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A sharply worded rebuke — and a $100,000 DraftKings fine— underscored the importance of accurate reporting within the New Jersey gambling industry.
DraftKings NJ received notice of the fine on June 16, but blunt wording from the New Jersey Division of Gaming Enforcement began to surface Monday in an Associated Press report. The division’s staff members had to correct and repost New Jersey sports tax figures from:
- December 2023
- January 2024 and
- February 2024.
Acting NJDGE director Mary Jo Flaherty told DraftKings she wasn’t pleased with the edits.
“These types of gross errors and failures cannot be tolerated in the New Jersey gaming regulatory system,” she wrote.
Coding Flaw Led to DraftKings Fine
The AP traced New Jersey and DraftKings correspondence back to March 29, when the company told New Jersey regulators a newly created database contained coding flaws. The bug also led to reporting errors in Oregon and Illinois.
The bad code didn’t alter DraftKings’ tax obligation to the state. It did under-report DK’s parlay betting numbers, however. The sportsbook told New Jersey it gave the issue a lower priority since it didn’t impact its contribution to the New Jersey state budget.
So, why does it matter — and why was Flaherty so blunt?
New Jersey itemizes betting categories, such as football, basketball, or baseball, in its monthly reports to the public. With a little research, New Jersey consumers learn that companies like DraftKings have a 20% win rate on parlay bets.
Meanwhile, it’s New Jersey bettors who actually have a 1.2% win rate on football bets so far in 2024. Straightforward bets on baseball and basketball carry a less-profitable win rate of 3% to 4% for the New Jersey sportsbooks.
The NJDGE considers the data “a critical component of the monthly tax return.”
DraftKings Issues a Statement
DraftKings issued a statement as Flaherty’s letter, and the fine, began to receive widespread attention on Monday:
“We value our relationship with the DGE and are committed to ensuring compliance with all regulatory guidelines. There was an error in the reporting of our wagering mix breakdown to the state that we have corrected by implementing additional controls.”
Resorts Digital, an online extension of Resorts Casino, passed along the incorrect DraftKings data as part of the reporting process.
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