DraftKings, one of the leading daily fantasy sports providers in the United States, has been found to have breached Massachusetts sports betting event rules. The company has been fined $5,000 by the Massachusetts Gaming Commission for allowing out-of-state players to participate in a daily fantasy sports contest that was supposed to be limited to in-state players only.
The incident occurred during the 2019 NFL season when DraftKings held a promotion called “Sports Equinox,” which offered a $1 million prize pool for players who correctly predicted the winners of all four major professional sports leagues’ games on the same day. The promotion was only available to players physically located in Massachusetts.
However, an investigation by the Massachusetts Gaming Commission found that DraftKings had allowed out-of-state players to participate in the contest through a loophole in their geolocation technology. The company had used a third-party vendor to verify the location of players, but the vendor’s software did not always accurately detect when a player was outside of Massachusetts.
The commission determined that DraftKings had violated state regulations that require daily fantasy sports contests to be limited to players physically located within the state’s borders. The company was fined $5,000 for the breach.
In a statement, DraftKings acknowledged the violation and said it had taken steps to prevent similar incidents from occurring in the future. “We take our compliance obligations seriously and have implemented additional measures to ensure that our geolocation technology is accurate and effective,” the company said.
The incident highlights the challenges that daily fantasy sports providers face in ensuring compliance with state regulations. While daily fantasy sports are legal in most states, each state has its own set of rules and requirements for operators. This can make it difficult for companies like DraftKings to navigate the regulatory landscape and avoid violations.
Despite the challenges, daily fantasy sports remain a popular and growing industry in the United States. According to a report by Eilers & Krejcik Gaming, the daily fantasy sports market is expected to generate $7 billion in entry fees by 2024.
As the industry continues to grow, it will be important for operators like DraftKings to prioritize compliance with state regulations and ensure that their technology is accurate and effective in verifying the location of players. Failure to do so could result in fines and other penalties, as well as damage to the company’s reputation and customer trust.
