New Jersey's gambling regulators have fined DraftKings $100,000 for giving wrong sports betting data to the state. They called this "unacceptable conduct," showing major problems in the company's operations.
These errors made the regulators change and resend financial data for several months, something that hasn't happened in 13 years.
Mistakes and Their Effects:
The errors involved overstating the amounts bet on parlays and underreporting other bets.
“These big mistakes and failures cannot be tolerated in the New Jersey gaming system,” said Mary Jo Flaherty, acting director of the state Division of Gaming Enforcement, in a letter to DraftKings on June 16. The letter was made public on Friday, July 5.
Because of the wrong data, Resorts Digital, the online division of Resorts Casino, filed incorrect sports betting tax returns for December 2023 and the first two months of 2024. These documents had to be corrected and resubmitted weeks later. Resorts declined to comment.
In early March, the gaming enforcement division’s Office of Financial Investigations noticed problems in DraftKings’ reporting of sports betting revenue to regulators in Illinois and Oregon. This made them suspect similar issues in New Jersey, as Flaherty noted.
DraftKings announced on Monday, July 8, that the issue had been fixed.
DraftKings' Reply:
"We value our relationship with the DGE and are committed to following all rules," the company said in a statement, according to the Associated Press. "There was a mistake in our betting data report to the state, which we have fixed by adding more controls."
DraftKings told New Jersey regulators that the errors came from a coding mistake in a new database update, which miscategorized some bets.
In a letter dated March 29 to the state, DraftKings explained that they didn't address or report the issue quickly because they believed the errors didn't affect taxable revenue and didn't need immediate attention.
The division disagreed, saying that even if the errors didn't affect gross revenue or taxes, the data is a "critical part of the monthly tax return."
DraftKings has since fixed the coding error, discussed the importance of the mistake internally, trained its staff, and added more monitoring procedures, among other steps.
