DraftKings faces potential problems in MA after credit card payment issue

Credit cards
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DraftKings is once again facing the ire of the Massachusetts Gaming Commission, this time over an issue related to credit cards.

Massachusetts is a state that not only prohibits in-state credit card deposits but also requires operators to restrict bettors from using funds they generated from other states where credit card deposits are allowed. Operators are required to restrict funds deposited by a credit card in any state when that bettor is within Massachusetts borders and wanting to bet.

This is a relatively unique regulatory requirement that requires a lot of technical set-up for both the operators and their payment partners.

DraftKings believed they had the requirement under control when the state launched online sports betting in March. However, the company self-reported to the MGC in that there was an issue. As the MGC Investigation and Enforcement Bureau’s Zach Mercer reported to the commissioners, the mistake was essentially an internal miscommunication.

DraftKings self-reported and the now-former MGC Executive Director Karen Wells submitted a list of questions about the issue to the operator. In their June 21 responses, DraftKings said that a May 31 software update had resolved the issue.

However, DraftKings returned to the MGC in July to report that what they thought fixed the issue had, in fact, failed. As Mercer told the commissioners, this time, the issue was related in part to miscommunication but was largely the result of a lack of thorough testing of the fix by DraftKings.

All told, 218 users wagered $83,663 across 242 wagers using funds from credit cards.

Since this is a violation not just of a regulation but the statute that legalized it, the penalty for violation could be more severe. Commissioner Eileen O’Brien summed up the sentiments of the other commissioners when she said, “For me, this is egregious.”

The commissioners have not only requested an adjudicatory hearing on the matter in the future. O’Brien additionally inquired about noticing any licensed individual from DraftKings who communicated directly to Wells that the issue was fixed with the May 31 software update.

This is the second time this month that DraftKings has appeared before the MGC for an issue that has transpired twice under its purview. Earlier in December, DraftKings appeared before the group seeking to void $4,000 in wagers that would have paid out over half a million dollars because DraftKings argued the posted bets amounted to a palpable error.

Before agreeing to void the wagers but also pay back bettors three times their initial bet, the commissioners expressed frustration and concern that a similar issue had previously happened in New York and wasn’t immediately fixed.