DraftKings will pay a $200,000 fine to the SEC for divulging nonpublic, material information

On July 27, 2023, DraftKings CEO Jason Robins posted on his personal X account. He noted that DraftKings continued to see “really strong growth” in states that offer iGaming and sports betting. That same day, a public relations firm representing DraftKings posted similar remarks to Robins’ LinkedIn profile. However, this information was not supposed to be released to the public for another week. 

The Securities and Exchange Commission reported that DraftKings’ PR firm released its Q2 financial results early. DraftKings received requests to delete the information but these reports were not made public until a week after the information was leaked. John Dungan is the Associate Director of Enforcement at the SEC’s Boston Regional Office. He had this to say about the information not being made public to everyone at the same time.

“It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors.” – said Dungan

DraftKings lawyers have a lot on their plates

According to reports, the SEC charged DraftKings with “violations of Section 13(a) of the Exchange Act and Regulation FD. The company would not confirm or deny the findings but they did pledge to refrain from future violations of this protocol. They are going to pay the $200,000 fine to DraftKings and comply with whatever comes next. 

This is far from the only case that DraftKings is dealing with. Just last week, the MLBPA sued four gaming companies. One of which was DraftKings. The MLBPA claimed that DraftKings and the other operators were using player names and images without consent. DraftKings was not consulting with the players or the players union. 

The litigation for the MLBPA came weeks after the NFLPA sued DraftKings. They claimed the industry operator could owe tens of millions of dollars for using player names and images. DraftKings was using this in their now-defunct Reignmakers nonfungible tokens (NFTs) game. This July, DraftKings shut down their NFT marketplace and pledged to provide compensation to those who played the game.

Jason Robins has had controversial posts in the past

Sadly, this is not the first time that DraftKings CEO Jason Robins has been on the wrong end of a post on X. On March 28, 2023, Robins had an eight-post thread and commented on his “bullishness” about DraftKings’ long-term outlook. In that post, Robinis did not specifically mention stocks. On that same day, he sold 300,000 shares. An interesting move by Robins to say the least. Now, he’s caught up in another post on X that could have been avoided. All DraftKings needed to do was let their investors know where the information was going to be released. They failed to do so and they’ll face the penalties.