Gaming regulators in the home state of the sports betting and iGaming operator, DraftKings, located in Boston, have punished the company after discovering that its online sportsbook platform permitted credit card transactions for account deposits.

The Massachusetts Gaming Commission (MGC) discovered that DraftKings let certain consumers to deposit money into their online sportsbook accounts using credit cards, which is against the commonwealth's sports betting laws.

According to an MGC investigation headed by the MGC's Investigations and Enforcement Bureau, 242 credit card deposits were made by at least 218 DraftKings sportsbook customers.  The total amount of deposits was $83,667.92.

“No deposits may be made by credit card, either directly or indirectly, including without limitation through an account funded by credit card, and no wagering on credit is allowed,” the MGC’s Sports Wagering Account Management regulations state.

Large Fine Justified

The sports betting behemoth, which dominates the online betting industry alongside rival FanDuel, was harshly criticized by the MGC.  The five MGC commissioners stated in a noncompliance decision that Crown MA Gaming, LLC, operating under the name DraftKings, did not contest the usage of credit cards on its online sportsbook platform in Massachusetts and was fined $450,000.

“There is a preponderance of evidence showing that these violations occurred. In fact, DraftKings does not dispute any of the relevant facts… Instead, DraftKings contends that its noncompliance was based on a fundamental misunderstanding of the prohibition at issue and did not constitute purposeful contravention of the law and regulations,” the MGC wrote.

"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 statement continued.

The financial harm resulting from the regulatory infraction is not limited to DraftKings' $450,000 fine.  Additionally, the MGC mandated that DraftKings reimburse the gamblers who made the $83,667.92 credit card deposits.

In order to prevent future credit card transactions, DraftKings must also create a corrective action plan.

An independent third-party auditor must also conduct an internal examination of the online gambling operator to make sure that no additional credit card deposits were permitted.  The audit has 180 days for DraftKings to finish.

Verification of Credit

According to Massachusetts and the other states that forbid credit card payments to online sportsbooks and/or iGaming players, doing so is better for the general public.  Advocates for responsible gaming also advise against using credit when gambling.

However, several states that allow online sports betting do not forbid the usage of credit cards.  Since many banks view credit deposits for sports betting and online gaming goods as cash advances, using a credit card to gamble online can be more expensive than using a debit card, in addition to raising financial problems.  They may therefore have high costs.

Numerous online sports bettors have expressed dissatisfaction over unintentionally incurring credit card fees for transactions associated with their gambling activities.  The seven biggest credit card companies all treat legal gambling and sports betting with credit cards as cash advances, according to the Consumer Financial Protection Bureau.