The Securities and Exchange Commission (SEC) imposed a penalty on DraftKings on Wednesday, following allegations that the company’s public relations team shared excessive information on the CEO’s personal X (formerly Twitter) and LinkedIn accounts.
The SEC reported that the public relations team for the $20 billion fantasy sports and casino platform published a post on CEO Jason Robins’ personal X account and LinkedIn, stating, “There’s massive potential for growth in new markets—but we’re still seeing really strong growth in existing states. Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1. With those numbers, we expect robust growth even without new states opening.”
According to the SEC, neither X nor LinkedIn are official sources for DraftKings, and information regarding company growth should not have been shared with selective audiences on these platforms. DraftKings’ communications team alerted the PR firm immediately after the posts went live, and the posts were taken down within half an hour. However, DraftKings did not release the information to the general public or its investors until seven days later, aligning with its scheduled earnings release. The regulator stated that this selective disclosure violated Regulation Fair Disclosure, which requires that all investors receive information simultaneously.
John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office, emphasized the importance of disseminating material, nonpublic information fairly to all investors.
DraftKings’ Reg FD policy includes a “quiet period” during which employees are prohibited from discussing financial or operational results. The social media posts in question appeared on July 27, 2023, before the quiet period concluded on August 4. The SEC noted that DraftKings’ staff reviewed and approved the content of the posts, violating multiple internal social policies that forbid using blogs, social networks, chat boards, Facebook, and other platforms to disclose material information that has not been made public.
Without admitting or denying the SEC’s findings, DraftKings agreed to pay a $200,000 penalty for the infringing posts.
A spokesperson for DraftKings stated the company is “pleased to have this matter resolved.”