 Head it right now. Thank you. To go. Good morning. This is convening of the Massachusetts Gaming Commission. And before we get started, I just want to extend my appreciation to our team members who have been helping on our flood to the extent they're hearing or anybody can pass along. They're busy at work taking care of some difficult arrangements. So to the draft King's folks, thank you for your patience. And we're going to get started. Good morning to our team. And it is Monday, July 24th. It's an adjudicatory hearing before the Massachusetts Gaming Commission relative to the alleged non-compliance of Crown Mass Gaming LLC doing business as draft Kings. With Massachusetts General Law Chapter 23N, Section 305, CMR 2.7.01, subsection 2A. In the Massachusetts Sports Wagering Catalog, I will refer to Crown MA Gaming LLC as draft Kings. My name is Kathy Judstine, and I'm the Chair of the Gaming Commission, and I'm joined today by my colleagues, Commissioner Eileen O'Brien, Brad Hill, Commissioner Nikisha Skinner, and Commissioner Jordan Maynard. The entire commission will preside over the hearing and decision of this matter. This hearing will be conducted in accordance with 205 CMR 101.01, Massachusetts General Laws Chapter 30A, sections 10 and 11, and 801 CMR 1.02 Informal Fair hearing rules. This hearing is being conducted via remote collaboration technology. Before we begin, I'd like to explain the process that will govern this proceeding. First, the notice of hearing was provided to draft Kings in advance of today's hearing. It exemplifies the alleged non-compliance incident. That will be the focus of the commission's attention at this hearing and the relevant statutes and regulations. A pre-hearing conference was also conducted. Personed to Massachusetts General Laws Chapter 23N, sections 4 and 16 and 205 CMR 232, the commission may hold a statutory hearing and at the conclusion of the hearing may decide to issue a civil administrative penalty and pose conditions on draft Kings license, suspend draft Kings license, revoke draft Kings license, reprimand draft Kings and or assess a fine on draft Kings. At the conclusion of my opening comments, this proceeding will commence with the presentation of the evidence of this matter. And specifically, if the commission will first call Zachary Mercer, IEB Enforcement Council and any other witnesses listed on the notice of hearing or witness list, draft Kings may ask questions of any witness who testifies. Kings will then be called upon to make a presentation and to call additional witnesses if any. Any commissioner may question any witness who is testifying at any point during or after their presentation. And draft Kings may raise any objection at desires at any time. However, the basis for all objections must be clearly stated. Finally, at the conclusion of all the evidence, draft Kings will be provided an opportunity to make a closing statement to summarize its view of the evidence. And before we begin, I understand that there are pre-marked exhibits that have been prepared in advance of this hearing. Those exhibits are identified on the exhibit list and that's been circulated. They are as follows. Exhibit one, investigations and enforcement bureau, sports waitering, non-compliance incident review, report dated April 13, 2023. Exhibit two, notice of July 24, 2023 hearing. Tracking, so are there any objections to the exhibit one and two being marked and entered into evidence? No, there are not. And may I have, I'm so sorry. I don't have your full name. Is it, is it list? Is it attorney list? Yeah, of course. Sorry, I'll briefly introduce everyone here on the draft Kings team. So my name is Nicholas. I'm the senior director of regulatory operations. We also have Pete Harrington, who's our regulatory counsel, and Keir Adams, who's the senior manager of the training team. Okay, so attorney Harrington and then I'm sorry, one more colleague. Yes, his name is Keir Adams. Okay. Yes, I see him now. And position again, please. He's senior manager from our training team. Thank you. All right, thank you. And so you are raising no objections, either Mr. List or attorney Harrington to these exhibits one and two? No objections. Excellent, thank you. So those exhibits shall be admitted into evidence and in order to maintain a clean record, I ask that documents are referred to by exhibit number. And at this point, I'd ask if draft Kings would like to stipulate to exhibit one, the IEB sports wagering non-compliance incidents review report. I suspect that you had that discussion during your pre-trial conference. Yes, we did point out one like small language error, which we responded to prior to the hearing, but yes, I think we can stipulate to the report. In the subject line, we get issues in UTA when it should be referred to as UTR, I believe. Okay, and that edit is noted. Mr. Attorney Mercer, are you all set with that? It is, yes. I had a conversation with the team from draft Kings last week, the typographical error that is correct. Okay, excellent, thank you. And then if draft Kings would like to have any additional documents entered into evidence during the course of the hearing, I would ask if they'd just be properly introduced and marked. But at this point, we understand draft Kings would like to stipulate to exhibit one with that minor edit. I'll add that no final decision will be made at the conclusion of the public portion of the hearing. Instead of the conclusion of the proceeding, the commission will privately deliberate and ultimately issue a written decision. If at any point during the commission's deliberations, it determines that additional testimonial or documentary evidence is desirable, it reserves the right to ask for such evidence prior to a final decision being made. So we'll now swear all the witnesses in and anyone who will be testifying at this proceeding, please raise your right hand. Mr. Adams, I think you've got your hands up. I can tell from your angle of your shoulder, but you have your right hand up, correct? Okay. All right. Do you solemnly swear that the testimony you'll provide before the commission at this proceeding will be the truth, the whole truth, and nothing but the truth? Yes. Thank you all. We responded in the affirmative. I thank you for