State regulators divided over DraftKings palp

Hand spelling out Oops in blocks
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An error at DraftKings Sportsbook on Oct. 24 has state regulators divided over how to proceed. On that day, DraftKings Sportsbook accidentally posted full-game player prop bets for NBA action except the numbers were supposed to be the lines for first-quarter performance.

Players saw a bad line and pounced, placing thousands of dollars of bets with potentially millions in payouts.

DraftKings says the error was the result of an issue with third-party lines provider Sportcast. Despite DraftKings communicating with Sportcast that they could not support first-quarter lines, Sportcast deployed the markets anyway, creating the issue.

For most states, this qualified as what is called a palpable error and, since language about palpable and obvious errors is in DraftKings’s house rules, the operator was allowed to void the wagers.

Not every state was in agreement though. Two states, Connecticut and New Jersey, required DraftKings to pay out the bets. Massachusetts considered doing the same but elected instead to allow the voids but with some conditions.

Massachusetts bettors placed a little over $4,000 in wagers on the markets, which could have resulted in $575,000 in payouts. After extensive debate, the five Massachusetts Gaming Commission commissioners elected to allow the voids but that impacted bettors needed to be reimbursed three times their stake as cash.

More than one commissioner was set on not granting the void largely because the operator had another costly mistake at the hands of Sportcast earlier this year in New York. The state allowed the operator to void a same game parlay that would have paid out $318,000 after the posted odds displayed at +3500 instead of the accurate line, just +100.

The MGC staff recommended the commissioners allow DraftKings to void the wagers and Sports Betting Director Bruce Band suggested one takeaway from the incident is that the group should revisit and rewrite the regulation that covers obvious errors. Despite the recommendation, the commissioners were keen on a result with some punitive element for DraftKings.

Commissioner Eileen O’Brien was the most critical of DraftKings for not moving away from that vendor sooner. She also took issue with DraftKings labeling those who leaped on the bad line for large sums of money as an “undesirable” customer segment.

DraftKings Senior Director of Regulatory Operations Jake List did tell the MGC that the operator has taken its NBA SGP markets in-house over the past month and no longer uses Sportcast for those wager prices.