DraftKings, one of the leading online gambling websites in the world, has agreed to pay a $100,000 fine after New Jersey’s Division of Gaming Enforcement discovered the company had inaccurately reported betting activity between December 2023 and March 2024.
A letter sent to DraftKings on June 17 from Interim Director of the Division of Gaming Enforcement Mary Jo Flaherty admonished the company about making errors that distort truthful reporting to regulators after the agency discovered a series of inaccurate reports across several states.
Authorities said DraftKings reported inaccurate wagers to their New Jersey gaming partner, Resorts Digital Gaming, regarding parlay bets for December 2023 and January 2024 that continued into February and March, while the company failed to notify regulators about an internal coding error causing distorted figures to be submitted.
“These types of gross errors and failures cannot be tolerated in the New Jersey Gaming regulatory system,” Flaherty wrote in June. “They evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct in dealing with regulations and requisite reporting and financial systems.”
Casinos must file monthly financial reports with New Jersey regulators. The division’s Office of Financial Investigations flagged DraftKings’ figures after they discovered a similar abnormality in reports in Illinois and Oregon, according to the letter.
Flaherty said in the letter that DraftKings was notified about New Jersey regulators’ concerns on March 8 in an email, and that the company confirmed the existence of a coding error that caused the inaccurate reports to Resorts Digital Gaming, leading to inaccurate reports being filed with the state.
“We value our relationship with the DGE [Division of Gaming Enforcement] and are committed to ensuring compliance with all regulatory guidelines,” the company said in a statement to NJ Advance Media. “There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
A spokesperson for Resorts Digital Gaming did not immediately respond to a request for comment.
In her letter, Flaherty scolded DraftKings for its reporting errors that caused the Division to distribute inaccurate data, forcing the agency to answer questions about the figures that didn’t add up, and reissue at least two corrected sets of gambling statistics for December 2023 and January 2024.
“Due to the misstated statistical and financial information for those two months, the division was placed in a difficult position of responding to inquiries regarding industry data, with such inquiries focusing on parlay handle,” Flaherty wrote.
The specific issue with DraftKings’ reports dealt with reporting parlay bets relative to total bets over the two-month period. Regulators were also upset that DraftKings was aware of the issue as early as January and did not inform the Division.
“Of particular concern is that DraftKings did not inform the Division of the issue in statistical reporting, even though DraftKings was aware of a potential problem as early as January 16, 2024,” the letter states. “DraftKings only corrected the error in reporting following inquiry and follow-up by OFI [Office of Financial Investigations].”
Flaherty characterized DraftKings’ justification for the lack of communication with regulators as a misunderstanding between the agency and the company, adding that, “It was not understood internally that the discrepancy required notification to either the Division or Resorts Digital as it was believed that the errors did not impact taxable revenue.”
While agreeing that the errors did not impact gross revenue, Flaherty upheld the importance of accurate monthly reporting as essential for the public and media, as well as the state’s regulatory process.
According to the letter, DraftKings has corrected the coding error, placed a heightened sense of urgency around accurate reporting to regulators, created additional monitoring procedures on betting, instituted additional training for staff and agreed to notify regulators about inaccuracies within 24 hours of discovery.
DraftKings began as a sports betting website as states across the country began loosening restrictions betting on sports. New Jersey legalized sports betting in 2018, leading to a boom in the state’s gambling industry.
New Jersey’s most recent gaming revenue report for June shows a 37% increase in sports betting in the state, year over year, with gross revenues from casinos, racetracks and their partners increasing to $513 million from $374.5 million the year prior.
Stories by Matthew Enuco
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Matthew Enuco may be reached at Menuco@njadvancemedia.com. Follow Matt on X.