DraftKings Fined $100,000 by AGCO for Alleged Advertising and Inducement Infractions

DraftKings Fined $100,000 by AGCO for Alleged Advertising and Inducement Infractions
By Mark Keast

At the recent Canadian Gaming Summit in Toronto, the Alcohol and Gaming Commission of Ontario was widely commended by the industry for how it has overseen the rollout of a regulated Ontario sports betting market.

With an announcement Thursday that the AGCO had issued $100,000 in fines to DraftKings Canada for alleged advertising and inducement infractions, that tone in some corners had changed. 

“[The fine] is a parking ticket,” said one industry source, expressing their disappointment at the AGCO. 

According to an AGCO new release, contrary to Standard 2.05 in the Registrar’s Standards for Internet Gaming (“Advertising and marketing materials that communicate gambling inducements, bonuses and credits are prohibited, except on an operator’s gaming site and through direct advertising and marketing, after receiving active player consent”), Crown DK CAN Ltd., the parent company of DraftKings Canada, posted or aired multiple broad gambling inducements between May 19 and May 31. They included inducements of boosted 2-1 odds.

The promotion was distributed widely via television and social media channels, the AGCO said in its news release.

DraftKings Canada is the third operator to be fined for alleged advertising violations. PointsBet Canada and BetMGM Canada were fined in early May by the AGCO.

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Size of Fine Questioned

The real issue for the industry source was the size of the fine measured against the number of users DraftKings Canada was potentially able to acquire because of the direct inducement. The AGCO reportedly received many complaints about it. The source also referenced the timing of those ads — in part over the May 24 holiday weekend when offices were closed.

DraftKings Canada went live on May 18 in the Ontario sports betting market.

Said a spokesperson from DraftKings Canada, in a statement Friday: “We are committed to complying with all applicable regulations in every jurisdiction in which we operate. Upon being informed of the potential issue shortly after our launch, we took immediate action to remove the assets in question.”

At the summit last month, a panel that included Bet99 CEO Jared Beber, Marissa Caldwell, a lawyer with McCarthy Tetrault, and Andrew Stokes, senior director at Maple Leaf Sports & Entertainment’s Global Partnerships Group, talked about the terrain for sportsbook advertising in Ontario. That included the challenges in partnerships and advertising, and how everyone is adapting in light of the standards where operators can’t build content around bonuses. In other markets, like New York, bonuses are a differentiator.

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‘Definitely a Shift in Mindset’

One of the points brought up was consumer confusion around having to be introduced to bonuses on the operator’s site for the first time or via email once they’ve signed up with an operator. 

“I am a lawyer. I give advice [to operators], and I say ‘no’ a lot about gambling inducements and bonuses under Section 2.05,” Caldwell said. “I’ve really been encouraged by how flexible people have been. Yes, it’s going to be more difficult to get [the customer] in the door, but it’s an opportunity to build trust with a customer base. You are getting in the door without an instantaneous reward ... giving them a chance to show what your site does, how it’s different, and how it’s a long-term partnership for them, as opposed to it being the best bonus in this week. 

“Operators who have been able to look at that as an opportunity, through responsible gambling, through restricting inducements at the outset. It’s definitely a shift in mindset, but they’ve been successful, and it’s been a bigger picture priority for them.”

Long-term gain via customer engagement and experience is the priority, Beber added.

“Acquisition is at the core, but retention is arguably more important,” he said. “So we need to take proactive steps to achieve that retention by being able to lead on why we are different and tell that story.”

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‘Responsive’ Ontario Regulator

There are some clear no-gos within those standards, Caldwell said. 

“Everyone got on board with those pretty quickly,” she said. “Then we had a really excited, creative industry that started thinking about what can we do? How can we push beyond those no-go zones and do something that aligns with the standards but also gives us some freedom in the market? When you have 70+ operators in a pipeline sometimes they think a little bit faster than a regulator, and they get a little bit ahead. 

“We’ve had a responsive regulator in Ontario. But there’s going to be a push and pull in a new market. Players have been constantly adapting … and I don’t think that will change in the days that are coming. We will see where all this lands after we have been doing this for awhile.”

DraftKings Canada can appeal the fine to the Licence Appeal Tribunal.

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Mark Keast has recently covered the sports betting industry in Canada for The Parleh, and is a long-time sportswriter and editor, most notably with the Toronto Sun.

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