Global daily fantasy sports heavyweights DraftKings and FanDuel have agreed a combined $2.6m settlement with the Massachusetts Attorney General’s office following a statewide investigation into allegations of consumer protection failings by both firms in 2015.
The Massachusetts Attorney General’s office began a review of the business models of both firms in 2015, in order to better understand the various economic and consumer protection issues surrounding the implementation of revised consumer protection standards in the state.
As part of the review, the Attorney General’s office found that some participants in daily fantasy sports contests were inadequately protected and that better consumer protection regulations were required. These regulations were later introduced by the state of Massachusetts in July of 2016.
In an announcement late on Thursday night, both companies confirmed that they would pay $1.3m each, with the money being used by the state for grant programs aimed at protecting consumers and engaging young people in the use of technology.
Following the agreement of the settlements, Massachusetts Attorney General Maura Healey said:"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."
Both DraftKings and FanDuel have made significant changes to their business models in the wake of the investigation in respect of gameplay fairness, protections for minors, responsible gaming requirements, fairness in advertising, and data and funds security to bring these elements in full compliance with Massachusetts state regulatory requirements.
In a statement released following the settlement’s publication, FanDuel spokesperson Justine Sacco said:"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."
Tim Parilla, general counsel for DraftKings praised the role of the Attorney General’s office in improving regulations in Massachusetts, saying: "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."