DraftKings In Regulatory Trouble In Home-State Massachusetts

DraftKings, a leading sports betting app, is under scrutiny by regulators in Massachusetts for violating the state’s legal sports betting regulations in two separate incidents.

The Massachusetts Gaming Commission (MGC) reported on Thursday that instances of DraftKings customers using credit cards to fund their sports betting accounts were discovered. It is illegal to use credit cards to fund Massachusetts sports betting apps.

The most recent issue arises following a report last week of a potential class action lawsuit in Massachusetts regarding deceptive promotions by the sports betting giant. Advocacy groups are criticizing the design of DraftKings’ usual welcome bonus.

The latest issue

The Massachusetts Gaming Commission has scheduled an adjudicatory hearing for DraftKings Massachusetts in the upcoming year. This decision comes after the legal sports betting provider was discovered to have permitted users to use credit cards to fund sports betting accounts in the state between March 10, 2023, and July 13, 2023.

Using credit cards to place sports wagers or fund a sports betting account is not allowed under Massachusetts sports betting regulations. Prior to obtaining a license in the state, DraftKings had provided assurances to Massachusetts regulators that it had the necessary technology in place to prevent these activities from occurring.

On May 31st, DraftKings voluntarily reported to the Massachusetts Gaming Commission that 218 of its customers were able to place 242 bets totaling $83,663.92 using out-of-state credit card funds.

It seems that measures to prevent this activity were not implemented when the Massachusetts market first launched. Even after safeguards were put in place with DraftKings software, they proved to be ineffective as some individuals were still able to use credit cards to fund their accounts and place sports bets.

The second try to close the software loophole proved successful, but not before a number of bettors managed to exploit it.

Eileen O’Brien from the Massachusetts Gaming Board stated that the DraftKings error was not just a minor mistake, but rather a serious offense. She emphasized the need for an adjudicatory hearing, pointing out that it was a violation of not only regulations, but also state statute.

As previously stated, the adjudicatory hearing is scheduled to occur in the beginning of next year.

Promotional issue

DraftKings Massachusetts faced scrutiny at Thursday’s Massachusetts Gaming Commission meeting due to potential legal action stemming from deceptive promotions. Numerous sports bettors in the state have likely participated in these promos.

The controversy revolves around DraftKings’ $1,000 welcome bonus for new customers in Massachusetts. The terms and conditions of the offer are under scrutiny. In order to qualify for the $1,000 bonus, customers must deposit a minimum of $5,000 within 90 days and wager at least $25,000 on bets with odds of -300 or higher.

The lawsuit questions DraftKings’ lack of transparency regarding the process new customers must follow to fully understand the extent of the bonus.

The $1,000 bonus is a popular incentive offered by DraftKings in the US market. The Massachusetts challenge will be closely watched nationwide and will attract attention from sportsbooks in both Massachusetts and across the country.

And while they were at it….

FanDuel, a company operating in Massachusetts, faced criticism at Thursday’s MGC meeting for briefly accepting bets on the Fenway Bowl between Boston College and Southern Methodist on Dec. 28, which violated the rule prohibiting bets on local college teams.

Bets were accepted for only one day after an employee manually added the game to Massachusetts’ sports betting menu. A $50 bet was placed and later refunded by DraftKings staff once the error was discovered.

No action was taken, but acknowledging the mistake may have had the intended effect.