DraftKings' Application Receives Favorable Response from Massachusetts Regulators
In a significant development, the Massachusetts Gaming Commission (MGC) has given verbal approval to Boston-based DraftKings during its Category 3 untethered sports wagering application review. The MGC has been reviewing applications from several operators, including DraftKings, Bally's, FanDuel, Betr, Digital Gaming, and PointsBet.
However, DraftKings is currently facing regulatory issues in Massachusetts related to violations of state gambling laws. The company was fined $450,000 for accepting over 1,100 unlawful credit card-backed wagers totaling more than $83,000 from 218 customers between February 2023 and February 2024. This violation persisted despite prior warnings from regulators before the sportsbook launched, stemming from systemic compliance failures, poor internal communication, and repeated software issues that allowed the infractions to continue for nearly a year.
Commission Eileen O'Brien questioned the "free bet" language used by DraftKings in some of its advertising and marketing. Stephanie Sherman, DraftKings Marketing Director, clarified that anything labeled a "free bet" is truly free, with no additional conditions on the consumer.
Regarding other regulatory concerns such as data breaches and diversity issues, there are no specific recent reports or fines publicly noted concerning DraftKings in Massachusetts or other states. The company acknowledged violations around direct mail, licensing paperwork, and some reporting issues. It also addressed a recent data breach during the review, but details of how the company is dealing with that were discussed in executive session.
The MGC has required DraftKings to provide workforce and supplier diversity goals, as well as information about overall vendor spend. Diversity of DraftKings' staff is a key issue for the MGC, as women represent about 26% of the workforce, which is well below the numbers shared by other operators. The company has a commitment to hiring more women and increasing their presence on staff, which is a significant focus.
The commission has announced plans to launch retail sportsbooks on January 31 and aims for early March for digital platforms. Each operator could be subject to a $150,000 fine, and the notice of violation is DraftKings' second in Ohio in a month. The Ohio Casino Control Commission flagged DraftKings and two other operators last week for failures related to responsible gaming messaging and the use of the term "risk-free" for bets.
Under the new state law, the commission can issue up to seven standalone mobile licenses, but only six companies have applied. DraftKings is the only Massachusetts-based operator applying for a license, and it expects to hire 25 new employees in the state should it get licensed, with the expectation of adding more than three times that number of new jobs in the company at large.
The MGC went section by section during the DraftKings review, covering issues such as DraftKings' partnership with the UFC and ex-fighter Conor McGregor, the company's amassed database of consumers in Massachusetts, its level of diversity, and its responsible gaming practices. If the MGC were to ban such language, DraftKings would comply. The company will also update the Investigations Enforcement Bureau about a pending violation in Ohio.
The commission's review of the Fanatics application began last Thursday, marking the final tethered operator on the commission's docket. The review will continue at 8 a.m. Thursday. The Massachusetts Gaming Commission will announce which platforms will get initial approval starting next Wednesday.
- DraftKings is facing regulatory issues in Massachusetts due to violations of state gambling laws, for which they were fined $450,000.
- Commission Eileen O'Brien expressed concerns about the "free bet" language used by DraftKings in some of its advertising.
- DraftKings clarified that anything labeled a "free bet" is truly free, with no additional conditions on the consumer.
- The MGC is requiring DraftKings to provide workforce and supplier diversity goals, as women represent about 26% of the workforce, which is well below the numbers shared by other operators.
- The MGC has announced plans to launch retail sportsbooks on January 31 and aims for early March for digital platforms, with each operator potentially subject to a $150,000 fine.
- DraftKings is the only Massachusetts-based operator applying for a mobile license, and if approved, they expect to hire 25 new employees in the state, with the expectation of adding more than three times that number of new jobs in the company at large.
