DraftKings received a $100,000 fine from New Jersey’s Division of Gaming Enforcement for inaccurate financial reports, the first such violation since sports betting launched in the Garden State in August 2018.
Coloring Outside the Lines
DraftKings was recently hit with a $100,000 fine for submitting inaccurate financial reports over several months. The Boston-based bookmaker acknowledged that it overstated the parlay handle and understated other betting categories. Although the error did not affect the bottom line, it was still a misclassification that was not fixed until New Jersey regulators discovered similar transgressions in Oregon and Illinois.
Regulatory Response
A March 29th letter from DraftKings to gaming regulators in New Jersey stated the company was aware of the mistakes but did not address them immediately nor give it the attention it warranted. That reply did not go over well with the regulators and the substantial fine was subsequently handed down along with a stinging admonishment which they deemed “unacceptable conduct.”
The mistakes in December 2023 and January and February 2024 did not affect the amount the sportsbook paid in taxes to the state but the New Jersey Division of Gaming Enforcement said that the data “is a critical component of the monthly tax return.”
Mary Jo Flaherty, the acting director of the state Division of Gaming Enforcement, wrote in a June 16 letter, “These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system.”
DraftKings attributed the issue to a coding problem within the reporting system and has subsequently taken action by fixing the problem, discussing the gravity of the issue, and introducing training and monitoring that will prevent it from happening again.
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines,” the company said in a statement. “There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
In-State College Betting Proposal
New Jersey is one of several states that prohibits wagering on in-state college sporting events. However, ACR 140, a bill to amend the state constitution that would allow sports betting on in-state college athletic events has been announced, and should it pass, it would bring more betting activity to the sportsbooks and, as a result, increase revenues to the state.
The bill currently rests with the Assembly Tourism, Gaming, and the Arts Committee, which would then proceed to the legislature for its blessing. Should it wind its way through this process, the voters would have the ultimate say in November when they would vote on the initiative.
This issue was brought up in 2021 but a lack of financial support from the online sportsbooks to launch a campaign for the measure left voters uneducated about the bill and it was ultimately rejected by the electorate.
Gaming attorney Jeff Ifrah stated: “It is always tough to send a measure to voters when the voters may not be fully informed of the full context of the measure.”
Porzio lobbyist Barbara DeMarco was asked at the time how the bill would fare in the future, she said, “New Jersey is a fickle state. The fact that the referendum failed – well, I would say it failed for now.” Perhaps the time is now.
