A serious matter

DraftKings is in hot water after allowing users in Massachusetts to gamble with credit card deposits. The Boston-based company will need to attend a Massachusetts Gaming Commission adjudicatory hearing next year regarding the matter. Casinos and sportsbook operators in the state are not able to accept credit card payments.

a violation of not only sportsbook regulations but also state law

Commissioners noted in a meeting on Thursday how it is a violation of not only sportsbook regulations but also state law, with all of them voting in favor of holding a hearing. Commissioner Eileen O’Brien went so far as to deem the offense “egregious.”

In an adjudicatory hearing, all of the relevant parties take part in a legal review of the alleged offenses. It is the first time that an operator in the state has violated the credit card ban.

Eventually resolved the issue

DraftKings self-reported the breach on May 31 to the regulator after discovering that users were able to add money to their accounts with credit cards out of state and then place bets with these funds in Massachusetts. This flaw was present from the moment the legal market in the Bay State launched on March 10.

The regulator had concerns before the market went live about this type of back-door use of credit cards. Operators like DraftKings gave assurances that it wouldn’t be possible due to the deployment of geolocation services and proprietary wallet technology.

first attempt to fix the issue was unsuccessful

DraftKings has since admitted that the necessary protections were not actually in place. The first attempt to fix the issue was unsuccessful due to an “internal miscommunication,” with the second and final update to block the money coming on July 14. This has supposedly succeeded in blocking any credit card funds in the state.

A turbulent time

DraftKings now has new systems and procedures in place to make sure that a similar issue does not occur again in the future. During the period in which the mistake went unnoticed, 218 users placed wagers with stakes totaling a combined $83,664 worth of credit card funds.

DraftKings’ troubles in Massachusetts don’t just stop with the credit card issue. It is also facing a class-action lawsuit regarding a sports betting promotion that was allegedly “misleading and deceptive.” This relates to a $1,000 welcome offer it was promoting that required users to gamble $25,000 to unlock the entire bonus as withdrawable money. DraftKings intends to fight the potential legal action.