that. And before we begin, Mr. List, Attorney Harrington, do you have any other preliminary issues or objections? We do now. Okay, excellent. So with that, I'll ask Mr. Mercer, you'll present exhibit one, the Investigations and Enforcement Bureau, Sports Wadring Non-compliant Incident Review Report Data Paper 13, 2023. Certainly. Thank you. Good morning, Chair and commissioners. On March 23rd, 2023, Joseph McCann, Draft King's Regulatory Incident Senior Manager, notified the commission's sports wagering director, Bruce Band, by email that Draft King's had made the UTR Pro Series, an unapproved tennis league available for wagering in Massachusetts earlier that month. The UTR Pro Series is a series of tennis tournaments with cash prizes. These tournaments are open to tennis players above a certain universal tennis rating, which is a rating system that algorithmically generates a numerical assessment of players based upon their last 30 eligible matches over the preceding 12 months. In addition to this rating, players must be 14 years of age or older and meet certain ranking requirements. The IEB has learned the following key factors during its review. The timeframe that the wagering was allowed was from March 10th, 2023 through March 22nd, 2023. As for the events, numbers of wagers and amounts, there were 68 wagers on the UTR Pro Series event in Barcelona, Spain, for a total handle of $965.47. 22 wagers on the UTR Pro Series event in Newport Beach, California for a total handle of $589.41 and 774 wagers on the UTR Pro Series event in Tigray, Argentina for a total handle of $6,312.12. Total amount of wagers was 864 with a total handle of $7,867. As for the reported reason for the error, DraftKings reported that their trading support team discovered that the UTR events were enabled for wagering upon launch and remained active until the date of discovery. DraftKings stated that the reason for this error was a miscommunication between the trading team and the trading compliance team. Their usual practice involves a weekly coordination between those teams to confirm authorized tennis wagering markets on a jurisdictional basis. This is done by the submission of a file of the upcoming weeks markets and events from the trading team to the trading compliance team. In this instance, DraftKings trading team had copied the tennis offerings from a different jurisdiction without verifying Massachusetts approval with their trading compliance team. In regards to remedial and mitigating information, DraftKings self-reported this matter and was cooperative with the IEB's review. Following this incident of non-compliance, DraftKings voided all wagers on the unapproved events and notified all impacted customers. Once the wagers were voided, any winnings were removed from the players' balances and the stakes were returned and the stakes of losing wagers were also returned. Additionally, DraftKings removed the UTR markets upon their discovery, performed a review of all tennis markets to confirm compliance and relayed to their trading team that all new market requests must be submitted to their trading compliance team prior to being made available. Thank you. Commissioner, do you have questions from Mr. Mercer? I see it, Commissioner O'Brien saying no. Commissioner Maynard, are you all set? I'm all set. Commissioner Hill, are you all set? Okay, thank you, Commissioner Skinner. Any questions? I'll set, all right. Thank you, Tony Mercer. Thank you, Chair. And so now, DraftKings, do you have any questions that you'd like to pose or would you like to make any kind of a closing statement or introduce any evidence on your part? So we don't have any questions for Zak about the report. We would like the opportunity to describe in much more detail the facts which led up to the event and their mediation. But to do so would require us to disclose quite detailed trading processes that we would consider to be confidential. And we would request that we'd be able to do that in closed session. Mr. Owens, did you say, are you saying trading process? Yes, trading, trading, trading with a date, yes. With the date, okay. And that makes a difference. So I'm gonna turn to Council. I see, Tony, on the hand, you're here today. Your thoughts? Yes, per 205-CMR 101.07, the Commission may close the hearing to the public and I'll just read the standard to the Commission and the Commission can decide whether it feels that this is an appropriate situation or not. So under that section, any adjudicatory hearing conducted under 205-CMR 101.01 may be close to the public at the request of either party or on the Commission's own initiative in order to protect the privacy interests of either party or other individual to protect proprietary or sensitive technical information including, but not limited to, software algorithms and trade secrets or for other good cause shown. Such determination rest in the sole discretion of the Commission. So I would say that it's up to the Commission to decide if it would like to go into closed session and the standard is met. And if it has any additional questions for Mr. Alist, it can ask them as well. Questions for Councilor Monaghan? Commissioner O'Brien, are you leaning in? If it turned out for some reason that we felt it didn't rise to that standard, once we started speaking with DraftKings, we could always come back to the public session, correct if we'd all be in agreement that this really is public. Is that fair, Caitlin? Yes, absolutely. Okay. Commissioner, is there any questions that you have? Do we have to, we can just shift without any kind of a vote, correct, Caitlin? I think that's correct because this is not an open meeting, it's an adjudicator hearing. Right. So, commissioners, is there anyone in opposition to moving to the private session as DraftKings has requested? Commissioner Skinner? Madam Chair, thank you. I'm not in opposition to that request, just wondering if there's anything that DraftKings and Mr. Alist are, his colleagues can share in the public session, generally, about what happened and some of the, just in, I don't think they've had the opportunity just yet to sort of give their presentation. So maybe that can happen in public and then we can consider going into executive session for additional questions. Yeah, I'm