DraftKings Comments on 11 VAC 5-80 Sports Betting Consumer Protection Program (Sections 100-110)

PLEASE NOTE text in underlined bold denotes an insertion and text between [brackets] denotes a deletion.

11 VAC 5-80-100 Security of funds and data

B. A permit holder shall not share information that could be used to personally identify a sports bettor with any third party other than the Department, law enforcement with a warrant or subpoena or a credit-reporting agency, except when a bettor provides consent. Information that could be used to personally identify a sports bettor includes gaming habits, except when this information has been anonymized.

DraftKings respectfully requests the above modifications to provide for narrow exceptions to when a permit holder may share information about a bettor. The first instance would be if the permit holder receives consent from the bettor. The second instance would be anonymizing information to learn more about player habits to better improve a permit holder’s offering, and if this information about a player’s gaming habits has been anonymized it cannot be used to personally identify a sports bettor.

D. A permit holder shall maintain a reserve in the form of cash, cash equivalents, payment processors reserves, payment processor receivables, an irrevocable letter of credit, a bond, or a combination thereof in an amount approved by the Department and sufficient to pay all prizes and awards owed [offered] to a winning sports bettor.

DraftKings respectfully requests the above modifications to the reserve requirement to better align with industry standards. Specifically, we suggest adding payment processors receivables and payment processor reserves to the approved ways a permit holder may meet its reserve requirement. These two reserve methods are approved in other jurisdictions across the country, as bettors can be fully protected by a reserve comprising various financial instruments, as demonstrated by Nevada’s Regulation 5.225.20.(a), which allows gaming operators to use a range of financial instruments to satisfy the reserve requirement.

Further, DraftKings respectfully requests replacing the word “offered” with “owed” to better align with the realities of sports betting. Due to the nature of sports betting, sports betting operators sometimes have an almost infinite amount of potential liability due to parlay wagers with near impossible odds, and this modification adopts a reasonable approach for all parties by requiring permit holders to have enough in reserves to cover money actually owed to bettors for winning sports wagers. These changes are also consistent with 11 VAC 5-70-140 B. 3.

 E. 5. Procedures that allow a sports bettor to request withdrawal of funds from his user account, whether such account is open or closed, including:

The permit holder shall honor any sports bettor's request to withdraw funds by the later of 10 business days after receipt of the request or 10 business days after submission of any tax reporting paperwork required by law, unless the permit holder believes in good faith that the sports bettor has engaged in either fraudulent conduct or other conduct that would put the permit holder in violation of this chapter, in which case the permit holder may decline to honor the request for withdrawal for a reasonable investigatory period until its investigation is resolved if it provides notice of the nature of the investigation to the sports bettor. For the purposes of this subdivision, a request for withdrawal shall be considered honored if it is processed by the permit holder but delayed by a payment processor, a credit card issuer, or the custodian of a segregated account; and

DraftKings respectfully requests the Department insert “10 business days” into the above requirement to provide operators ample time to process withdrawals, and amend the 10 days related to submission of tax reporting paperwork to 10 business days.  While sports betting operators try to transfer withdrawals back to players as soon as possible, there are some payment methods that take longer to complete than other payment methods. For example, if a player may receive a withdrawal in the form of a paper check, the process will take substantially longer than processing an online transaction.

E. 6. Procedures that allow a sports bettor to permanently close a user account at any time and for any reason. The procedures shall allow for cancellation by any means, including by a sports bettor on any platform used by that sports bettor to make deposits into a segregated account.

DraftKings respectfully requests clarification that establishing and making known procedures for contacting customer service to permanently close a user account at any time for any reason would satisfy this requirement. This is traditionally how we close user accounts, especially for those people that have self-excluded or are unable to access their accounts.

F. If a prize is awarded to a sports bettor with a closed account, that prize, to the extent that it consists of funds, shall be distributed by the permit holder within seven days, provided, however, that if an account is closed on the basis of the permit holder's good faith belief, after investigation, that the sports bettor has engaged in fraud or has attempted to engage in behavior that would put the permit holder in violation of this chapter, such prize may be withheld, provided that the prize is redistributed in a manner that reflects the outcome that would have resulted had that sports bettor not participated.

DraftKings respectfully requests clarification that the above requirement applies to closed accounts and not suspended accounts. We also respectfully request clarification on the definition of a prize and specifically request that the term prize does not include promotional offers that do not have a cash value.

G. If a sports bettor's segregated account remains unclaimed for two [five] years after the balances are payable or deliverable to the sports bettor, the permit holder shall presume the account to be abandoned. The permit holder shall report and remit all segregated accounts presumed abandoned to the State Treasurer or his designee pursuant to Chapter 25 (§ 55.1-2500 et seq.) of Title 55.1 of the Code of Virginia.

DraftKings respectfully requests the above modifications to the duration of an inactive bettor before the account is zeroed out and closed. Our platform traditionally treats an account as “dormant” if an individual account holder is dormant for 24 months, and at that point we follow the requirements of the jurisdiction where that individual is located to zero out the account. In order to keep our technology consistent across jurisdictions, we respectfully request the Department make this change to two years, as it is a sufficient amount of time to deem an individual’s sports betting account inactive. 

11 VAC 5-80-110         Limitations on user accounts

A. A permit holder shall not allow a sports bettor to establish more than one username or more than one user account per sports betting platform.

DraftKings respectfully requests that above change to clarify that a sports bettor may create no more than one account for each individual sports betting platform operated in Virginia. 

B. A permit holder shall take commercially and technologically reasonable measures to verify a sports bettor's identity [and address] and shall use such information to enforce the provisions of this section.

DraftKings respectfully requests the above modification be adopted to remove the requirement that permit holders verify a sports bettor’s address. Through our verification process, described in detail in our comment to section 11 VAC 5-80-50(A), we exceed industry standards to identify bettors, and while the individual’s address plays a role in that, the address is used to verify identity and is not verified as an end unto itself.  Instead, we respectfully request the Department narrow the focus of this requirement to allow for the successful processes we have implemented in other states to be implemented in Virginia.