DraftKings Faces Adjudicatory Hearing in Massachusetts for Credit Card Violations
DraftKings, a popular online sports betting platform, is in hot water in Massachusetts after violating state laws regarding how bettors fund their sports betting accounts. The Massachusetts Gaming Commission (MGC) has called for an adjudicatory hearing, which involves a legal review of the alleged violations.
The issues stem from DraftKings allowing sportsbook customers to use out-of-state credit cards to make deposits to their accounts, a direct violation of Massachusetts’ sports betting law. This self-reported violation occurred between March 10 and July 13, 2023, leading to DraftKings informing the MGC about the problem and installing a software resolution, which ultimately failed to fix the issue.
DraftKings revealed that 218 customer accounts made 242 bets totaling $83,663.92 using credit cards during this time. The company attributed the problem to an internal miscommunication and a lack of complete functionality testing, causing the MGC to escalate the matter to an adjudicatory hearing.
This unprecedented violation of state law has garnered the attention of MGC Commissioner Eileen O’Brien and her fellow commissioners, who have unanimously agreed to move forward with the adjudicatory hearing to address DraftKings’ regulatory shortcomings.
Alongside the MGC hearing, DraftKings is also facing a class-action lawsuit in Massachusetts, alleging that the sportsbook deceived customers into signing up through a “$1,000 Bonus” promotion.
The MGC holds significant power in such proceedings and can issue substantial financial penalties for regulatory failures and law violations. In the past, Wynn Resorts faced a $35.5 million fine for violations related to the company’s failure to disclose alleged sexual misconduct allegations against its founder, Steve Wynn. Despite the hefty fine, Wynn Resorts was permitted to retain its casino license.
As DraftKings prepares for the adjudicatory hearing, all eyes are on the MGC to determine the appropriate course of action for addressing this significant regulatory breach in the state’s sports betting industry.