A poorly timed social media post from DraftKings Sportsbook is set to cost the sports betting giant a hefty fine.
According to a report from the Securities and Exchange Commission, DraftKings’ public relations firm shared confidential information ahead of the company releasing its second-quarter financial results.
Despite requests from DraftKings to delete the relevant information, Reuters reports the information was not disclosed to investors for upwards of a full week.
“Information about growth in sales as a public company can be extremely important to investors,” said John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors.”
The issue was made particularly pertinent given the nature of the information's release. According to the SEC, investors “must be alerted about which social media will be used to disseminate information,” something that DraftKings Sportsbook failed to comply with.
According to the order, the post in question violated Section 13(a) of the Exchange Act and Regulation FD, and while not admitting or denying the order’s findings, DraftKings “agreed to cease and desist from future violations of the charged provisions, pay the civil penalty…and comply with certain undertakings.”
Specifically, the quote in question that tipped off SEC regulators was said to be a quote from DraftKings CEO Jason Robins, stating that the company had continued to see “really strong growth” in states it was currently operating.
Not a great stretch for DraftKings
News of the filing comes not long after DraftKings unveiled plans to introduce a “gaming tax surcharge,” on August 1, only for the idea to subsequently be shelved roughly two weeks later due to backlash.
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge,” DraftKings said at the time in a statement. “We are always committed to delivering the best value in the industry to our loyal customers.”
