The New Jersey Division of Gaming Enforcement (DGE) has fined DraftKings $100,000 for reporting inaccurate sports betting data, which the regulator said amounts to “gross errors and failures.”
The reporting errors resulted from DraftKings overstating the amount of money that had been wagered on parlay bets as well as understating other categories of wagers. The mistakes in the figures given under the Resorts Digital online sports betting license caused the online arm of DraftKings’ casino partner Resorts to file incorrect sports betting tax returns for three months from December 2023 to February 2024.
“These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” wrote DGE Interim Director Mary Jo Flaherty in a letter to DraftKings on June 16. “They evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct in dealing with regulations and requisite reporting and financial systems.”
Flaherty added that the incident, “reflects negatively upon the state of New Jersey and the gaming industry.” She noted that the DGE had not had to post corrected financial data in an amended monthly press release in more than a decade.
The corrected data filed to the DGE showed that 52 of 60 individual data points regarding win and handle for the three affected months, representing an error rate of 87%.
In addition, although the DGE’s Office of Financial Investigations (OFI) had informed DraftKings and Resorts on March 8 that they had found abnormal parlay reporting for December and January, DraftKings’ February monthly reporting on March 10 still contained similar errors with a 100% inaccuracy for the win and handle data points.
Flaherty’s letter noted that the DGE is authorized to issue penalties of $20,000 per violation. DraftKings offered to pay a $100,000 fine, which DGE accepted.
Investigation uncovered unreported errors in NJ and elsewhere
Flaherty’s letter noted that it was of particular concern to the DGE that DraftKings may have been aware of the error from as early as mid-January but did not inform the division.
She stated that in March, the OFI became aware of issues regarding how DraftKings had reported sports betting revenue to regulators in Illinois and Oregon. The OFI suspected the same problems were happening in New Jersey.
The Illinois Gaming Board did not provide a comment to SBC Americas when asked.
Flaherty notes that DraftKings informed the DGE in a March 19 correspondence that it did not give the matter urgent attention or report it in a timely fashion because it believed the errors did not affect taxable revenue and did not require immediate reporting. The DGE countered that the data “is a critical component of the monthly tax return” regardless of whether it affects taxable revenue.
DraftKings told regulators that the errors resulted from an update to a newly created database which contained a coding error that led to the miscategorization of certain bets.
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines,” a DraftKings spokesperson told SBC Americas. “There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
