DraftKings Hit With $450K Fine By MGC For Taking Credit Card Deposits
Boston-based betting operator DraftKings has been fined $450,000 by the Massachusetts Gaming Commission (MGC) for letting customers make credit card deposits to their gambling accounts.
The Massachusetts statute does not allow online betting operators to accept either deposits or wagers funded by credit cards, regardless of which state the original deposits were made.
The issue came to light when DraftKings discovered possible breaches of this code itself and reported three incidents to the regulator from May 2023, July 2023 and February 2024, during which it had accepted $83,000 from 218 customers using credit cards.
The firm blamed the initial transgression from its launch date of March 2023 to May 31 that year on miscommunication internally.
A software fix was implemented but was later discovered not to have worked, prompting DraftKings to report a second breach.
The final violation was as a result of DraftKings accepting two additional credit-card funded wagers on its Pools product.
Why Was DraftKings Fined After Reporting The Issue?
DraftKings appeared before MGC members in a mammoth seven-hour hearing last November, during which the sportsbook and online casino‘s senior manager of regulatory operations, Kevin Nelson, stated that the company originally believed the ban only applied to funds deposited by bettors who were physically located in Massachusetts.
He was quickly corrected by commissioner Eileen O’Brien, who read out relevant subsections of the statutes.
“I’d like you to tell me where the words are, the restricting words ‘while physically located in Massachusetts’ or ‘located’,” she said.
“It’s not there, is it, Mr. Nelson?”
What Are The Terms Of The $450k Fine?
Despite holding its hands up to the infractions and supplying evidence to the commission that the firm believed it had acted swiftly on each occasion to put its house in order, the MGC said that it was imposing the fine due to the delays in resolving each matter.
Their ruling stated: “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.
“Despite framing the matter as a ‘misunderstanding’ or an ‘anomalous series of events,’ it is undisputed that DraftKings’ actions and inactions constitute both statutory and regulatory violations.”
In addition to the fine, the MGC has also asked for proof that DraftKings has returned all monies gained from credit card deposits and that a third-party audit be actioned to ensure no other money was deposited or wagered using credit cards from the date the operator acquired its temporary state license on February 23, 2023 to the launch date of March 10, 2023.
Jim Munro is a betting industry and gambling expert who has been a national newspaper journalist for over 30 years, predominantly at The Sunday Times and The Sun, where he wrote a weekly soccer betting column. Jim also worked on the launch of Virgin Bet with Gamesys and was subsequently head of editorial at LiveScore, the sports media and betting group.
