DraftKings Agrees to Pay Hefty Fine Sports Betting

DraftKings Agrees to Pay Hefty Fine to Sports Betting Regulators in New Jersey

By Blake Roberts Founder & Editor in Chief Updated: 17 July 2024

Blake Roberts Founder & Editor in Chief

Blake Roberts is the founder of Betting.US and is currently heading the creative team as Editor in Chief. Born and raised in Morgantown, West Virginia, Blake is a great sports fan, with football and basketball being his favorite. He’s our trusted voice for all betting-related matters.

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It has been reported that sports betting giant, DraftKings, has agreed to pay a $100,000 fine to the New Jersey Division of Gaming Enforcement after a series of reporting mistakes. The errors, which occurred in filings made for December 2023 and the first two months of 2024, involved incorrect data being reported to the state.

According to reports, these inaccuracies stemmed from DraftKings’ early partnership with Resorts Digital, which is the online gambling subsidiary of Resorts Atlantic City. This partnership began after the 2018 Supreme Court decision that overturned the Professional and Amateur Sports Protection Act (PASPA). This decision paved the way for legalized sports betting in New Jersey as well as in a range of other states.

Issue Raised Directly with Operator

Regulators are said to have addressed the issue directly with DraftKings. In a formal letter, DGE Interim Director Mary Jo Flaherty highlighted the importance of accurate reporting and expressed concern over the December and January filings.

These filings apparently contained serious inaccuracies due to DraftKings’ oversight. She pointed out that such errors were unprecedented in New Jersey’s sports betting industry post-PASPA.

In her letter, she wrote,

They evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct in dealing with regulations and requisite reporting and financial systems.

According to Flaherty, the errors were largely due to misclassified wagers, such as parlays, which DraftKings attributed to a coding error within a newly implemented database system. The company has since announced to various media outlets that the issue has been rectified and additional measures have been put in place to prevent future discrepancies.

The situation came to light after a query from the DGE’s Office of Financial Investigations in mid-January, which led to DraftKings acknowledging and addressing the potential problem. However, Flaherty noted that DraftKings did not initially appear to understand the urgency of the issue or its obligation to inform both the DGE and Resorts of the reporting irregularities.

Fines Could Have Been Bigger

Under the New Jersey Casino Control Act, each reporting violation could have attracted a fine of up to $20,000. Given the number of errors identified by the Office of Financial Investigations, DraftKings could have faced a much larger penalty. However, the company proposed a settlement of $100,000, which was subsequently accepted by the DGE.

Officials said that this incident highlights the ongoing challenges faced within the sports betting market in New Jersey. This is a state that is at the forefront of the rapidly expanding sports betting industry.

The DGE’s action is said to be a reflection of its commitment to maintaining strict compliance standards to ensure the integrity and reliability of sports wagering operations. Regulators in other sports betting states have taken a similar stance by imposing hefty fines on operators found to be in breach of regulations.

With more and more states having legalized sports betting over the past few years, regulators have enforced strict rules that must be adhered to. Failure of operators to do this often leads to huge financial penalties.