(ADDS DRAFTKINGS STATEMENT IN NEW 4TH GRAF)
The sports betting revenue reports to the state agency for a four-month span from December to March.
Last Friday, the NJDGE publicly released the four-page letter sent by Interim Director Mary Jo Flaherty last month to DraftKings that conveyed the fine. She sternly criticized DraftKings for putting the DGE in the “difficult position of responding to inquiries focused on parlay handle.
“Moreover, given the magnitude of the errors and the impact upon the industry statistics as a whole, the Division was compelled to reissue the statistical data in its monthly Press Release for December 2023 and January 2024, which type of circumstance had never happened since at least 2011.”
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines,” a DraftKings spokesperson wrote in an e-mailed statement to Sports Handle.” There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
It is not the first time DraftKings — one of the top two series of out-of-state wagers in November 2020 placed by a customer in Florida through a proxy bettor.
The problem with DraftKings’ parlays 5a16w
The errors in reporting for DraftKings’ Oregon in December 2023 and January 2024.
The DGE’s Office of Financial Investigations (OFI) became aware of the discrepancies in Oregon and Illinois’ figures in early March. It sent an email to both DraftKings and licensee Resorts Digital on March 8 detailing the statistical information indicating what it called “abnormal parlay handle relative to overall handle for those two months.” Sports Handle was among those which reached out to NJDGE representatives regarding such abnormalities in the time frame mentioned.
DraftKings made amendments to their figures, which Resorts Digital then submitted as part of revised DGE-107 forms to the state agency. Resorts sent two reports for January on March 10 and 11 and one for December on March 11. DraftKings confirmed to the NJDGE that “issues experienced in other gaming jurisdictions also impacted upon the reporting of information in New Jersey.”
DraftKings further explained to the OFI an internal update to a newly created database that was utilized as a reference point for information specific to New Jersey’s DGE-107 form contained a coding issue “which resulted in the miscategorization of certain wagers.” That coding issue resulted in an overstating of parlay handle and understating of other categories of wagers.” DraftKings then sent another series of revised forms covering February 2024 on March 13.
And Then There Were More Revisions 6f395s
"In order to “increase transparency” regarding those reports, the DGE will begin breaking down revenue by each individual skin rather than by licenseholder."
New Jersey Regulators Will Begin Breaking Down Monthly Gambling Revenue By Individual Operatorshttps://t.co/Hs6xFOq3F9
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) April 3, 2024
Nearly one month later, DraftKings informed the DGE that it encountered “further issues with the data” from December through February, which resulted in another series of amended DGE-107 filings by Resorts Digital on April 10. The DGE noted that “DraftKings had revised 52 of the 60 individual data points regarding win and handle for those months.”
Though Resorts Digital filed its DGE-107 in a timely fashion April 9 for its March figures, it was forced to file an amended version six days later after DraftKings had revised all 20 individual data points. The revised submission was filed without prior notice to the DGE by DraftKings, pointing out errors in the prior data, which resulted in the Division reviewing the form to identify all of the changes. As a result, DraftKings had failed to abide by a remediation step in which it was to provide 24-hour notice for any discrepancy.
DraftKings makes fixes, pays the price t1v6j
Flaherty bluntly stated in her letter that “these types of errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” adding that “they evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct dealing with regulations and requisite reporting and financial systems.”
DraftKings informed the state agency that it had fixed the coding error and also trained staff on placing a greater importance on the “significance of non-revenue inaccuracies internally.” It also has created additional internal monitoring specific to unusual changes in sports and parlay percentages as well as institute new quality assurance review procedures “for discrepancies that would impact public reporting within 24 hours of discovery.”
DraftKings offered to pay a $100,000 fine to the NJDGE in recognition of its action that resulted in causing Resorts Digital to file inaccurate DGE-107 forms and its failures to “promptly notify” both Resorts Digital and the state agency of its reporting errors.
