Boston-based DraftKings has been hit with a $450,000 fine by the Massachusetts Gaming Commission (MGC) for allowing customers to fund their online sportsbook accounts using credit cards, a direct violation of state gaming regulations.
Credit Card Deposits Violate Massachusetts Sports Betting Rules
The Massachusetts Gaming Commission prohibits the use of credit cards for online sports betting deposits. According to the MGC’s Sports Wagering Account Management regulations:
“No deposits may be made by credit card, either directly or indirectly… and no wagering on credit is allowed.”
Despite this, an investigation by the MGC’s Investigations and Enforcement Bureau found that at least 218 DraftKings users made 242 credit card deposits, totaling $83,667.92.
MGC Issues $450K Fine for Regulatory Noncompliance
The MGC issued a noncompliance order against Crown MA Gaming, LLC, operating as DraftKings, stating:
“There is a preponderance of evidence showing that these violations occurred. In fact, DraftKings does not dispute any of the relevant facts.”
DraftKings claimed the violations stemmed from a misunderstanding of the regulation, not intentional misconduct. However, the MGC emphasized that the operator’s actions constituted statutory and regulatory violations, regardless of intent.
Refunds and Corrective Action Required
In addition to the $450,000 fine, DraftKings must:
- Refund the $83,667.92 in credit card deposits to affected bettors
- Develop a corrective action plan to prevent future credit card deposits
- Undergo an independent audit within 180 days to ensure full compliance
Why Credit Card Betting Is Controversial
States like Massachusetts ban credit card deposits for online gambling to promote responsible gaming and reduce the risk of problem gambling. Credit card use can lead to:
- High fees (often treated as cash advances by banks)
- Increased debt risk for bettors
- Unintended financial consequences
According to the Consumer Financial Protection Bureau, the seven largest credit card issuers treat legal online gaming transactions as cash advances, which often come with steep fees and interest rates.
Final Takeaway
This enforcement action highlights the importance of strict regulatory compliance in the fast-growing online sports betting industry. As DraftKings works to correct its internal processes, the case serves as a reminder that credit card gambling violations can result in significant financial penalties and reputational damage.
