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The New Jersey Division of Gaming Enforcement (NJDGE) has fined DraftKings $100,000 for reporting inaccurate sports wagering data.

The inaccurate data led the operator to submit incorrect monthly sports wagering tax returns for December 2023, January 2024, and February 2024, according to the NJDGE.

The errors also forced the regulator to correct and reissue industry financial data for several months, a situation that had not occurred “since at least 2011.”

The mistakes included overstating the amount wagered on multi-tiered bets, or parlays, while understating other wager categories.

NJDGE acting director Mary Jo Flaherty highlighted the issue in a letter to Jacob List, DraftKings’ senior director of regulatory operations.

The NJDGE first became aware of potential reporting issues in early March, after noticing discrepancies in DraftKings’ reports to regulators in Illinois and Oregon.

This raised suspicions about similar issues having occurred in New Jersey.

DraftKings’ explanation

DraftKings attributed the errors to an internal update, involving a newly created database used to retrieve information for the required forms.

The company cited a coding issue that led to the miscategorisation of certain wagers.

As a result of DraftKings’ inaccuracies, the NJDGE stated that statistical data for the New Jersey sports wagering industry was “materially misstated” in the division’s monthly press releases.

This situation placed the NJDGE in a “difficult position”, requiring it to respond to enquiries about the industry data and particularly the parlay handle.

In the end, the division had to reissue the statistical data.

Corrective measures

One major concern for the NJDGE was that DraftKings did not inform the division of the issue promptly, despite being aware of a potential problem as early as 16 January.

DraftKings said it did not prioritise the matter because it believed the errors did not affect taxable revenue and did not require immediate attention.

The NJDGE rejected this reasoning, emphasising that even though the errors did not affect gross revenue and taxes due, the data is a critical component of the monthly tax return.

DraftKings has since corrected the coding error, discussed the significance of the error internally, trained staff, and implemented additional monitoring measures.

However, the NJDGE noted that when DraftKings refiled the forms for December 2023, January 2024, and February 2024, it had revised 52 of 60 individual data points, reflecting errors in 87% of the categories.

In April, DraftKings amended its form for March, revising all 20 individual data points, or 100% of the categories.

“These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” Flaherty said.

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