Massachusetts Based DraftKings Meets Criteria For Online Sports Betting License

• Massachusetts based sports betting operator DraftKings met criteria for an untethered Category 3 online sports betting license
• DraftKings joins Bally Bet, FanDuel, and Betr as operators that have met criteria for an untethered license
• Massachusetts Gaming Commission will vote on applications beginning Jan. 18

While it lacked the star power (and fireworks) of yesterday’s Betr hearing, state regulators gave commonwealth-based DraftKings its initial stamp of approval for an untethered Massachusetts online sports betting license.

DraftKings, which employs more Massachusetts residents than any other state, met or exceeded criteria for an untethered Category 3 sports betting license, according to the Massachusetts Gaming Commission (MGC).

“You presented a very thorough application…it was very content rich. For that, we are very appreciative. The fact that you’re here in Boston, it’s a pleasure to see that, when we know that the legislature always cares about the economic engine of gaming,” MGC Chair Cathy Judd-Stein said.

Commissioners Concerned with Responsible Gaming, Employee Diversity

While it was ruled that the DraftKings application met or exceeded the MGC licensing criteria, the commissioners still shared a number of concerns with the operator’s responsible gaming strategies, gaming violations in other states, and lack of overall female employment.

Commissioner Eileen O’Brien asked that DraftKings address its 26.6% female employee rate, noting that the rate was on the lower side, and asked the operator to share strategies for how it would improve diversity in this area.

Graham Walters, Chief People Officer, said the company has improved its overall demographics in this area, but “is not where we need to be” in terms of female employees.

“This is a significant focus for us and a large area of investment,” he said.

O’Brien also challenged the operator on its “free bet” language in certain promos, asking if it had any plans to eliminate such language from promos or offers in the future. PENN Entertainment recently made the pledge to eliminate “risk free” wording from all its offers during its hearing with the MGC.

Any “free bet” language in promos constitutes an actual “free bet,” said Stephanie Sherman, Marketing Director. If “free bet” is used in a promotion, it is truly a “free bet” for users without any other action needed to access the offer.

Sherman did say if Massachusetts regulations prohibited the use of such wording in advertising or marketing, DraftKings would agree to do so.

The commissioners did laud DraftKings Sportsbook Massachusetts for having no marketing presence at colleges or universities.

DraftKings Violations Questioned

The MGC also had numerous questions about violations accrued by the sports betting operator. Commissioners asked for more information on two recent alleged violations from the Ohio Casino Control Commission regarding the operator’s sports betting advertising campaigns (and $500,000 in potential fines), a $15,000 violation from the Illinois Gaming Board levied in 2020, and several separate incidents in New Jersey and Illinois where advertisements were mailed to individuals who had placed themselves on a self-exclusion list.

The MGC asked DraftKings to address the violations and to describe what safeguards have been put into place to make sure similar incidents don’t occur in Massachusetts.

While the violations were discussed in the public meeting, the safeguards taken to avoid them were mostly discussed outside of the public view in a lengthy executive session.

DraftKings Has Deep Massachusetts Roots

Jason Robins, DraftKings Chief Executive Officer and Chairman of the Board, founded DraftKings in Massachusetts with fellow co-founder Paul Liberman in 2012. The operator initially ran daily fantasy sports services, but now operates online sportsbooks across 20 states and 12 retail sportsbooks across 18 properties, Robins said.

“The DraftKings brand has become synonymous with sports in America,” Robins said.

DraftKings currently has 4,000 plus employees across its platforms, has 2.7 million monthly unique players, and 11 worldwide offices.

While it still has not become profitable, Jason Park, DraftKings CFO, said Wall Street consensus estimates that the company had its deepest loss in 2022, but will have a “strong inflection of profitability” expected in 2023, and will achieve profitability shortly thereafter.

Jason Park, DraftKings CFO, said using Wall Street consensus estimates it is believed that 2022 is the company's deepest loss year, with a strong inflection of profitability expected in 2023, and achieving profitability shortly thereafter. pic.twitter.com/mjYgpoZgCY

— RLinnehanXL (@RLinnehanXl) January 11, 2023

Digital Gaming Corporation Up Next

The Massachusetts Gaming Commission will march on with its application hearings, as Digital Gaming Corporation will appear before the commissioners on Friday, Jan. 13, at 10 a.m.

Digital Gaming Corporation hopes to join DraftKings Sportsbook, Betr, FanDuel Sportsbook Massachusetts, and Bally Bet as online sports betting operators that have met criteria for an untethered Category 3 online sports betting license.