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[toc]DraftKings and FanDuel will pay more than $2 million as part of a settlement of a Massachusetts investigation into “alleged unfair and deceptive practices” by the two daily fantasy sports sites.
The move comes just before the start of the NFL season. Daily fantasy football constitutes the most important segment for the two DFS operators.
When possible, we will first refund all deposits made in the last 90 days. Any excess funds after refundable deposits have been fulfilled are delivered via the selected withdrawal method.
More on the DraftKings, FanDuel settlements
The office of Massachusetts Attorney General Maura Healey conducted the investigation and announced the $2.6 million in penalties on Thursday. Each site will pay $1.3 million to the state. The AG’s office did not specify or elaborate on the practices that resulted in the settlement.
The two sites paid a combined $12 million last year to the state of New York in a similar case.
Healey’s office said that the AG entered into the settlement agreement with the companies as a result of their behavior prior to regulations she implemented in 2016.
“I am glad to have reached these settlements to address various consumer issues that existed at the early stages of this new industry,” Healey said in a press release. “We have since implemented a set of comprehensive regulations that provide consumers with broad-ranging protections and that have served as a model for many other states.”
Many of the 2016 regulations that came from Healey dealt with consumer protection. Massachusetts was the first state to deal with and implement regulation of the DFS industry.
More from the release:
Both DraftKings and FanDuel cooperated throughout the investigation and have made significant changes to their business models to protect consumers with respect to gameplay fairness, protections for minors, responsible gaming requirements, fairness in advertising, and data and funds security. Each company represents that it is now in full compliance with the applicable regulatory requirements.
DFS companies react
Tim Parilla, general counsel for Boston-based DraftKings, offered this statement on the settlement:
DraftKings is pleased to have reached this agreement with the Massachusetts Attorney General’s office and conclude what has been a productive and collaborative process.
Over the last two years, the Attorney General’s office has done an excellent job of working to fully understand DraftKings, our business and the fantasy sports industry. That expertise informed the Massachusetts regulations which have now become the national model for common sense, consumer-focused fantasy sports regulations.
As the Attorney General said, this agreement resolves prior issues that were addressed through new regulations and DraftKings’ implementation of the industry’s most comprehensive compliance and game integrity programs. We are proud of the responsible environment we have created for our consumers and grateful to the Attorney General for working with us throughout this process.
And more from a FanDuel spokesperson:
We have worked closely with the Massachusetts Attorney General’s office in their review of fantasy sports, including their issuance of the first set of consumer protection regulations for our industry, which we were pleased to comply with since their inception in 2016.
FanDuel has worked tirelessly to pass laws in 16 states that solidify the fantasy sports industry and implement many of these same important consumer protections. FanDuel’s efforts have ensured that sports fans are able to continue playing the games they love in a safe, regulated environment and as we head into this football season, we look forward to continuing these efforts.
What was Massachusetts investigating?
As stated above, we don’t know exactly what Massachusetts was looking into. Nor do we know why DraftKings and FanDuel agreed to the settlement.
But Healey’s office affords her wide-ranging powers related to consumer protection. DFS regulations or no, she could have looked into how the companies were operating in the state.
But the template was likely the same as employed in a 2016 settlements in New York with AG Eric Schneiderman. Those settlements resolved “lawsuits alleging false and deceptive advertising practices by the companies.”
There, we saw far more of what the AG’s office alleged and settled with the companies, through theactual agreements. For example, the NY AG found that DraftKings and FanDuel:
- Used advertisements that gave false and misleading statements about the likelihood of players winning DFS contests.
- Claimed to fully match players’ initial deposits but were deceptive in how that money could be available to users.
- Did not take adequate steps to help problem gamblers or provide safeguards to those at risk.
FanDuel and DraftKings did not admit to or deny the findings in the settlement from a legal standpoint. However, it’s fair to guess that Healey was using some of the points brought up in NY.
Settlements in more states?
The settlement in Massachusetts came out of the blue. However, it does not appear likely that other states are poised to join New York and Massachusetts.
First, not state all AGs have the kind of power wielded by Schneiderman and Healey on consumer protection issues.
Second, interest from state AGs has largely waned. While a variety of AGs have declared DFS to be illegal gambling under existing statutes, almost none have taken the same level of interest as in NY or Massachusetts.
Now, legislatures are being left to act on whether to legalize and regulate the DFS industry. Sixteen states have passed such laws to date.
While it’s not out of the realm of possibility, the likelihood of more deceptive advertising settlements or investigations would appear to be low.
Massachusetts does not seem to be in a major hurry to legislate sports betting in the state and DraftKings wants to change that by coming up with a new campaign geared at pushing forward sports betting legislation in early 2019.
Draftkings Massachusetts
The Supreme Court lifted the PASPA 1992 which prohibited sports betting and since then 5 states including New Jersey and New Mexico have gone on to regulated sports betting. There are reportedly close to 15 other states that are in talks about legalizing sports betting and Massachusetts is one of those states.
Gov. Charlie Baker stated that a few months earlier that his team had launched discussions with a number of sports leagues in the country regarding sports betting regulation. The Governor expected legislators to move forward with a sports betting bill in January 2019 when the State House resumes.
Legalizing sports betting in Massachusetts is expected to bring a number of benefits such as preventing residents from wagering on illegal sports betting websites, going across the border and spending their money on out-of-state sportsbooks and also bringing in millions of dollars to the government through sports betting licensing fees and gaming tax revenue. Analysts predict that Massachusetts could gain as much as $61.3 million in sports betting taxes per year.
DraftKings Launches Campaign
DraftKings is one of the top daily fantasy sports (DFS) operators in America along with FanDuel and is very keen on expanding its offerings through legalized sports betting. The DFS operator has its eye on the Massachusetts market and confirmed that it will launch a campaign geared at pushing for sports betting legislation.
In a statement, DraftKings said
DraftKings is looking forward to lending our expertise an insight as a sports betting operator when the legislature takes up sports betting in 2019. Legal, regulated mobile sports betting provides the best mechanism to not only protect consumers, but to eliminate illegal offshore gambling, ensure game integrity, generate new revenue for the Commonwealth and fuel the growth of Massachusetts’ sports-tech sector
DraftKings which has its headquarters in Boston, Massachusetts’ has come out with a social media campaign that targets residents in Massachusetts to remind them what they are missing out on because sports betting is yet to be made legal in the state.
Draftkings Massachusetts Map
The DFS operator has also confirmed it will continue with its legislative and lobbying efforts to ensure that there are no unnecessary delays regarding the move to legalize sports betting in Massachusetts.