Despite myriad questions around past violations and an extended executive session to get more answers, the Massachusetts Gaming Commission on Wednesday gave a verbal thumbs-up to Boston-based DraftKings during its Category 3 untethered sports wagering application review.
The commission will not vote during the review period, which extends through next week. It has plans instead to revisit applications and starting next Wednesday announce which platforms will get initial approval. So far, the commission has reviewed applications from Bally’s, FanDuel, Betr, and DraftKings. It will finish with Digital Gaming (Friday) and PointsBet (Monday).
Under the new state law, the commission can issue up to seven standalone mobile licenses, but only six companies have applied. Five others — Barstool Sportsbook, BetMGM, Caesars Sportsbook, Fanatics, and WynnBET — applied for tethered digital licenses. So far, all but Fanatics have been approved. The MGC announced in December that it would launch retail sportsbooks Jan. 31 and is aiming for early March for digital platforms.
As it has with other applicants, the MGC went section by section during the DraftKings review, covering issues such as DraftKings’ partnership with the UFC and ex-fighter Conor McGregor, the company’s amassed database of consumers in Massachusetts, its level of diversity, and its responsible gaming practices.
The UFC and McGregor partnerships are unique to the UFC, which does allow its athletes to partner with sportsbooks. With regard to the database, DraftKings executives shared that it has been offering daily fantasy in Massachusetts for several years but has not yet marketed sports betting to anyone in Massachusetts.
Data breach, Ohio violations considered
The issues that rose to the top, however, had to do with regulatory compliance, much of which was ultimately discussed away from the public in executive session. The commission noted past violations in multiple states, including Illinois, Indiana, New Jersey, and Ohio, with an investigation into proxy betting occurring in New Jersey.
The company also acknowledged violations around direct mail, licensing paperwork, and some reporting issues, telling the commission that new protocols had been put into place, which it declined to detail publicly. DraftKings also addressed a recent data breach, but details of how the company is dealing with that were discussed in executive session.
New Jersey fines #DraftKings $150,000 for allowing proxy betting https://t.co/lrdoewbQry
— News12NJ (@News12NJ) March 4, 2022
DraftKings’ representatives apparently satisfied the commission during executive session, but they will be required to provide the commission with “workforce and supplier diversity goals and overall vendor spend” as well as to update the Investigations Enforcement Bureau about a pending violation in Ohio.
The Ohio Casino Control Commission last week flagged DraftKings and two other operators around failures related to responsible gaming messaging and the use of the term “risk-free” for bets. Each operator could be subject to a $150,000 fine, and the notice of violation is DraftKings’ second in Ohio in a month. It was previously cited for sending mailers to consumers under the age of 21. That violation carries a potential $350,000 fine, though each operator is entitled to a hearing and can appeal.
Commission Eileen O’Brien Wednesday questioned the “free bet” language that DraftKings uses in some of its advertising and marketing. Company Marketing Director Stephanie Sherman told the commission that anything labeled a “free bet” is truly free, with no additional conditions on the consumer, but she also said that if the MGC were to ban such language, that DraftKings would comply.
MGC: DraftKings must focus on diversity
Diversity of the company’s staff also rose as a key issue for the MGC, as DraftKings shared that women represent about 26% of its workforce, which is well below the numbers shared by other operators. Executives said that going forward, they will work to improve that number, as well as low numbers for Black employees. Commissioners did acknowledge that the company’s commitment to veterans is “impressive.”
Graham Walters, DraftKings’ chief people officer, said that increasing the presence of women on staff is a “significant focus” and that the company has been investing in hiring more women.
DraftKings is the only Massachusetts-based operator applying for license, and as such, the commission was happy to hear about potential new jobs in the state. In its application, DraftKings wrote that it expects to hire 25 new employees in the state should it get licensed, and it expects to add more than three times that number of new jobs in the company at large.
The commission last Thursday began its review of the Fanatics application, as the final tethered operator on the commission’s docket. The MGC continued its Fanatics review Wednesday in executive session, and the review will continue at 8 a.m. Thursday.
