ATLANTIC CITY, N.J. — In one of the most sternly worded rebukes they have ever issued, New Jersey gambling regulators have fined DraftKings $100,000 for reporting inaccurate sports betting data to the state, which it called “unacceptable conduct” that demonstrated weaknesses in the company’s business abilities.
The errors resulted in regulators having to post corrected financial data for several months, something that had not happened in 13 years.
The mistakes involved overstating the amount of money wagered on multi-tiered bets, or parlays, and understating other categories of wagers.
“These types of gross errors and failures 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 Friday.
The inaccurate data caused Resorts Digital, the online arm of Resorts casino, to file 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 comment.
In early March, the gaming enforcement division’s Office of Financial Investigations became aware of issues in the way DraftKings had reported sports betting revenue to regulators in Illinois and Oregon, and suspected the same problems were happening in New Jersey, Flaherty wrote.
DraftKings said Monday it has fixed the problem.
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines,” the company said in a statement. “There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
The company told New Jersey regulators that an update to a newly created database contained a coding error that resulted in the miscategorization of certain bets, according to the state.
In a March 29 letter to the state, DraftKings said it did not give the matter urgent attention and did not report it in a timely fashion because it believed the errors did not affect taxable revenue and did not require immediate attention and reporting, according to the state.
The division rejected that response, saying that even though the errors did not affect gross revenue and the taxes due on that revenue, the data “is a critical component of the monthly tax return.”
DraftKings has told the state it has corrected the coding error, has discussed the significance of the error internally, trained staff and created additional monitoring, among other steps.
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