DraftKings Settles SEC Claims Over Selective Dissemination

The issue arose on July 27, 2023, when Robins posted messages about the company’s strong growth on his X (former Twitter) and LinkedIn pages. These details about the significant increase in revenue from existing markets were not publicly available until DraftKings’ quarterly report a week later. The SEC did not accept that time frame, citing the need to ensure equal access to information for all investors.

While DraftKings asked to remove the posts, the SEC noted that this did not address the underlying issue because the public was notified of the situation too late. John Dugan, deputy director of enforcement at the SEC’s Boston office, said, “Information about sales growth for a public company is of great importance to investors. It’s important that companies do so in a way that is fair to everyone.”

The SEC issued a writ of citation accusing DraftKings of violating Section 13(a) of the Securities Act and Regulation FD. The company neither admitted nor denied the allegations, but agreed to prevent similar violations in the future and provide training to its corporate communications staff.

The fine adds to a growing number of legal challenges facing DraftKings, as the company is also involved in lawsuits with major sports associations, including the NFL and the Major League Baseball Players Association, over the use of player names and likenesses in its fantasy sports and NFT products.

Despite legal hurdles, DraftKings remains a major player in the sports betting market. But the company’s approach to selectively sharing information on social media highlights the growing scrutiny of how businesses share data that could impact the market in today’s digital economy.