Citing Wire Act Concerns, West Virginia Lottery Halts DraftKings Sports Betting Mobile Launch

Posted on: June 5, 2019, 02:04h. 

Last updated on: June 5, 2019, 02:05h.

The West Virginia Lottery announced on Wednesday afternoon it has delayed approval for DraftKings online sportsbook application, citing Wire Act concerns. And it appears it could take a while before the state re-enters mobile sports betting.

DraftKings, which seemed almost ready to launch its mobile sportsbook in West Virginia, now must wait indefinitely as the state’s lottery has questions regarding the app and compliance with the federal Wire Act. (Image: DraftKings)

Nearly two weeks ago, Lottery Director John Myers announced at the Lottery Board’s May meeting that DraftKings completed testing at the casino and that additional training would take place that weekend. Myers anticipated the application and Website would be ready for a public launch by the middle of the following week.

Since then, there were no other announcements from DraftKings or the Lottery, which manages sports betting for the state, until Wednesday afternoon.

Everyone involved wants to make sure we proceed the right way,” Myers said in the Lottery’s statement. “The construction of the network and the mobile app involves many parties and can affect the operations of other jurisdictions. The Lottery wants to see a successful launch as soon as possible, but we must make sure that the citizens of West Virginia and our employees are not put at risk. We are working closely with the parties involved, however it will take time to build the system.”

Last December, DraftKings signed a partnership agreement with Penn National Gaming to provide an online sportsbook platform. Penn National owns the Hollywood Casino at Charles Town Races. The casino is located in the eastern part of the state. It serves as West Virginia’s leading retail sportsbook thanks to drawing customers from the Washington, D.C. metropolitan area.

Questions About ‘Wallet Server’

Randy Burnside, the Lottery’s public relations and drawings manager, told on Wednesday the concern stems from the “wallet servers” DraftKings will use. The servers that will process the wagers are based in West Virginia. However, the other servers are located in New Jersey, where DraftKings is currently licensed to operate a mobile sportsbook.

“The wallet servers check with the financial institutions to make sure funds are available… That’s the hangup,” he said.

The Wire Act prohibits any interstate or international transmission of data regarding any bet on a sporting event.

Burnside said he did not know if DraftKings owned those servers or if they belonged to a vendor or partner.

A spokesman for DraftKings did not immediately return a request for comment.

Delay Latest Hiccup

The DraftKings postponement is just the latest blemish for West Virginia in its attempt to roll out mobile sports betting applications.

In March, Delaware North, which owns two casinos in the state, saw its sportsbooks and BetLucky application close indefinitely due to a vendor dispute. The still-ongoing closure affected the Wheeling Island Hotel Casino Racetrack in Wheeling and the Mardi Gras Casino and Resort in Cross Lanes, between Charleston and Huntington.

Delaware North has since filed suit against Miomni, and that case is still pending.

When state lawmakers legalized sports betting in February 2018, in anticipation of the US Supreme Court overturning the Professional and Amateur Sports Protection Act, they expected the state to generate $5.5 million in taxes from retail and online sportsbooks. However, the first-year returns have not yielded anywhere near that amount.

Through the week of May 18, the state’s sportsbooks have generated slightly more than $949,000 in tax revenue.

In addition to Hollywood and the currently suspended books at Wheeling Island and Mardi Gras, the state also has sportsbooks at The Greenbrier in Sulphur Springs and Mountaineer Casino Racetrack and Resort in New Cumberland.