Operator ordered to refund wagers, strengthen compliance, and undergo independent audit
Regulator Cracks Down on Credit Card Use in Sports Betting
The Massachusetts Gaming Commission (MGC) has imposed a $450,000 fine on DraftKings after uncovering systemic failures to enforce the state’s strict prohibition on credit card funding for online sports betting accounts.
Between March 2023 and February 2024, DraftKings accepted 1,160 wagers financed through 242 credit card deposits from 218 customers, totaling $83,667.92. The MGC determined that these transactions directly violated state laws designed to prevent risky betting practices.
Multiple Compliance Failures Identified
Despite self-reporting incidents in May 2023, July 2023, and February 2024, DraftKings’ remediation efforts proved ineffective. The MGC investigation found that internal miscommunication and inadequate oversight allowed violations to persist for nearly a year.
The Commission’s decision stated:
“Despite framing the matter as a ‘misunderstanding’ or an ‘anomalous series of events’, it is undisputed that DraftKings’ actions and inactions constitute both statutory and regulatory violations.”
The issue was compounded by the operator’s failure to disseminate the MGC’s explicit directives—issued before the sportsbook’s March 2023 launch—to the appropriate compliance teams.
Credit Card Bans: A Safeguard Against Gambling Harm
Massachusetts prohibits the use of credit cards for sports betting to limit financial risk and promote responsible gambling. Such regulations reflect broader consumer protection trends across regulated US markets, where operators are expected to enforce strict funding controls.
DraftKings Ordered to Refund Players and Undergo Audit
In addition to the $450,000 fine, DraftKings must:
Return the full $83,667.92 to affected customers
Submit a corrective action plan outlining measures to prevent future violations
Commission an independent audit to verify no further illegal credit card-funded wagers occurred during the period in question
These requirements aim to reinforce accountability and safeguard players.
Broader Regulatory Implications
This enforcement action follows a series of measures by the MGC to enhance consumer protections, including the introduction of an official seal to distinguish licensed sportsbooks from illegal operators.
The case serves as a critical warning to all operators: compliance failures—regardless of intent—will face strict penalties. As Massachusetts continues to refine its regulatory framework, operators must adopt robust internal controls and ensure clear communication across all compliance teams to avoid similar sanctions.
