Massachusetts Sports Betting: BetMGM Took $200K In Illegal College Wagers

BOSTON –  Massachusetts sports betting regulators Thursday said BetMGM took more than 15,000 wagers totaling more than $200,000 involving college football player props. 

Wagering on college player props is against the law in Massachusetts, not simply a violation of standing gaming regulations. 

The wagers were made through Same Game Parlay plays throughout the college football season and were discovered by the Sports Wagering Division of the Massachusetts Gaming Commission during an audit. 

They were not self-reported by the operator. 

A representative of BetMGM had no comment when asked about the matter by bookies.com Thursday. 

MGC Senior Enforcement Counsel Kathleen Kramer dropped the bombshell more than 5 hours into Thursday's scheduled meeting, which was otherwise bogged down in procedural concerns and non-action taken on several matters.

The MGC said it will set the BetMGM matter for an adjudicatory hearing. Penalties could include a fine and/or temporary or permanent suspension of BetMGM's Category 3 mobile license in Massachusetts.

This would be, by far, the largest non-compliance, illegal wagering incident in the state reported by regulators since betting launched in 2023.

"The breadth of it, the statutory violation, the number of bets, the money. This warrants an adjudicatory hearing," Commissioner Eileen O'Brien. 

MCG Chair Cathy Stein needed to hear clarification on the dollar figure twice from Kramer.

"Prop bets on students is a statutory violation here in Massachusetts," Stein said. "It's a conversation starting to take place across the nation as to whether it's ever appropriate. Massachusetts got this right. I'm interested in resolving this matter as quickly as possible." 

Fanatics, MGM Springfield Took Wagers on BU, Northeastern, BC 

State law also prohibits wagering on in-state collegiate teams not participating in tournaments of four or more teams. College bowl games do not meet this requirement. 

Two other non-compliance matters were referred to the Investigation and Enforcement Bureau on Thursday. They concerned single wagers the Boston University and Northeastern University men's basketball teams taken by MGM Springfield and Fanatics. Each wager was less than $10 and involved a multi-leg parlay bet.

Fanatics also booked a $50 futures wager booked by Fanatics on Boston College in the Wasabi Fenway Bowl football game played at Fenway Park on December 28.  

Fanatics told regulators on December 6, at approximately 5:55 p.m. that it accepted the bet in question a day earlier. It was eventually canceled before the game and the wager was refunded. 

A Fanatics trader manually activated the market before it was closed by a football trader. Wagering was allowed on the game for almost a 21-hour period. 

A similar case concerning a BC women's basketball bet at Encore Boston Harbor last winter resulted in a $10,000 fine. The hearing will be scheduled at a later date. 

MGC members voiced concerns about the betting systems used by Fanatics and how this was allowed to occur at a meeting last night. 

DraftKings Remains Under Investigation 

Boston-based DraftKings remains under investigation after it allowed more than $83,000 in wagers taken from March to August to be funded by credit card deposits made in other states. 

Using credit cards to fund both sports wagers and casino bets is illegal in the Bay State. Zachary Mercer of the Massachusetts Gaming Commission said 218 DraftKings customers bet a total of $83,663.92 on 242 wagers using funds from credit cards from the launch of mobile betting on March 10 until July 13. 

O'Brien called the actions "egregious." And Commissioner Jordan Maynard stressed that this is a "violation of the statute, not a reg, the statute." 

The issue will be evaluated at an adjudicatory hearing on a date to be determined. The MGC has the authority to issue financial and civil penalties against DraftKings, up to and including the suspension or termination of its license to operate in Massachusetts. 

Safeguards Initially Not In Place

According to Mercer's report, DraftKings notified MGC Director of Sports Betting Bruce Band on May 30 that it had been taking bets funded with credit cards in the Bay State since the Massachusetts launch in March. 

DraftKings told Band on May 30 that the safeguards to prevent out-of-state credit card funds from being used in Massachusetts were not in place. 

DraftKings updated its software on May 22nd in an attempt to fix the issue, but that software update would prove ineffective. DraftKings became aware again in July that out-of-stater credit card deposits were still funding wagers in Massachusetts. It subsequently issued another software update, Mercer said. 

DraftKings said both errors were allowed because of "internal miscommunication," Mercer said. The initial failure occurred due to what DraftKings called an "anomalous sequence of events."

This potential issue was raised during the licensing process for all multi-state sportsbooks that applied to operate in Massachusetts. During its licensing hearing, DraftKings said it had safeguards in place to prevent credit card funds deposited in other states from being used in Massachusetts. 

O'Brien said she wants the representatives from DraftKings who made the initial representations about its safeguards in this matter to appear before the MGC. 

DraftKings Facing Class-Action Lawsuit

The MGC issued a brief update on a lawsuit filed against DraftKings. A case filed in Middlesex Superior Court by the Public Health Advocacy Institute alleges that DraftKings uses “unfair or deceptive practices” and “misleading advertising” when marketing in Massachusetts. 

The suit centers on a "$1,000 Bonus" DraftKings offered to new customers: “Join DraftKings Sportsbook. New Customers Get a $1,000 Deposit Bonus in DK Dollars!”

The plaintiffs allege that the claim is misleading because that $1,000 bonus is only available to bettors who deposit $5,000 and wager at least $25,000 within 90 days of signing up with the book. Those wagers are limited to those with odds of -300 or better. 

According to the lawsuit: “A new consumer could not reasonably have been expected to understand from the face of DraftKings’ advertisements that the $1,000 bonus would not be provided at the time of their initial deposit, but that instead he or she would earn the bonus only $1 at a time for every $25 wagered."

