DraftKings and FanDuel Fined for Regulatory Violations

The operators were fined for breaching the terms of their licenses by misreporting sports betting handle and accepting bets on concluded matches, as NJDGE continues paying close attention to sports betting operations in the state.
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July 18, 2024

DraftKings and FanDuel, two of the biggest operators offering online sports betting in New Jersey, were both issued fines by the New Jersey Division of Gaming Enforcement (NJDGE) last week for failing to comply with the terms of their gaming licenses.

DraftKings received a $100,000 fine for providing inaccurate sports betting data over the last 12 months, while FanDuel was fined $2,000 for allowing bets to be placed on MMA matches that were already finalized.

Both fines may seem somewhat insignificant compared to the revenue the two operators have been posting in recent months, but both signify NJDGE’s continues watchfulness and decisiveness to take action even against the biggest operators in the country.

DraftKings Misreported Revenue Data

A letter sent to DraftKings from the Offices of New Jersey Attorney General the Department of Law and Public Safety, and the NJDGE detailed the reasons for the $100,000 fine, which was issued against the operator.

According to the letter, the operator misreported its parlay total handle for the months of December 2023, January 2024, and February 2024. The inaccurate reports led to the figures in the statewide reports by NJDGE being incorrect.

NJDGE also found evidence that DraftKings was aware of the inaccuracies as early as January 2024 but failed to self-report the issue, later stating that they believed the inaccuracy did not change its taxable revenue.

The State disputed that claim and proved that March and April reports also had inaccuracies in them, which DraftKings recognized in April and amended the numbers for that month a week after submitting them.

Yet, according to regulations, any such mistakes should be corrected within 24 hours, and the State decided to issue the maximum penalty of $20,000 for each month in which inaccurate reports were submitted, totaling out at $100,000.

FanDuel Allowed Betting on Finished Matches

A more bizarre case of regulatory failing came from FanDuel, another one of the biggest sports betting operators in the country.

FanDuel was recently fined for a failing that happened on April 1, 2022, where the operator accepted sports bets on Professional Fighters League (PFL) matches that happened on March 25 of the same year.

Despite the matches being finished, the operator accepted a total of 34 bets for more than $190,000 before realizing its mistake.

FanDuel reported the mistake to the regulators after realizing it and was informed by the International Betting Integrity Association that the matches were concluded a week earlier.

The operator had to pay $230,000 to settle the bets, and was later issued a $2,000 fine by NJDGE for breach of regulation in this case on January 2, 2024. The fine was only made public last week, and FanDuel was ordered to improve internal control to avoid such mistakes being repeated in the future.

New Jersey Regulator Cracking Down on Irregularities

New Jersey gambling regulators are among the best in the world, and have kept a watchful eye over the NJ sports betting industry since its inception in 2018.

These are not the only cases of similar fines, with PointsBet being fined for a similar offence as FanDuel when it accepted bets on finished soccer games in 2023.

In addition to sports betting, the NJDGE also oversees online casino and online poker in NJ, with operators like BetMGM NJ, and PokerStars NJ participating in both gaming verticals.

The growth of the market has led to a number of regulatory irregularities over the years, but also an increasing exposure of players to problem gambling.

Most recent steps by the NJ government have seen Governor Murphy found a Responsible Gambling Task Force, which will be tasked with advising the Governor’s Office on best ways to reform the industry and maintain a responsible gambling environment in the sprawling gaming market.

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