NJ Regulator Questions DraftKings’ Business Abilities, Issues $100k Fine Over Inaccurate Data

  • DraftKings miscalculated the parlay handle and miscategorized other bet types
  • It blamed a coding error in a new database for the inaccurate reporting
  • The regulator became aware of the issue after similar errors in OR and IL
DraftKings symbol with person on phone
New Jersey’s gambling regulator has fined DraftKings $100,000 after misreporting betting data over several months. [Image: Shutterstock.com]

Not acceptable

The New Jersey Division of Gaming Enforcement (DGE) isn’t happy with DraftKings after discovering that the sportsbook operator inaccurately reported data. The regulator handed the Boston-based company a $100,000 fine for the “unacceptable conduct” and questioned the weaknesses in its business practices.

miscalculating the amount that people bet on parlays

The misreported betting data meant that the DGE had to publish corrected data for numerous months, which it had not had to do for 13 years. Some errors related to DraftKings miscalculating the amount that people bet on parlays and misinterpreting other bet type categories.

Reasons behind the errors

The regulator’s Acting Director Mary Jo Flaherty sent a letter to DraftKings last month. The letter, which was made public on Friday, said “these types of gross errors and failures cannot be tolerated.”

blaming a coding error in a new database

DraftKings has said it has resolved the reporting issues, blaming a coding error in a new database that led to the miscategorization of certain wagers.

It now has extra controls in place to ensure this doesn’t happen again, implementing additional monitoring processes and providing more training to staff. DraftKings also reiterated the importance it places on maintaining a good relationship with the DGE and ensuring that it is fully compliant.

Issues coming to light

All online sportsbook operators need to partner with a racetrack or casino in New Jersey, with DraftKings working alongside Resorts Casino in Atlantic City. The property’s Resorts Digital subsidiary filed inaccurate betting tax returns in December, January, and February due to the errors.

DraftKings has dominated the online sports betting market in New Jersey alongside FanDuel since it went live in August 2018.

The matter first came to the attention of the regulator in early March. Its Office of Financial Investigations learned about misreporting by the operator in Oregon and Illinois, which led to a deep dive in New Jersey.

DraftKings took its time resolving the issues as it did not believe the error impacted taxable revenue. The DGE rubbished this claim by saying that the data itself is a vital part of the monthly return process and not just the gross revenue or taxes.

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