DraftKings has been fined again this year, with the latest hiccup costing the Boston-based sports betting company $200,000 over posts published on the CEO’s social media accounts.
The company has agreed to pay the civil penalty to settle the Securities and Exchange Commission’s charges that it violated the Regulation Fair Disclosure, which ensures all investors have equal access to material disclosures simultaneously.
The mistake came in July 2023 when DraftKing’s public relations firm published a post about how the company continued to see “really strong growth” in states where it was already operating.
According to an SEC order, the firm published the post on the CEO’s personal X account on the same day it put up a similar statement on the CEO’s LinkedIn account.
“At the time of the posts, DraftKings had not yet disclosed its second quarter 2023 financial results, nor had it otherwise publicly disclosed certain information contained in the posts,” a release from the SEC states. “Shortly after the public relations firm published the posts, it removed both posts at the request of DraftKings.”
DraftKings held the information from the public purview for a full week until it announced financial earnings for the second quarter of 2023, ignoring the Regulation FD order that it “promptly disclose the information to all investors.”
As a consequence, DraftKings employees who have corporate communications responsibilities must undergo Regulation FD training
“Information about growth in sales as a public company can be extremely important to investors,” said John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors.”
Companies have the green light to post key information on social media in compliance with the Regulation FD as long as they give their investors a heads-up on what platform will be releasing the material.
Business has not been smooth sailing for DraftKings over the past few months.
New Jersey regulators called out “unacceptable conduct” in July when they fined the company $100,000 for reporting inaccurate sports betting data to the state.
Connecticut then ordered $22,500 to be forked over from the company and the developer of the “Deal or No Deal Banker’s Bonanza” as the online slot machine saw no winners between Aug. 15 and Aug. 21, despite more than 20,600 spins.
In early March, the gaming enforcement division’s Office of Financial Investigations became aware of issues in the way DraftKings had reported sports betting revenue to regulators in Illinois and Oregon, and suspected the same problems were happening in New Jersey, Flaherty wrote.
The Associated Press contributed to this report
