The DraftKings $2.5M Sports Betting Championship Controversy: Where It Goes From Here

Posted By Chops on January 14, 2019 - Last Updated on April 14, 2019
DraftKings Sportsbook controversy

Things were going so well for DraftKings’ first-ever $2.5 million Sports Betting National Championship.

It was exciting. It brought fun and competition to sports betting.

Unfortunately, DraftKings couldn’t stick the landing.

Controversy ensued.

Now what?

So what happened at DraftKings was…

Held in New Jersey from Friday through Sunday, the DraftKings Sportsbook event had participants vying for $2.5M in total prizes. Whoever ran their starting bankroll up the highest by the final eligible game (Eagles vs. Saints) would take home $1 million for first.

Read The Lines live blogging of the event here.

Everything was going without a hitch until the very end.

Thanks to some garbage-time scoring, the Chargers vs. Patriots game ran late, ending a few minutes before the start of Eagles vs. Saints.

Bettors who had all or a significant chunk of their bankroll in Chargers vs. Patriots needed those wagers to be settled / graded out in order to get in on the Eagles vs. Saints game.

Some bettors were settled in time.

Buuuuut some weren’t.

And therein lies the rub.

Had Chargers vs. Patriots just gone on a few minutes longer, or had all bets on that game not been settled in time for Eagles vs. Saints, no problem. That’s not what happened.

One particularly high-profile competitor, former ESPN writer Rufus Peabody, was potentially impacted the most. Peabody, who was in first place, had his entire bankroll (save .01) tied up at the start of Eagles vs. Saints.

He ended up finishing third for $250,000.

Others surely were impacted to lesser degrees.

For more details, read Legal Sports Report here.

DraftKings handled this well, right?

Weeeeellll…

DraftKings did quickly put out a statement regarding the controversy:

“The first ever Sports Betting National Championship was an incredibly thrilling event. We recognize that in the rules the scheduled end of betting coincided very closely to the finish of the of Patriots-Chargers game.

While we must follow our contest rules, we sincerely apologize for the experience several customers had where their bets were not graded in time to allow wagering on the Saints-Eagles game. We will learn from this experience and improve upon the rules and experience for future events.”

This is a perfectly fine first-step response. It’s factually accurate. Leading with “incredibly thrilling event” is a little tacky considering how payout timing impacted some participants and the general “come on, DraftKings” public perception building over this miscue. And the reality is they likely have a team of lawyers massaging every word of what the next statement will be. Understandable.

The contest itself was obviously flubbed at the end, and the first response was adequate though not great. DraftKings could have been more emphatic in their remorse and forceful in fixing the situation, but the reality is they quickly had to shift celebratory shilling to disaster mode.

This all sets up an interesting few weeks ahead.

What should DraftKings do now?

This is a difficult situation. First, let’s be clear: the overall concept of the contest was great. It’s a creative and fun way to generate excitement for sports betting, content and publicity for DraftKings, and could have been used as a template in other states.

When you hold events with gaming authority oversight, the very first things you must ask yourself is: “OK, what could go wrong here? And if something do goes wrong, what’s the fix?”

DraftKings might have asked themselves those questions, but they certainly didn’t have any implementable answers.

They’re stuck in impossible situation because of it.

They simply can’t issue Rufus Peabody a “make-good” settlement as that opens up a huge can-of-worms. First, you must trust that Rufus, or anyone else, is telling the truth over whatever wager was going to be placed. It’s possible not entering wagers in the final game was the best thing that could have happened to Rufus or others.

Here’s one suggested route for DraftKings to follow:

  • Apologize profusely. Their initial statement, while all true and accurate, lacked a level of contrition for those negatively impacted or understanding of how this situation could snowball.
  • Fix the contest rules. This is a given and was already hit upon by DraftKings, but if DraftKings is ever going to be allowed to hold such an event in New Jersey (or elsewhere) again, they must have contest rules that consider all worst-case scenarios and “emergency, break-glass” solutions. There’s a reason why people are playing BetStars and not BetTilt in New Jersey today. It’s because PokerStars had (among other things) an emergency plan it case things hit the fan. Hard lesson learned. DraftKings will hopefully issue their “how we’ll keep this from happening again” in short order.
  • Be proactive with NJ Department of Gaming Enforcement. While maybe not this flippantly, DraftKings needs to have their Otter moment with New Jersey gaming. Reasonable people understand we’re all traveling into new frontiers with sports betting in America. In a situation like this, how you handle it usually determines the eventual outcome. Fess up, be proactive, offer solutions, collaborate, move on.
  • Wait on NJ for answers. Unfortunately for those impacted, this is the safest route for DraftKings to take. You fall on the sword of New Jersey Gaming. Yes, still be proactive regulators, but ultimately let them dictate the solution. They’re the boss. As long as they’re working with regulators, DraftKings will likely have a say in the final outcome anyway. This is the safest and smartest path to follow.

While a mess, everything preceding the settlement issue was a positive showcase for sports betting. Hopefully, DraftKings gets the next steps right and is afforded a second chance.

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Chops

Steve “Chops” Preiss has 15 years of experience in the gaming industry. Chops began writing and producing content for digital media sites during the early poker-boom years. He has twice been voted by his peers as one of the 20 Most Influential People in Poker. Chops has also written and produced segments for a primetime gaming TV show on Versus (now NBC Sports Network) and distributed a poker program to over 160M global households.

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