In a strongly worded reprimand, New Jersey’s gambling regulators have fined DraftKings $100,000 for providing incorrect sports betting data to the state. This was deemed “unacceptable conduct, ” highlighting significant flaws in the company’s operational abilities.
These mistakes forced the regulators to revise and reissue financial data over several months, an event not seen in 13 years.
Errors and their consequences:
The inaccuracies involved overstating the amounts wagered on parlays, multi-tiered bets, and underreporting other types of wagers.
“These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” stated Mary Jo Flaherty, acting director of the state Division of Gaming Enforcement, in a letter addressed to DraftKings on June 16. The letter was released publicly on Friday, July 5th.
Due to the incorrect data, Resorts Digital, the online division of Resorts Casino filed erroneous sports betting tax returns for December 2023 and the first two months of 2024. These documents had to be corrected and resubmitted weeks later. Resorts declined to comment on the situation.
In early March, the gaming enforcement division’s Office of Financial Investigations noticed issues in DraftKings’ reporting of sports betting revenue to regulators in Illinois and Oregon. This led to suspicions that similar problems were occurring in New Jersey, as noted by Flaherty.
DraftKings announced on Monday, July 8th, that the issue had been resolved.
DraftKings’ response:
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines,” the company said in a statement, as the Associated Press reports. “There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
According to the state, DraftKings informed New Jersey regulators that the errors stemmed from a coding mistake in an update to a newly created database, which miscategorized certain bets.
In a letter dated March 29 to the state, DraftKings explained that it did not address the issue urgently or report it promptly because it believed the errors did not affect taxable revenue and thus did not require immediate attention and reporting.
The division, however, dismissed this explanation, emphasizing that even if the errors did not impact gross revenue or the taxes due on that revenue, the data “is a critical component of the monthly tax return.”
DraftKings has since reported to the state that it has corrected the coding error, internally discussed the mistake’s importance, trained its staff, and implemented additional monitoring procedures, among other steps.