DraftKings told NBC10 Boston it "respectfully disagrees with the claims and allegations" and added that it tried to resolve the case before the suit was filed. 

PHAI president Richard Daynard fought to make tobacco companies liable for their products’ harms in court.  “Online gambling is creating a public health disaster with increasingly addictive products right before our eyes,” Daynard said in a release. “In fact,” he continued, “massive advertising using unfair and deceptive promotions to hook customers on an addictive product bears an uncanny similarity to what the cigarette companies used to get away with.”
 

Sportsbook Let Off The Hook For $575,000

The above actions all come after the MGC in November voted to void 178 bets totaling $4,182.36 which would have cost DraftKings $575,436.82.

The MGC, which usually votes 5-0 in most matters, split its vote on two motions. The first motion to force DK to pay out on bets was defeated by a 3-2 vote. The second motion, which agreed to void the bets, passed 3-2 only after DK agreed to pay a 3X cash bonus out to each patron affected. 

The bets were made on a Los Angeles Lakers-Denver Nuggets game played on October 24. The wagers in question were featured and made by Same Game Parlay players. Incorrect full-game totals were posted in that particular market that included totals for just the first quarter. For instance, the game total for LeBron James that night was posted at just 8.5 points.

A total of 137 players took advantage of the skewed numbers, that were called a "Black Swan Event" during a November 16 hearing on the matter by Jake List of DraftKings. List called it "an extremely large error" on Thursday. One $100 wager hit for $150,000, according to Commissioner Nakisha Skinner.

DraftKings said the numbers were the result of an error by Sportcast, its odds provider. The incorrect numbers were up for all of 13 minutes in the afternoon of October 23. Yet, bettors still pounced. Sportcast made an error with similar wagers in January, yet was still being used by DraftKings in October. That mistake led to more than $318,000 in wagers being voided. That issue stuck with Commissioners. 

DraftKings voided similar SGP on the October 24 Lakers-Nuggets game in 17 of the 19 jurisdictions outside Massachusetts where they were taken. 

Bettors in Connecticut and New Jersey have been paid out on their wagers, the company added. New Jersey rules prohibit voiding wagers because of "obvious error." There are no provisions for such an issue in Connecticut. The liability for DraftKings in Connecticut was $151,000, the MGC said. The MGC has previously voided a wager requested by Penn Interactive in September. 

DFS Battle Lines Drawn In Bay State

The MGC has also begun to examine what it terms to be the "overlap" between some daily fantasy sports activities and sports betting. The Commission collects taxes from both DFS operators in the Commonwealth. 

Last summer, the MGC noted that there's been "of late, a great deal of activity surrounding the boundaries of sports wagering relative to daily fantasy sports and whether there's been some overlap between the two." 

Some DFS activities being offered have been considered sports betting activities elsewhere, Grossman said. He said an investigation is underway into the situation in Massachusetts and that the MGC could address this at a future date. 

A schism in the DFS space has developed. Established operators such as DraftKings and FanDuel who also operate in the regulated sports betting space believe some DFS operators are essentially offering prop bets and parlays under the guise of fantasy. Those on the other side, including PrizePicks and Underdog Fantasy, argue these plays fit within the fantasy sports space. 

Grossman's remarks are seen at the very least a nod to the licensed sports betting operators that the MGC is looking into the matter. 

Several DFS companies have been in the news as of late. Last week, Betr launched Betr Picks, a pick ’em-style fantasy game in 24 states. Among those were Florida, California, and Texas. None of those three states, the three largest (by population) in the nation, have sports betting up and running. Betr has a Category 3 mobile betting license in the Bay State. It is noteworthy that Betr did not launch Betr Picks in Ohio and Massachusetts, the two states in which it currently is a sports betting licensee. 

DFS operator No House Advantage has been accused by customers on social media of not paying on attempted withdrawals. Attempts to reach that company or its founder, Kevin F. Koeppel, have been unsuccessful. 

3 Massachusetts Sportsbooks Fined A Total Of $50K

The three retail sportsbook operators in Massachusetts were fined a combined total of $50,000 for taking illegal wagers on games involving in-state colleges in February of 2023.

The announced fines for MGM-Springfield, Plainridge Park Casino, and Encore Boston Harbor on July 24 after each book accepted bets on basketball games involving teams based in the Bay State. The law in Massachusetts prohibits wagering on in-state colleges unless they are involved in a tournament involving four or more teams. All of the fined operators self-reported the incidents and cooperated with the MGC in its investigation.

EBH accepted one wager on February 2, 2023, Boston College vs. Notre Dame women’s regular season basketball game at a kiosk through its WynnBET-branded book. The wager was part of a parlay. The fine was $10,000. The book subsequently stopped taking wagers on all women's college games to avoid any such errors in the future. 

MGM-Springfield was fined $20,000 after it took wagers on two Harvard University men's basketball games on Feb. 3 and 4 (against Yale and Brown, respectively) at its BetMGM-branded book. Wagering was offered for approximately 21 hours and 20 hours on each event respectively, and twenty-eight tickets were sold that included wagers on the two events. 

All wagers were placed at kiosks, and two winning tickets were redeemed at the book's counter. Two other winning tickets were redeemed at a kiosk. BetMGM had incorrectly designated Harvard as being in Connecticut. The Cambridge-based university opened its doors in 1636. 

PPC was fined $20,000 after taking 33 wagers across 27 tickets on February 2, 2023, Merrimack College vs. Long Island University men’s regular season basketball game. Its Barstool-branded book incorrectly listed Andover-based Merrimack as being located in Florida.