DraftKings Facing $425K Fine in Ohio over Illegal Bets
DraftKings has been fined $425,000 by the Ohio Casino Control Commission for two compliance violations related to sports betting operations in the state. The penalty reflects the regulator's commitment to ensuring adherence to Ohio's college sports prop betting ban, which it recently introduced.
A DraftKings ad announcing its arrival in Ohio. (Source: X/DraftKings)
LISTEN TO THIS ARTICLE:The fine was announced following a settlement agreement approved by the commission on Wednesday. The first violation involved DraftKings accepting bets on college player prop markets after these wagers were prohibited in Ohio as of March 1, 2024. Regulators reported that the company took bets on these prohibited markets from March 14 to March 19.
Related: Ohio Regulator Reports Surge in Compliance and Betting ActivityOhio had communicated the decision to ban college player props to all regulated operators, including providing an opportunity for feedback before implementing the prohibition. DraftKings, as part of the regulated community, participated in this process and received advance notice of the wagering catalog changes before the March deadline.
The second violation pertained to allowing an unapproved method for funding accounts. DraftKings permitted cash deposits at retail locations that were not approved by the commission, which is a breach of Ohio's rules.
From January 1, 2023, through March 5, 2024, approximately 40,985 such transactions were processed, totaling over $2.5 million. Ohio regulations require that cash deposits for accounts be made only at authorized locations.
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DraftKings Looks to Make Amends
In response to these violations, DraftKings cooperated with the commission and implemented measures to prevent similar issues from occurring in the future. The company promptly disabled the college player prop markets in the state after identifying the oversight. Additionally, it reported that it had conducted a thorough review of all such markets to ensure compliance with the state's regulations and voided any non-winning wagers on prohibited bets, refunding affected customers.
To address the issue of unauthorized deposit methods, DraftKings halted the availability of the cash funding option in Ohio as soon as it was notified. The company further reviewed all deposit methods to ensure compliance and introduced an alert system to flag any unapproved deposit activity in Ohio. Monthly compliance testing and additional reviews were also added to monitor deposit methods in new markets.
The settlement agreement with the Ohio Casino Control Commission includes requirements for DraftKings to train its personnel on relevant laws, policies, and internal controls to ensure full compliance in their roles. The commission stated that it worked closely with the company to implement corrective actions, demonstrating a collaborative effort to uphold regulatory standards.
Ohio has established itself as a strict enforcer of sports betting regulations since launching legal wagering on January 1, 2023. The state's regulators have previously penalized several operators, including DraftKings, for violations related to advertising and other compliance issues.
Ohio's decision to ban college player prop betting earlier this year, at the NCAA's request, has influenced other states, including Louisiana and Maryland, to implement similar prohibitions. New Jersey lawmakers are also considering a bill to ban prop bets on college sports.
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