The Massachusetts Gaming Commission (MGC) has fined DraftKings $450,000 for failing to prevent the use of credit card funds in online sports betting—an explicit violation of the state’s gambling laws. The breach, which spanned from March 10, 2023, to February 13, 2024, involved more than 1,100 bets placed by 218 customers using 242 credit card deposits totaling $83,667.92.

Regulators Cite Persistent Violations and Systemic Lapses

According to the noncompliance decision [pdf] published on the MGC website, DraftKings, operating under a temporary Category 3 license in Massachusetts, acknowledged three separate compliance failures during this period and self-reported each to the Commission. However, the MGC ruled that the operator’s corrective measures were repeatedly ineffective, raising serious concerns over internal miscommunication and oversight.

According to the MGC’s official ruling dated July 25, 2025, the violations occurred despite direct guidance issued to DraftKings and other operators before the launch of Massachusetts’ sports betting market. Then-Executive Director Karen Wells had contacted all licensees in January 2023 to remind them that credit card funding was strictly prohibited. This directive, however, was not properly relayed within DraftKings.

DraftKings first identified the issue in May 2023 and implemented a software patch. When that fix failed, the company submitted another update in July 2023. Yet again, the prohibition remained ineffective. Finally, in February 2024, DraftKings reported that two wagers were mistakenly placed using credit card funds in its Pools product, revealing that the issue had persisted longer than previously believed.

A DraftKings spokesperson commented, “We are dedicated to upholding the regulatory standards set by each state and jurisdiction in which we operate, and we value the productive and collaborative relationships we’ve built with regulators.” The company also confirmed it had since been granted a permanent license in Massachusetts.

Audit Ordered and Refunds Mandated

Alongside the fine, the MGC ordered DraftKings to refund the full $83,667.92 to the affected customers and submit a corrective action plan to prevent similar breaches. The company must also commission an audit by an independent third party approved by the Commission to examine transactions between its license acquisition on February 23, 2023, and sportsbook launch on March 10, 2023, to verify that no additional violations occurred during that time.

The Commission stressed that although DraftKings reported the incidents voluntarily, the repeated failures to implement effective corrections over nearly a year compounded the severity of the matter. “Despite framing the matter as a ‘misunderstanding’ or an ‘anomalous series of events,’ it is undisputed that DraftKings’ actions and inactions constitute both statutory and regulatory violations,” the MGC wrote.

During a November 2024 adjudicatory hearing, Commissioner Eileen O’Brien criticized the company’s interpretation of the statute. In response to DraftKings’ claim that the ban only applied to deposits made within Massachusetts, O’Brien challenged, “It’s not there, is it, Mr. Nelson?”—highlighting the clear statutory language that prohibits any use of credit cards for sports betting accounts.

While the MGC found grounds to suspend or revoke DraftKings’ license, it opted for a financial penalty and corrective measures due to the operator’s transparency and cooperation. The fine is the largest the MGC has issued against a licensed sportsbook since the market’s launch in 2023.