DraftKings hit with record $450K fine for taking credit card bets
Regulatory enforcement has reached a new high in Massachusetts sports betting with DraftKings receiving the state’s most substantial penalty to date. The Boston-based operator now faces heightened scrutiny across multiple jurisdictions as compliance failures accumulate.
Internal communication breakdowns spark regulatory concern
An investigation by the Massachusetts Gaming Commission has uncovered ongoing internal problems at DraftKings. Between March 2023 and February 2024, 218 customers placed 1,160 wagers, worth over $83,000, using credit card deposits, a method that’s explicitly banned under state law.
DraftKings pointed to an internal communication lapse as the source of the problem. The company alerted regulators in May 2023 and said it had rolled out software fixes. But regulators later found that those fixes failed to address the underlying issue, allowing the violations to continue unchecked.
The commission found particularly troubling that DraftKings already operated similar controls in Tennessee but failed to apply them in Massachusetts. “This structure appears to have permeated these non-compliance events,” the commission noted in its ruling.
Financial consequences and corrective measures
Beyond the record $450,000 penalty, DraftKings must demonstrate full reimbursement of over $83,000 to affected customers. The company also faces requirements for comprehensive third-party auditing and development of corrective action plans to prevent future violations.
The fine represents the largest enforcement action since Massachusetts legalised sports wagering in 2023. Commission Chair Jordan Maynard emphasised the seriousness of the violations during proceedings, noting the need for additional information gathering due to the complexity of the case.
Paul Liberman, DraftKings’ president and co-founder, previously signed a sworn statement in July 2023 declaring the company was “prohibiting any use of credit cards to place Sports Wagers on its sports wagering platform in Massachusetts.” However, credit card-funded wagers continued to slip through the system, with two additional incidents reported in February 2024.
Broader regulatory challenges across jurisdictions
The Massachusetts fine comes amid ongoing regulatory issues for DraftKings in other states. Connecticut authorities recently announced a $3 million settlement requiring refunds to 7,000 customers over misleading bonus promotions. The Department of Consumer Protection alleged that deposit match offers between October 2021 and January 2023 failed to clearly disclose wagering requirements.
DCP Gaming Division Director Kris Gilman stated: “Gaming operators must clearly communicate the terms of any promotion to their customers, including requirements to wager a certain amount or other conditions to obtain a promised award.”
New Jersey regulators separately fined DraftKings $100,000 for providing inaccurate sports betting data to the state. Acting director Mary Jo Flaherty described the errors as “unacceptable conduct” that highlighted significant operational flaws.
The company received an additional $200,000 penalty from the Securities and Exchange Commission for social media posts that violated fair disclosure regulations. CEO Jason Robins’ posts about “really strong growth” prior to earnings releases were deemed problematic by securities experts.
The growing list of penalties highlights the mounting pressure DraftKings faces from regulators in several states. As the company pushes forward with its expansion plans, keeping pace with varying compliance requirements is proving to be a major hurdle, one that could impact its long-term position in the crowded sports betting market.
