DraftKings Error Leads to State Penalty and Refund Order

DraftKings is now on the hook for a $450,000 fine after allowing users to deposit and bet using credit cards in Massachusetts—a clear violation of state law.

Good to know

• The issue spanned 2023 through early 2024, involving 218 users.
• DraftKings accepted over $83,000 in credit card deposits during that time.
• Massachusetts law prohibits credit card use for gambling-related deposits.

The Massachusetts Gaming Commission (MGC) found that DraftKings didn’t just slip up once—it let users deposit and gamble with credit cards on multiple occasions across nearly a full year. And even after flagging the problem themselves, the company failed to fix it quickly.

The Commission shared its take in the ruling:

“Even after discovering this non-compliance, DraftKings repeatedly failed to implement successful corrections to its platform to remedy the issue for nearly a year while also repeatedly reporting that the issue had been resolved.”

So while DraftKings self-reported the issue three separate times—May 2023, July 2023, and February 2024—the underlying problem kept happening.

Commission Pushback

The MGC didn’t accept DraftKings’ explanation that the issue was a misunderstanding or a rare technical glitch.

“Despite framing the matter as a ‘misunderstanding’ or an ‘anomalous series of events,’ it is undisputed that DraftKings’ actions and inactions constitute both statutory and regulatory violations.”

Kevin Nelson, Senior Manager of Regulatory Operations at DraftKings, said the company believed the law applied only to users making deposits from within Massachusetts. That interpretation turned out to be incorrect.

Nelson explained:

“[DraftKings] misinterpreted the language of the law and believed it only applied to users making deposits while physically located in Massachusetts.”

Next Steps and Penalties

Along with paying the $450,000 fine, DraftKings now needs to prove it returned all funds to the affected 218 users. The Commission is also requiring a third-party audit to confirm no other unauthorized credit card deposits were made during the same timeframe.

While the MGC said it had the authority to revoke DraftKings’ license in the state, it opted not to do so. According to the ruling, the fine and corrective steps were seen as reasonable, largely because DraftKings came forward on its own each time the violation occurred.

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