DraftKings Faces Massachusetts Gaming Commission Adjudicatory Hearing For Credit Card Use

• DraftKings allegedly allowed users to fund sports bet in the Massachusetts from March 10, 2023, through July 13, 2023
• The Massachusetts Gaming Commission has called for an adjudicatory hearing on the incident
• The commonwealth does not allow users to fund sports bets through the use of a credit card

The Massachusetts Gaming Commission will hold an adjudicatory hearing for DraftKings after it learned the sports betting company mistakenly allowed users to fund sport bets through the use of a credit card earlier this year.

The commissioners unanimously approved an adjudicatory hearing for the sports betting company after DraftKings mistakenly allowed 218 users to place 242 bets funded through “out-of-state credit card funds” for a total of $83,663.92.

DraftKings erroneously allowed customers to use credit cards from March 10, 2023, through July 13, 2023.

An ‘Egregious’ Mistake

DraftKings self-reported the incident to Bruce Band, director of sports wagering for the Massachusetts Gaming Commission (MGC), on May 31, 2023. The sports betting operator notified Band that they had mistakenly been allowing customers to fund bets with credit cards since March 10.

A DraftKings representative told Band that there was an “internal miscommunication” and safeguards were never in place to prohibit credit card usage. Massachusetts statute specifically prohibits the use of credit cards to make bets or fund sports betting accounts.

DraftKings updated its software to put the necessary credit card prohibitions in place on May 31. However, the update was ineffective due to a “lack of complete functionality testing” and the prohibition never went into place, according to MGC legal counsel Zachary Mercer.

The mistake was not immediately detected and the allowance of credit cards to fund bets was allowed through July 13, 2023, until DraftKings noticed the error. The software was updated on that date and DraftKings believed it to be successful.

However, on Feb. 16, 2024, it was found that two additional bets had been placed through the use of credit card funds.

Commissioner Eileen O’Brien immediately called for an adjudicatory hearing after hearing the details of the incidents.

“For me, this is egregious. It needs to be an adjudicatory hearing,” she said.

Her fellow commissioners quickly agreed and unanimously voted to go through the adjudicatory process. Commissioner Jordan Maynard said it was important to note that this was in direct violation of the state statute, not a regulation.

Fanatics Also Found to be in Non-Compliance

The MGC also found Fanatics Betting and Gaming to be in non-compliance of a sports betting regulation, but likely won’t hold an adjudicatory hearing over the matter.

The sports betting operator self-reported that it incorrectly accepted a futures wager on the Boston College football matchup against SMU. The event was schedule to take place on Dec. 28, 2023, at Fenway Park as the “Wasabi Fenway Bowl.”

The $50 bet was accepted on Wednesday, Dec. 6, at approximately 5:55 p.m. Fanatics found that the market was incorrectly left open from Dec. 5 at 11 a.m. through Dec. 6 at 5:50 a.m.

Betting on in-state colleges is not allowed unless the team is competing in a tournament. A college football bowl game does not qualify as a tournament.

Fanatics reported the market was turned “on” by a Fanatics trader manually during the daily market process. It was turned off in the backend of the sportsbook operator’s system once discovered and no longer available to customers.

The MGC applauded Fanatics for self-reporting the incident. O’Brien noted that an adjudicatory hearing was likely not going to be necessary for just one placed bet.

The commissioners agreed and said that a “civil penalty” will likely be necessary, though what that penalty will be has not yet been determined. To be consistent with prior actions, the MGC agreed to have the investigations and enforcement bureau look into the incident and come back with a summary and suggested course of action at a later meeting.

No vote was taken on the incident.