Earlier this month, NJ Online Gambling reported that DraftKings was fined $10,000 in New Jersey for again sending marketing material to self-excluded gamblers in the Garden State. A records request through the state sheds more light on what happened.
According to a complaint against DraftKings dated March 1, 2021, the online gambling firm simply “missed a step in the process” aimed to protect people with gambling problems from further harm.
DraftKings, which offers online gambling in the state under the casino license of Resorts Casino Hotel, is required to avoid direct marketing to people on the state’s self-exclusion list. In New Jersey, a gambler can self-exclude from as little as a year up to their entire life. A gambler with a lifetime self-exclusion was the person who tipped the state off to what happened.
“On November 25, 2020, patron ‘AC’ complained to the Division [of Gaming Enforcement] that despite the fact he has been self-excluded for lifetime since 2012, he received a promotional mailing from DraftKings at his home,” the complaint said.
The complaint said that a “third-party group” whose name was redacted gave DraftKings a list of 50,000 names to send marketing material to. DraftKings was then tasked with making sure it didn’t send material to anyone who was on the state’s self-exclusion list.
The state said that a single employee at DraftKings “missed a step in the process and failed to remove any individuals who do not have a DraftKings account but who are on the self-excluded list.”
“This error resulted in AC and ten other self-excluded individuals not being removed from the mailing list. Accordingly … a total of eleven self-excluded individuals potentially received the mailer,” the three-page complaint said. It’s unclear how the self-excluded players ended up on the 50,000-person list supplied to DraftKings by the third party.
“DraftKings management addressed the incident” with the employee, according to the complaint.
Also according to the complaint, the judgment against DraftKings required it to privately submit to the state “a detailed account of all methodologies it uses to ensure that its promotional mailing list does not include prohibited individuals.”RECORD 0001 - REDACTED (1)
A trend for DraftKings?
The Boston-based DraftKings has a growing history of violating the rules against directly marketing to self-excluded gamblers.
DraftKings was fined $3,000 last month in Indiana for a similar violation of advertising to 15 self-excluded players. In February, DraftKings was fined $500 in New Jersey for marketing to an undisclosed number of self-excluded players, as well as players with accounts in “cooled-off” status.
DraftKings has had other self-exclusion failures in prior years, including a 2019 violation in New Jersey for advertising to self-excluded players. In that case, DraftKings was fined $2,000. State regulators also found DraftKings had allowed self-restricted gamblers to continue betting.
In 2020 in Iowa, DraftKings was fined $5,000 for a reported “late download” of a self-exclusion list.
Why this matters to the industry
Sports betting isn’t going away, so it’s important to protect consumers from addiction.
States have long had their own casino gambling self-exclusion lists and they still don’t currently share them, meaning that a self-excluded player in New Jersey could go into Pennsylvania and gamble online. DraftKings’ online sportsbook is live in 11 states in total.
The sports betting boom has seen gambling ads proliferate on the internet, TV, and radio, so it’s very hard to avoid indirect marketing. However, the self-exclusion list is designed to protect people with addictions from direct marketing, which can seem more personalized.
Some people with gambling addictions may be able to receive mailers and simply discard them without any harm done. For others, it may result in a relapse, whether in their home state or somewhere else. In addition to the regulated options in New Jersey, many offshore sites are still accessible, ones with few if any problem gambling safeguards whatsoever.
The point of state regulation of online gambling is to provide consumer protections and generate economic activity and tax revenue, ideally greatly curbing the black market.
In more extreme instances, we’ve seen cases of self-excluded gamblers being able to slip through the cracks and create accounts and gamble online, as was the case recently with online gambling supplier GAN. New Jersey fined GAN and ordered it to disgorge the money the players lost.
The regulated sports betting boom is still in its infancy, so measures to help those with problem gambling might improve over time. DraftKings says it takes gambling addiction seriously. “People who are problem gamblers are not good long-term customers. … It can create a stain on the whole industry, and it’s not in our business interest,” DraftKings CEO and co-founder Jason Robins told the Financial Times in a recent article. Robins said the firm is working to improve safeguards.
As for the recent $10,000 fine against DraftKings, that’s just a drop in an Olympic-sized swimming pool for a firm with a market cap of $23 billion, but it’s actually on the high end for New Jersey. The online gambling regulatory fine structure has received some criticism in New Jersey.
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