Will a miscommunication and $4,182.36 worth of bets end up costing DraftKings nearly $600,000?
The company was left in a holding pattern Wednesday after the Massachusetts Gaming Commission (MGC) delayed making a decision on whether to allow DraftKings to void wagers it claims were made on an “obvious error.”
“It was clear,” said Jacob List, DraftKings’ senior director of regulatory operations. “When customers see something like that and then package them together as a parlay, then they do know. We also saw conversation on Twitter and other social media. So, we see it as unusual, but it was a clear and obvious error.”
The MGC pushed its decision to its Nov. 30 meeting.
At issue is a 13-minute window on Oct. 24 when DraftKings offered wagering markets on what it termed “incorrect totals for ‘Total Points,’ ‘Total Rebounds,’ and ‘Total Assists’” during the Denver Nuggets-Los Angeles Lakers game. According to DraftKings, 137 bettors placed 178 wagers on the “impacted” markets and stood to win $575,436.82. It is not clear if those bets were made throughout the DraftKings ecosystem or only in Massachusetts.
The mistake was the result of a miscommunication with supplier Sportcast, which informed DraftKings that it would be offering first-quarter basketball markets. DraftKings told its supplier it could not support those offerings. Sportcast apparently sent the markets anyway, and they appeared on the DraftKings platform as full-game, rather than first-quarter markets.
List said consumers quickly noted the error and many paired the faulty market with others in parlays that would net big payouts. He also said that the company detected discussion about the faulty market on social media.
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Should supplier, insurance company pay?
Commissioners Wednesday weren’t quire sure how to proceed, in part because of their curiosity about how other regulators have treated such errors.
List would not share how regulators in other states reacted, as he said he wasn’t sure that was public information. He did say that “the vast majority of jurisdictions have permitted us to void.” Chair Cathy Judd-Stein said the commission might be uncomfortable not knowing if it was “the first or the last” to decide the issue.
The majority of commissioners seemed to agree that the error was “obvious” and covered not only an exception for such errors in DraftKings’ own terms and conditions, but also under Massachusetts regulations. However, Commissioners Eileen O’Brien and Nakisha Skinner asked for more clarity, suggested that maybe Sportcast should pay out the winnings, and wondered if the error would be covered by insurance. In addition, O’Brien wondered whether voiding the wagers was truly in the best interest of Massachusetts consumers.
List reiterated that it was a “truly exceptional” circumstance and that regulators must provide “some sort of recourse” for operators in extenuating circumstances. As of now, DraftKings has not settled wagers on this market.
More information needed
The MGC opted to punt on the decision when O’Brien said she “wasn’t in a position” to vote after asking for additional information about indemnification, whether or not all patrons were treated equally, and what decisions have been made by other jurisdictions. However, it appears that a majority of commissioners will vote to void the wagers.
Massachusetts Wagers Big on Privacy in Sports Betting https://t.co/Cg7jVpgD67 #MassachusettsGamingCommission #SportsBetting #SportsWagering @gaminglawrev
— National Law Review (@natlawreview) November 16, 2023
In the bigger picture, commissioners are looking for additional guardrails to prevent a similar situation from happening again. In a letter to the MGC, DraftKings wrote that it “has advised Sportcast that they will not be offering 1st Quarter player markets until further development work has been completed.”
Commissioners wondered aloud what additional mitigation would take place going forward, as the warning from DraftKings that it could not accommodate the markets in question did not keep Sportcast from sending them.
Prior to the discussion, the commission agreed to extend a waiver until June 30, 2024, for operators to comply with data privacy guidelines. The decision came about two months after the MGC held a roundtable with operators during which they all said they needed more time to comply with the state’s unique data privacy rules, which were first rolled out in June.
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