Massachusetts-bound DraftKings to settle utility bill of $450,000 for unlawful betting controversies
In a significant move, the Massachusetts Gaming Commission (MGC) has imposed a fine of $450,000 on DraftKings for multiple breaches of the state's sports betting law. The penalty, the largest issued by the MGC since the legalization of sports betting in Massachusetts in 2023, was handed out due to DraftKings allowing customers to fund accounts with credit cards, an act explicitly prohibited under the state's 2022 statute.
The violations occurred on three separate occasions—May 2023, July 2023, and February 2024—with over $83,000 in credit card deposits made by 218 customers, totaling 242 separate deposits[1][2][4]. Despite clear communication from the MGC regarding the ban on credit card usage in sports betting during public meetings and operator outreach, DraftKings failed to adhere to the rules[1].
Initially, DraftKings attributed the issue to an internal miscommunication at launch and believed a subsequent software fix had resolved the problem. However, the problem persisted, leading to additional self-reports[1][3][4]. Between March 10, 2023, and February 13, 2024, more than 1,160 wagers were placed using credit cards during three distinct periods[2].
The MGC acknowledged DraftKings’ cooperation and prior success in implementing similar safeguards in other states but criticized DraftKings’ poor internal coordination and ineffective remediation for the repeat offenses[2][3]. As corrective actions, DraftKings has been ordered to refund the $83,000 to affected customers and hire an independent auditor to review all transactions conducted from February 2023 through launch[4].
Despite the fine, DraftKings retains its five-year sports betting license in Massachusetts[3]. The MGC's decision is specific to DraftKings' operations in Massachusetts and does not reflect a company policy or indicate if the same offenses occurred in other states. The penalty was not issued lightly and serves as a reminder of the importance of compliance with the law.
Moving forward, DraftKings will work with an independent third-party company for a compliance audit to ensure they do not repeat the same offenses in Massachusetts. The MGC will closely monitor DraftKings' actions to maintain the integrity of the sports betting industry in the state.
Based on the Massachusetts Gaming Commission (MGC) imposing a fine on DraftKings for breaches of sports betting laws, it's clear that understanding and adhering to gambling laws is crucial for any finance-related casino-and-gambling business. DraftKings' multiple offenses, including credit card usage for gambling, highlight the need for effective internal coordination and compliance with laws to avoid penalties. Technology will play a significant role moving forward, as DraftKings has decided to work with an independent third-party company for a compliance audit to prevent future violations.
