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Massachusetts Attorney General Fines DraftKings and FanDuel $1.3 Million Each Over Deceptive Practices

More than two years after launching an investigation into daily fantasy sports (DFS) industry regulations, the Massachusetts Attorney General’s office has reached a settlement with leading operators DraftKings and FanDuel.

As part of that agreement, DraftKings and FanDuel were fined $1.3 million each to resolve allegations over the sites’ use of “unfair and deceptive practices.”

Massachusetts Attorney General Maura Healey issued a statement announcing the settlement terms:

“I am glad to have reached these settlements to address various consumer issues that existed at the early stages of this new industry.

We have since implemented a set of comprehensive regulations that provide consumers with broad-ranging protections and that have served as a model for many other states.”

The statement also outlined the scope of DraftKings’ and FanDuel’s consumer protection failures, although no specific violations were mentioned:

“As a part of that review, the AG’s Office found that some participants in daily fantasy sports contests were not adequately protected and that comprehensive consumer-protective regulation was needed.

In response to concerns uncovered during its review, the AG’s Office proposed and implemented first-of-their-kind consumer protection regulations for the fantasy sports industry.”

Based on the similarities between Massachusetts’ investigation and a similar case in New York, where DraftKings and FanDuel were fined a combined $12 million over consumer protection issues, the sites were likely under scrutiny for deceptive advertising and internal improprieties.

In October of last year, New York Attorney General Eric Schneiderman concluded that DraftKings and FanDuel took advantage of “misrepresentations they made to millions of consumers” during the companies’ respective rise to the top of the DFS industry.

Among those misrepresentations were claims that most DFS players had a chance to win major, multimillion dollar prizes, despite the presence of data demonstrating that as little as 1 percent of their player pools managed to do so. The use of “bait and switch” bonus offers – which promise free funds for new depositors while making no mention of onerous “playthrough” requirements – was also scrutinized during the New York investigation.

In Massachusetts, Healey used her office’s statement to ensure the DFS-playing public that both DraftKings and FanDuel were no longer engaging in such practices:

“Both DraftKings and FanDuel cooperated throughout the investigation and have made significant changes to their business models to protect consumers with respect to gameplay fairness, protections for minors, responsible gaming requirements, fairness in advertising, and data and funds security.

Each company represents that it is now in full compliance with the applicable regulatory requirements.”

As a result of the 2015 investigation, Massachusetts implemented a series of newly codified regulations on DFS operation which went into effect on July 1 of last year.

Addressing the settlement for DraftKings, which is based in Boston, the company’s general counsel Tim Parilla referenced those regulations as a byproduct of the site’s input:

“DraftKings is pleased to have reached this agreement with the Massachusetts Attorney General’s office and conclude what has been a productive and collaborative process.

Over the last two years, the Attorney General’s office has done an excellent job of working to fully understand DraftKings, our business and the fantasy sports industry. That expertise informed the Massachusetts regulations which have now become the national model for common sense, consumer-focused fantasy sports regulations.”

A spokesperson for FanDuel echoed those sentiments:

“We have worked closely with the Massachusetts Attorney General’s office in their review of fantasy sports, including their issuance of the first set of consumer protection regulations for our industry, which we were pleased to comply with since their inception in 2016.

FanDuel has worked tirelessly to pass laws in 16 states that solidify the fantasy sports industry and implement many of these same important consumer protections. FanDuel’s efforts have ensured that sports fans are able to continue playing the games they love in a safe, regulated environment and as we head into this football season, we look forward to continuing these efforts.”

To celebrate Week 1 of the NFL season, DraftKings recently ran a “Billion Dollar Lineup Challenge,” which required players to submit a “perfect” lineup consisting of the top fantasy performers at each position.

Per iGaming reporter Dustin Gouker of Legal Sports Report, industry analysts have calculated the odds of creating such a lineup at 1 in two trillion.

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