The Ohio Casino Control Commission (OCCC) has imposed a $425,000 fine on DraftKings, citing two regulatory breaches. The violations involved accepting college player prop bets—prohibited under Ohio law—and facilitating unauthorized cash deposits at non-gaming retail locations. Between January 2023 and March 2024, nearly 41,000 such deposits, totaling $2.5 million, were processed. DraftKings has pledged to rectify these lapses and ensure compliance with state laws moving forward. Meanwhile, regulatory scrutiny of DraftKings is intensifying, with the Massachusetts Gaming Commission (MGC) also investigating its practices concerning credit card deposits.

Ohio’s Ban on College Player Prop Bets

1. Policy Violation:

DraftKings violated Ohio’s newly enforced ban on college player prop bets, which prohibits wagering on individual college athletes' performances.
The breach occurred between March 14 and March 19, 2024, shortly after the policy took effect on March 1, following a request by Governor Mike DeWine.
2. Limited Allowances for Team-Based Bets:

While Ohio permits team-based prop bets, such wagers are restricted to scenarios where statistics historically involve contributions from multiple players in the majority of cases.

Unauthorized Deposits Highlight Regulatory Gaps

1. Non-Compliant Funding Channels:

DraftKings allowed users to deposit funds via non-gaming retail locations, a practice unauthorized by the OCCC.
Between January 1, 2023, and March 5, 2024, 41,000 such deposits totaling $2.5 million were processed.
2. Approved Deposit Methods:

While Ohio regulations allow cash deposits, they must occur at approved kiosks or cashiers, ensuring compliance with established standards.
3. Regulatory Stance:

OCCC Chair Thomas J. Stickrath emphasized the Commission’s dedication to upholding compliance, stating, “The Commission is steadfast in its efforts to ensure Ohio’s sportsbooks follow all gaming-related laws.”

DraftKings’ Response and Corrective Measures

1. Commitment to Compliance:

DraftKings stated its commitment to adhering to regulatory standards across jurisdictions.
The company introduced alert systems to flag unauthorized deposits in Ohio moving forward.
2. Regulatory Collaboration:

A DraftKings spokesperson reaffirmed the operator’s intent to maintain productive relationships with regulators, focusing on preventing future lapses.

Massachusetts Scrutiny Adds to DraftKings’ Challenges

1. Credit Card Deposit Concerns:

The Massachusetts Gaming Commission (MGC) criticized DraftKings for accepting credit card deposits, prohibited under state law.
The issue occurred on multiple occasions, with DraftKings attributing the violations to a misinterpretation of the law, believing the prohibition applied only to in-state transactions.
2. Pending Penalties:

Although the MGC has yet to impose penalties, commissioners expressed dissatisfaction with DraftKings’ slow response to addressing the issue.

Ohio Casino Control Commission: A Robust Regulatory Force

1. Proactive Oversight:

The OCCC remains one of the most stringent gaming regulatory bodies in the U.S., evidenced by its decisive actions against DraftKings and illegal operators.
2. Recent Crackdowns:

In April 2024, the OCCC shut down three illegal gambling halls, seizing equipment and cash.
Executive Director Matthew Schuler emphasized the need to protect Ohioans from unregulated gambling operations, stating, “Illegal casinos operate without proper oversight and prey upon vulnerable Ohioans.”

Implications for DraftKings and the Broader Industry

1. Reputational Risks:

Repeated regulatory violations could damage DraftKings’ credibility, undermining its efforts to expand in highly regulated markets like Ohio and Massachusetts.
2. Need for Enhanced Compliance Systems:

The incidents highlight the importance of robust compliance frameworks to navigate the complex regulatory landscape across states.
3. Industry-Wide Lessons:

The DraftKings case underscores the growing scrutiny from regulators, signaling to the broader gaming industry the need for heightened vigilance and adherence to evolving laws.