In establishing itself as one of the best legal sports betting outlets in the country, DraftKings Sportsbook has had many good days.
Tuesday, Aug. 13, was not one of them.
In addition to the operator walking back plans for a surcharge on winning bets in high-tax states, DraftKings also sent a mass email to a much different audience than intended, which resulted in widespread outages. That email advertised bonus bets that, as it turned out, did not exist on such a scale.
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DraftKings won’t add a surcharge
A few weeks ago, DraftKings announced it would implement a surcharge on winning bets in markets with higher-than-normal tax rates. Specifically, that plan would affect customers in the New York sports betting, Illinois sports betting, Pennsylvania sports betting, and Vermont sports betting markets.
At the time, DraftKings CEO Jason Robins said it would take “quite a lot” to walk back these plans. “Quite a lot” happened Tuesday, when FanDuel Sportsbook held its quarterly earnings call. In addition to reporting exceeded revenue expectations, FanDuel CEO Peter Jackson stated firmly that his company had no intentions of offering a similar surcharge. In response to the call, Flutter Entertainment (FanDuel’s parent company) saw its stock surge in after-hours trading.
Less than an hour later, DraftKings took to X (formerly Twitter) and issued a formal statement:
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers.”
FanDuel did imply there would be fewer sportsbook bonuses in high-tax states. It’s likely DraftKings is now forced to follow a similar plan.
Mass email causes system issues
Later that evening, DraftKings sent an email to most of its user base, including those who did not have DraftKings Sportsbook accounts (such as DFS-only users in states without legal sports betting). The email discussed resolution of recent golf bets, as follows:
“Since two or more golfers tied for the same winning position, your bet(s) was settled using Dead Heat Reduction rules. A ‘Dead Heat Reduction’ is calculated by dividing the odds proportionally among the number of winners for a particular position (i.e. finishing place) in the event. Since this calculation resulted in a payout less than your wager, we are issuing you a bonus bet for the amount of your wager as a one-time courtesy.”
Many users who received this email, however, did not have relevant wagers placed on this weekend’s golf tournament. It caused a spike in traffic, one that the company’s servers, apparently, were not equipped to handle.
Draftkings sent a faulty email claiming it’s users placed a golf bet, everyone panic opened the website and app crashing the login page, thereby causing even more panic that their draft kings accounts were hacked lmao pic.twitter.com/dapGlZZug4
— baked ziti (@malikmamluke) August 14, 2024
DraftKings issued another X statement late Tuesday urging users to disregard the email. By that point, though, plenty of damage was done.
How does DraftKings move forward?
With NFL betting and college football betting on the horizon, things look bright for sportsbooks. It’s unlikely that the email fracas will have much significant effect on long-term business.
However, the reversal of plans regarding the surcharge is newsworthy. Based on their actions, it’s safe to assume they expected other online sportsbooks to follow suit. When FanDuel didn’t, and their share price benefited immensely after Tuesday’s call, DraftKings appeared forced to pivot.
Fewer sports betting promos in certain states isn’t ideal for customers. However, it seems a decision’s been made that that’s more palatable than the winning bet surcharge.
