DraftKings consented to pay a $100,000 fine assessed by the New Jersey Division of Gaming Enforcement (DGE) for misreporting, which resulted in the submission of incorrect data to the state.

Resorts Digital, the online gambling division of Resorts Atlantic City, filed inaccurate sports wagering tax returns with New Jersey for December 2023 and the first two months of this year as a result of reporting issues caused by DraftKings. In the wake of the 2018 Supreme Court decision on the Professional and Amateur Sports Protection Act (PASPA), Resorts became DraftKings' first sports betting partner in the state.

DGE Interim Director Mary Jo Flaherty chastised the operator in a letter to the gaming company, stating that New Jersey regulators will not tolerate such errors. She also pointed out that the division's news releases from December and January contained significant errors because of DraftKings' reporting issues.

"They evidenced weaknesses in DraftKings’ business abilities and casino experience and unacceptable conduct in dealing with regulations and requisite reporting and financial systems,” she wrote.

DraftKings, a Boston-based company, informed certain media outlets today that the New Jersey reporting problem had been resolved.

New Jersey's First Online Sports Betting Errors in Post-PAPSA Error

Flaherty implied that the gambling company's errors are the first in the state in the post-PAPSA era when she said in her letter to the DraftKings that there hadn't been a reporting error in New Jersey "since at least 2011."

The sportsbook operator informed the DGE that the misclassification of parlays and other bets is the cause of the reporting issue, citing a coding error in a new database. Press outlets were informed by DraftKings that the issue has been resolved and that more controls are being put in place. DraftKings was made aware of a potential reporting issue in mid-January, but Flaherty noted in her letter that the matter was only resolved in response to a request from DGE's Office of Financial Investigations (OFI).

She also stated that in a March 29 message from DraftKings to DGE, the gaming business did not address the issue immediately since it was not internally understood that reporting abnormalities required attention from DGE and Resorts.

“The Division rejects this notion,” wrote Flaherty. “While the Division recognizes that the changes to the statistical data did not impact gross revenue and gross revenue taxes, the statistical data is a critical component of the monthly tax return. In this regard, the industry statistical data has been made public by the Division and has been relied upon by the public and the press since the inception of sports betting in 2018.”

New Jersey had the opportunity to demand a higher fine

DGE has the authority to impose fines of up to $20,000 for each reporting infraction under the New Jersey Casino Control Act. In light of the numerous faults that OFI found, DGE could have fined DraftKings much more.

According to Flaherty's letter, the Division accepted the gaming company's $100,000 offer.

Additionally, DraftKings has provided DGE with a remediation plan. In the letter, Flaherty stated that the sportsbook operator will be contacted by the division's revenue unit over the punishment and that any further reporting errors will result in regulatory penalties.