New Jersey Regulators Fine DraftKings $100K for ‘Unacceptable Conduct’

Sportsbooks/Bookmakers Business
Edward Scimia

Updated by Edward Scimia

Journalist

Last Updated 10th Jul 2024, 01:31 AM

New Jersey Regulators Fine DraftKings $100K for ‘Unacceptable Conduct’

The New Jersey Division of Gaming Enforcement (DGE) has issued a $100,000 fine to DraftKings for reporting inaccurate sports betting data to the state. 

The DGE called the errors a sign of “unacceptable conduct,” saying that it showed weakness in DraftKings’ ability to conduct business in a professional manner.

Casinos.com reached out to DGE for further comment, to which a spokesperson replied: “DGE refers you to its June 17, 2024, letter to DraftKings, which speaks for itself. DGE declines further comment.”

DraftKings Miscategorized Sports Betting Revenue

The letter they’re referring to is a scathing missive sent by DGE Interim Director Mary Jo Flaherty to DraftKings that went public on Friday. 

Flaherty excoriated the online sports betting giant and New Jersey licensee for errors that involved DraftKings overstating how much handle it took in parlays, while underreporting other categories of wagering. As a result, Resorts Digital – the online portion of Resorts Atlantic City – filed incorrect sports betting tax returns for December 2023 and February 2024.

As a result, regulators were forced to go back and post corrected data for multiple months. This was the first time that had happened in 13 years.

“These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” Flaherty wrote. “They evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct in dealing with regulations and requisite reporting and financial systems.”

While DraftKings eventually fixed the errors, the DGE still had significant issues with how initially responded to the error.

“Of particular concern is that DraftKings did not inform the Division of this issue in statistical reporting, even though DraftKings was aware of a potential problem as early as January 16, 2024,” Flaherty wrote. “On April 9, 2024, DraftKings advised the Division of further issues with the data for all three months of December 2023, January 2024, and February 2024. … Upon review by the Division, DraftKings had revised 52 of 60 individual data points regarding win and handle for those three months, reflecting errors in 87% of those categories.”

Mistakes Impacted Public Revenue Reports

DraftKings blamed the problem on a coding issue, and said it has since fixed the problem. But while DraftKings felt that it wasn’t an urgent issue, because it didn’t impact the bottom line taxable revenue, the DGE disagreed, saying it impacted public reporting on the industry’s financial data.

“While the Division recognizes that the changes to the statistical data did not impact gross revenue and gross revenue taxes, the statistical data is a critical component of the monthly tax return,” Flaherty wrote in the letter. “The industry statistical data has been made public by the Division and has been relied upon by the public and the press since the inception of sports wagering in 2018. That statistical data is scrutinized by media and industry analysts each month and the accuracy of that data is essential in the New Jersey regulatory process.”

This wasn’t the first time DraftKings had run into reporting issues regarded to sports betting revenue. The letter referenced similar issues for the company in Illinois and Oregon, which first alerted the DGE’s Office of Financial Investigations to the possibility that similar issues could be taking place in New Jersey.


(Image: Associated Press)

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Edward Scimia
Edward Scimia
Journalist Journalist

Ed Scimia is a freelance writer who has been covering the gaming industry since 2008. He graduated from Syracuse University in 2003 with degrees in Magazine Journalism and Political Science. In his time as a freelancer, Ed has worked for About.com, Gambling.com, and Covers.com, among other sites. He has also authored multiple books and enjoys curling competitively, which has led to him creating curling-related content for his YouTube channel "Chess on Ice."

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