Crown MA Gaming, LLC, operating as DraftKings, received a $450,000 fine from the Massachusetts Gaming Commission. The penalty stems from violations of state sports wagering laws regarding credit card use.
DraftKings holds a temporary Category 3 sports wagering operator license in Massachusetts. The company launched its Massachusetts sportsbook on March 10, 2023.
Five commissioners presided over adjudicatory hearings held in September and November 2024. Chair Jordan Maynard led the proceedings, with the Investigations and Enforcement Bureau serving as the prosecuting party.
DraftKings was represented by attorneys from Mintz, Levin, Cohen, Ferris, Glovsky and Popeo during the hearings.
Massachusetts law specifically prohibits sports wagering operators from accepting credit cards for deposits. The state legislature established this prohibition as a fundamental component of the sports wagering framework.
Executive Director Karen Wells sent explicit guidance to all prospective operators on January 26, 2023. Her email addressed credit card prohibition requirements before operators launched their platforms.
DraftKings failed to properly distribute Wells’ regulatory guidance within the company. The licensing department did not forward the email to the regulatory operations team, creating internal communication failures.
The company had previously implemented credit card blocking technology in Tennessee. This demonstrated DraftKings possessed the technical capabilities to prevent credit card deposits in regulated markets.
Despite having the necessary technology and receiving clear regulatory guidance, DraftKings allowed credit card deposits to fund sports wagers in Massachusetts.
DraftKings accepted 1,160 impermissible wagers between March 10, 2023, and February 13, 2024. These wagers were funded by 242 credit card deposits from 218 individual customers.
The total handle for prohibited wagers reached $83,667.92. DraftKings discovered and self-reported three distinct periods of non-compliance to the commission.
The first violation period occurred from March 10 through May 31, 2023. DraftKings reported this issue on May 31, 2023, and claimed to have implemented a software fix.
The software update proved ineffective. Credit card deposits continued through July 13, 2023, prompting DraftKings to report the second violation period on July 14, 2023.
After implementing another software fix on July 13, 2023, DraftKings certified under perjury that it was prohibiting credit card use. However, two additional violations occurred on its Pools product.
DraftKings reported these final violations on February 13, 2024, acknowledging that multiple technical fixes had failed to resolve the issue.
DraftKings must return the full $83,667.92 in improperly accepted credit card funds to the 218 affected customers. The commission requires documented proof of these refunds.
The company must develop a comprehensive corrective action plan addressing internal communication failures. This plan must ensure regulatory guidance reaches appropriate departments promptly.
DraftKings faces a mandatory independent audit of the period between February 23 and March 10, 2023. The audit must verify whether additional credit card deposits occurred during the pre-launch period.
The commission must approve the independent auditor. DraftKings has 90 days to hire the auditor and another 90 days to complete the review.
Commission officials expressed concern about DraftKings’ repeated communication breakdowns and technical failures. The violations occurred over nearly a full year despite multiple reported fixes.
