When Ohio regulators said no more college player prop wagering, they really meant no more college player prop wagering, as DraftKings is now well aware.
The Ohio Casino Control Commission met Wednesday and approved a settlement agreement with DraftKings that included a $425,000 fine for the Boston-based bookmaker.
That six-figure penalty was due to two compliance violations by DraftKings, the first of which was taking bets on college player props after Ohio banned those markets as of March 1.
The second violation was permitting an unapproved funding source for sports wagering accounts.
“The Commission is steadfast in its efforts to ensure Ohio’s sportsbooks are in compliance with all gaming‐related laws, and we will not hesitate to take administrative action when necessary in order to maintain the integrity of gaming and to protect Ohio’s citizens,” Casino Control Commission Chair Thomas Stickrath said in a press release.
You were warned
DraftKings cooperated with the commission and signed the settlement agreement, which was then approved by commissioners on Wednesday without any debate.
The agreement states that DraftKings accepted an undisclosed number of bets on college player props between March 14 and March 19 of this year, after they were prohibited in Ohio.
"The Commission communicated with the regulated community, including providing an opportunity for comment prior to deciding whether to prohibit NCAA player proposition wagers in Ohio," says the notice of violation that was sent to DraftKings in June. "DraftKings participated in the comment period and was provided notification of the wagering catalogue change in advance of the March 1, 2024 implementation date."
Moreover, according to the notice, the company allowed accounts to be funded using cash deposits at "non-gaming retail locations" without commission approval.
A total of 40,985 of those deposits were made totaling $2,545,927.76, the notice said. This happened from Jan. 1, 2023, through March 5, 2024.
Ohio rules allow bettors to fund their online sports betting accounts using cash, but only at "an approved cashiering or kiosk location."
Shut it down
Commissioners heard Wednesday that the regulator's staff worked with the sportsbook operator on measures to ensure the mistakes don't happen again.
"DraftKings is also required to ensure that its personnel are trained on all laws, policies and procedures, and Commission‐approved internal controls relevant to each employee’s individual function, as it relates to the violations," Wednesday's press release said.
According to the settlement agreement, DraftKings disabled the relevant college player prop markets in Ohio after it realized it had not done so before March 1, 2024.
The company then performed an additional review of its college player prop markets, including ones that it had not previously offered in Ohio, to ensure they had all been removed in the state. It also voided all "non-winning wagers" on college player props and refunded customers.
Here is the full text of Ohio's ban on college player prop betting, which is now part of the state's event and wager catalogue:https://t.co/2WwekrIWl6 pic.twitter.com/McEHSfs8qv
— Geoff Zochodne (@GeoffZochodne) February 23, 2024
DraftKings disabled the unauthorized cash deposit method after it was informed it was available in Ohio.
Furthermore, the company performed a review of its other deposit methods and put an alert in place that would "trigger an internal notification if a deposit is accepted in Ohio using a method that is not identified as approved."
The company also added monthly "compliance assurance testing" for its Ohio deposit methods and quality assurance reviews for deposit methods during pre-launch and post-launch compliance testing in new markets.
"DraftKings is dedicated to upholding the regulatory standards set by each state and jurisdiction in which we operate,” a spokesperson told Covers on Wednesday. “We value the productive relationships we've built with regulators and remain committed to close collaboration moving forward."
It's not the first brush DraftKings has had with regulators because of payment issues.
The operator faced an adjudicatory hearing in Massachusetts after allowing funds deposited by credit card in other jurisdictions to be used in the Bay State. The hearing wrapped up on Wednesday, with a decision by the Massachusetts Gaming Commission still pending.
Buckeyeing the trend
DraftKings' fine is also one of several that the Ohio Casino Control Commission has levied against operators in the state, which launched legal sports betting on Jan. 1, 2023.
The regulator has been a relatively strict watchdog, having previously penalized a handful of bookmakers (including DraftKings) due to advertising-related issues.
The Ohio sports betting regulator also became a trendsetter earlier this year when it banned college player prop betting at the request of the NCAA.
Louisiana, Maryland, and Vermont have since followed suit, and New Jersey lawmakers are considering legislation that would do the same.
“The NCAA has shown good cause to support its request to prohibit player-specific prop bets on NCAA collegiate events in Ohio,” Casino Control Commission Executive Director Matthew Schuler wrote in a letter in February. “While I recognize that there may be a small negative impact to operator and tax revenue, the protection of student-athletes and the integrity of collegiate competitions far outweigh these impacts.”
College player prop betting is finished in Ohio as of March 1. Matthew Schuler, executive director of the Ohio Casino Control Commission, announced today he approved the NCAA's request to ban such wagering. Any remaining futures must be voided by next Friday. pic.twitter.com/b9MXDJmZJE
— Geoff Zochodne (@GeoffZochodne) February 23, 2024
There are still 20 states with legal sports betting that permit some form of college player prop wagering. The debate over allowing those markets is ongoing, including in Ohio, where some lawmakers have expressed a wish to scrap the state's ban.
Buckeye State legislators are not confining their attempts at tinkering to betting markets either. For example, one lawmaker recently introduced a bill that would return the state’s sports betting tax rate to 10% after it was hiked last year to 20%.
“Ten percent was a reasonable tax rate that put us in the middle of the pack,” State Sen. Niraj Antani wrote in a letter to the state Senate’s finance committee. “While I’d love for us to be at the 6.75% rate to tie the lowest in the country, going back to 10% is reasonable.”
