlocs, Mrwghl wurghl furghl durzle
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No not that
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Casino's and anything remotely related too 'Gambling' 'Blackmailling' 'Bullying' etc are strictly against Blizzard's policies. Anyone caught doing these actions have actions taken against them
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So, I believe it would be frowned upon if they saw you do this. I doubt the guy would report you though, seemingly as what he is doing is just provoking the 'blackmail' and he doesn't have a liable defence to report you back - "Yea, Blizz, this dude just blackmailed me into giving him 5000g because if I didn't he'd tell you I was botting"
/clap the Botter
Hope that helps.
Note: This was a European Server and GM - May be different for US (Heard Casino's were allowed there)