The Massachusetts Gaming Commission last Friday issued a $450,000 fine to Boston-headquartered sports betting giant DraftKings for illegally accepting bets funded by credit card deposits.
According to an MGC investigation, DraftKings took 1,160 bets worth $83,667.92 from March 10, 2023, through Feb. 14, 2024. That directly conflicts with the state’s gaming laws, which do not allow customer accounts to be funded by credit card deposits.
The fine – not the first DraftKings has received from the MGC – is the largest the regulator has ever issued to a sports betting operator.
Repeated failures
The MGC confirmed that DraftKings self-reported to Bruce Brand, the MGC’s former director of sports wagering. However, it said the company was still liable for a hefty fine because the incidents were “a serious violation of statute and regulations.”
The regulator informed DraftKings in its confirmation of the penalty that it must also repay the $83,667.92 in accepted wagers to the 218 customers who placed credit card-based bets. It must then submit to the MGC proof that the money was returned.
DraftKings will also be responsible for creating a plan to correct and fix the issue. It must also undergo an audit from a third-party company to ensure that there weren’t other customers who were allowed to use credit cards to add money to their sportsbook accounts.
The auditor must be hired within 90 days, and the audit must be completed within 90 days of the hiring.
This is not the first time that DraftKings has encountered issues attempting to block deposits from credit cards. the MGC said.
“[There were] repeated representations by DraftKings that fixes they had implemented were later reported to have failed, thus calling into question the reliability of their communications. The commission is further seriously troubled by the level of internal miscommunication at DraftKings that prevented critical questions posed by the commission from wide internal distribution to all appropriate stakeholders.”
DraftKings' argument
During a November 2024 adjudicatory hearing, DraftKings attempted to argue that the wording of Massachusetts’ gaming laws implied that credit card deposits were only banned inside state lines, essentially meaning that DraftKings Massachusetts customers could legally make credit card deposits from other states before returning home and placing bets. Commissioner Eileen O’Brien balked at that assertion.
DraftKings first self-reported on May 31, 2023, after it found customers had been allowed to make credit card deposits since the market launched on May 10, 2023. It also told the MGC that it had implemented a fix.
DraftKings later told regulators that its solution did not work due to a “lack of complete functionality testing.” Credit card deposits were allowed to continue until July 13, 2023, when another update was introduced. Then, one day before a Feb. 14, 2024, adjudicatory meeting, it was revealed that customers had been allowed to use credit card payments to enter a DraftKings pool contest.
Despite being headquartered in the state’s capital, DraftKings has received several fines from the MGC.
The company was fined for accepting more than $7,000 in wagers on unapproved tennis matches from the UTR Pro Series. It was also reprimanded for offering a “Never Forget” parlay on the anniversary of the Sept. 11 terrorist attacks.
DraftKings is one of seven online sportsbooks available in Massachusetts.