ATLANTIC CITY, New Jersey — In one of the strongest reprimands they’ve ever handed down, New Jersey gambling regulators fined DraftKings $100,000 for reporting inaccurate sports betting data to the state, calling it “unacceptable behavior” that exposed weaknesses in the company’s business capabilities.
The errors forced regulators to publish corrected financial data for months, something that had not been done in 13 years.
The errors consisted of overstating the amount wagered on multi-level bets, also known as parlays, and understating other categories of bets.
“These types of egregious errors and shortcomings cannot be tolerated in the New Jersey gaming regulatory system,” Mary Jo Flaherty, acting director of the state Division of Gaming Enforcement, wrote in a letter to DraftKings on June 16. The letter was made public on Friday.
Due to the incorrect data, Resorts Digital, the online arm of Resorts Casino, filed incorrect sports betting tax returns for December 2023 and January and February 2024.
The documents had to be corrected and reposted weeks later. Resorts declined to comment.
In early March, the gaming enforcement division’s Office of Financial Investigations became aware of problems with the way DraftKings reported sports betting revenue to regulators in Illinois and Oregon. It suspected the same problems were occurring in New Jersey, Flaherty wrote.
DraftKings had no immediate comment Monday but said it would respond later in the day
The company told New Jersey regulators that an update to a newly created database contained a coding error that caused certain bets to be miscategorized, the state said.
DraftKings wrote in a March 29 letter to the state that the issue was not given urgent attention and was not reported in a timely manner. According to the state, DraftKings believed the errors did not affect its taxable income and did not require immediate attention or reporting.
The department rejected that response, stating that while the errors did not affect gross income and the taxes owed on it, the data “represents a critical part of the monthly tax return.”
DraftKings has notified the state that it has corrected the coding error, discussed the error’s significance internally, trained staff and implemented additional monitoring, among other measures.
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