DraftKings, a major player in the sports betting and online gaming industry, is in hot water with both regulators and investors after a series of issues with its slot machine game.
The issues have raised concerns about the company’s transparency and its ability to protect consumers.
Slot Game Glitch
The Connecticut Department of Consumer Protection fined the company £14,392 ($19,000) for a malfunction in one of its online slot games, Deal or No Deal Banker’s Bonanza.
Over 20,000 spins failed to produce any wins, despite advertising an expected payout rate of nearly 95%.
According to regulators, a software error set the game’s odds to zero, making it impossible for players to win. The glitch, which occurred shortly after the game’s launch in August 2023, was discovered within 48 hours. DraftKings reportedly refunded £18,111 ($23,909) to all players in Connecticut who had placed bets on the faulty game.
However, according to the state’s investigation report, the company did so without notifying the affected players of the exact reason for the refunds, prompting concerns about the integrity of the online gaming platform.
Regulators have fined White Hat Gaming, its casino software provider, £2,651 ($3,500) for its role in the incident.
Red Flags
DraftKings acknowledged the incident, claiming it was isolated to the game’s launch in Connecticut.
“Our customers’ satisfaction and the integrity of our products are central to our success. We have robust measures to monitor potential payout issues, and we investigate any concerns promptly. In the event of a game not functioning as intended, we ensure impacted customers are appropriately refunded.”
A DraftKings spokesperson said in a statement
However, DraftKings is also under investigation by The Schall Law Firm for potential securities law violations. The investigation is focused on whether DraftKings issued false or misleading statements to investors.
The probe was triggered by a report that user accounts had been hacked in 2022, resulting in £240,000 ($300,000) being cashed out from customer accounts without their knowledge. DraftKings acknowledged the breach but did not provide detailed information until after the report was published.
Following this news, shares of DraftKings fell more than 5%