DraftKings, a leading US sports wagering operator, is under fire for allegedly violating a Massachusetts state law governing the use of credit cards for placing bets with operators in the state. The Massachusetts Gaming Commission (MGC) will reportedly hold an adjudicatory hearing in the near future to determine the penalty for the alleged breach.
According to reports, DraftKings allowed credit card deposits made in other states to fund sports betting accounts active with the DraftKings’ operations in Massachusetts, which is a violation of both the gambling regulations and the state law. Commissioner Eileen O’Brien and Commissioner Jordan Maynard expressed their concern over the issue and the commission will summon a hearing for the case.
The alleged violation occurred from March 10 until May 30, 2023, during which DraftKings allowed the use of credit card deposits for sports betting in the state. The operator reportedly assured the commission that its proprietary wallet and geolocation services would lock credit card funds coming from other states, but this did not happen. After updating the software on June 21 and notifying the commission that the out-of-state funds had been locked as of May 31, DraftKings discovered on July 13 that the software update was ineffective.
Staff attorney Zachary Mercer presented a report to the commission indicating that appropriate safeguards were not in place upon the launch of the wagering campaign ran by DraftKings. The company admitted that the failures in internal communication were the root cause of the failed update and took comprehensive corrective action.
DraftKings accepted 243 bets from 218 customers in the total amount of $83,663.92 during the four-month window, referring to the company’s alleged failure related to credit card deposits.
In addition to DraftKings, Fanatics Sportsbook reportedly self-reported a similar failure related to wagering on local college teams. The MGC was made aware of this case on 14 December 2023 and announced that it will take these into consideration next year. The commission did not take any immediate action but has been made aware of the situation regarding Fanatics Sportsbook.