Sign up for the Today newsletter
Get everything you need to know to start your day, delivered right to your inbox every morning.
State slams DraftKings with its largest ever sports gambling fine for taking credit card bets
“Even after discovering this non-compliance, DraftKings repeatedly failed to implement successful corrections to its platform to remedy the issue for nearly a year."
Online sports betting giant DraftKings was fined $450,000, the largest fine of its kind ever issued, after the Massachusetts Gaming Commission found the company illegally accepted credit card funds.
The commission ruled July 25 that DraftKings, which is headquartered in Boston, repeatedly violated the law when accepting more than a thousand impermissible wagers amounting to $83,667.92 from 218 customers’ credit cards.
“There is a preponderance of evidence showing that these violations occurred. In fact, DraftKings does not dispute any of the relevant facts,” the commission’s decision read. “DraftKings contends that its noncompliance was based on a fundamental misunderstanding of the prohibition at issue and did not constitute purposeful contravention of the law.”
Advertisement:
The company was ordered to pay the $450,000 fine, provide proof it returns the bets to customers, develop a corrective action plan, and perform an internal audit by an independent third party.
“We are dedicated to upholding the regulatory standards set by each state and jurisdiction in which we operate, and we value the productive and collaborative relationships we’ve built with regulators,” a DraftKings spokesperson told Boston.com.
When Governor Charlie Baker legalized sports betting in the state in 2022, a “tenet” of the law included the ban of credit cards to fund betting accounts, the commission wrote.
Advertisement:
DraftKings self-reported to the commission on May 31, 2023 that, since the launch of online sports in Massachusetts two months earlier, the company had been erroneously accepting credit card bets. The company initially said a “software update” solved the issue, but in July of that year, DraftKings realized it did not correct the problem, the decision said.
DraftKings accepted online sports bets from its launch on March 10, 2023 through July of that year. Additional bets from credit cards were also placed on Aug. 18, 2023 and on Jan. 13, 2024.
“Even after discovering this non-compliance, DraftKings repeatedly failed to implement successful corrections to its platform to remedy the issue for nearly a year while also repeatedly reporting that the issue had been resolved,” the commission’s analysis said.
The $450,000 fine is one of the largest levied against a company since online sports betting went live in 2023, with an exception for the $35 million fine on Wynn Resorts in 2019 related to sexual misconduct.
Despite the fine, the commission awarded DraftKings a full five-year license for online and mobile betting, following a one-year temporary license. The licensing fee is $5 million, and DraftKings will be taxed on 20 percent of the gross sports wagering revenue, according to the commission.
Advertisement:
“DraftKings extends its sincere thanks to the Massachusetts Gaming Commission for granting us a permanent license to operate in the Commonwealth,” the company spokesperson said.
To comment, please create a screen name in your profile
To comment, please verify your email address
Conversation
This discussion has ended. Please join elsewhere on Boston.com