just to clear. I suspect that there might be some questions. I'm sorry, did I say public? No, you said executive session. I think it's just a little bit different in an adjudicatory hearing, but it's fine. But we just went to the private, yeah, private session. We try to do as much of this in public as possible. Yeah, I'm just suggesting that because there might be questions that are suitable for this public session. Mr. Liston, Attorney Harrington, do you want to present anything that is less sensitive just to set the stage and for the public to hear? Mr. Liston? I can summarize a little bit. I mean, essentially what we already provided in the written report is a level of detail that we're comfortable in sharing in the public forum. But to re-summarize, essentially there was a miscommunication between our trading compliance team and our trading support team about exactly what was approved. While that might sound straightforward on the surface, there's actually a lot of detail that goes into these processes and the communication between these organizations that also doesn't only affect compliance. Some of it's competitive in nature and also potentially enables customers to more easily exploit us if you've talked about in the public forum. So that was the reason for requesting the closed session and the general summary already provided. Thank you. Commissioner Skinner, any follow-up questions? I do have a follow-up question. Could you share any detail about how the support team discovered the issue? Yes, yes, I can share that. The support team, I mean, maybe best understood as trading operations is responsible for actually implementing the filters which are sort of stipulated by the trading compliance team. And in this case, a member of the trading side organization able to see certain filters in the back office just raised it as a potential issue because that specific league UTR is approved in several jurisdictions but I think not more than half. So it was just flagged as potentially something to double check that this had been enabled in Massachusetts. And when was that flagged? Just a second, let me check my notes. I mean, it would be the date that in the report we said that it was discovered. Is that March 11th? Yes. And so was it reported to IEB the same day, March 11th? No, Jake, I don't believe that's the date we went live in Massachusetts on March 11th. No, March 10th, I think actually. Oh, I think this market was first wagered on on March 11th. Yes, you are correct, we went live on March 10th. But I believe the issue was discovered on a different date. Yeah, I can, I've almost got to it in my notes. Just hang on a second. Yeah, we discovered it on the 22nd and it was reported to the M.J.C. on the 23rd. Covered on March 22nd and reported on March 23rd. Is that correct? Okay. And could you speak to the timing? On March 22nd and March 23rd, in other words, how much time had lapsed between the time you discovered it and the time you reported it to IEB? Could I just quickly make a quick note? I believe that it was actually not reported to IEB specifically at the beginning, but instead to Bruce Bann, the director of the sports advisory division. I just want to make sure we're clear on that. Thanks. Attorney Hall, can I apologize? I'm not sure the exact minute on the 22nd that it was discovered, but we did record that we notified you at 6.06 p.m. Eastern time on the 23rd. Okay, thank you. Any further questions, commissioners? All right, so Grace, the way that this works is that all present here have a different link to go into the private session. So because it's pretty clear that we may be coming back into public session, you can disregard that link, and instead Dave Sousa will move everyone into a breakout room, and then we'll be able to move you all back into the public session, if need be. So do nothing. Just sit tight and get transported. Yes. All right, thank you, Grace. Appreciate that. Thanks, Grace. I will start moving everybody over now and share the screen that says we're in executive session. If I have not moved you over in a few minutes, just give me a holler and I'll make sure to do so. Excellent, thanks, Dave. I think the only one that should be left in here is Ying. Ying, if you need me to toss you over there, just let me know as well, please, and thank you. I just don't have you on my list. Oh, yes, okay. Yes, please move me over, thank you. Gotcha, no problem. Dave, I think you can take down the screen. Thank you. Thanks so much. I'll just set it. Okay. Is everybody back? I think we have everyone? Okay. So at this time, thank you to Drakens for its testimony in the closed session, but now I'd like to turn to you, Mr. Liston, your attorney. Is there anything you'd like to add as a closing statement? I mean, certainly nothing substantive, just to thank everyone at the commission for their time. Especially under duress with the flooding. This is an issue that we did take very seriously and we hope we've addressed sufficiently to the standards of both ourselves and to the MTC. Thank you. So unless there are any further matters at Drakens or my fellow commissioners would like to address, we'll now conclude this portion of the proceeding. Anything for other commissioners? Before we adjourn. So the commission will now deliberate about the matter in private, an issue of written decision. The proceeding at this point, however, remains open. At any point during deliberations, the commission determines that for the testimonial, a documentary evidence is desirable. It may send notice of such and provide instructions as to how to proceed. So we are adjourned at this moment. And commissioners, I believe we're going to go into deliberations now, but we're going to assess our schedules for the rest of the day, given that there was a disruption in today's calendar, given our flooding. All right. Is that right Grace? Do we go into a deliberations room now? Yep. So we'll close out this meeting and then you all have a calendar invite for deliberations. So you can join that and we can discuss there if we, how long we would like to proceed for. Okay. To Drakens, thank you so much. Thank you for your patience this morning. I wish you a good day. Thank you. And we'd like to keep the stream going. Yes. No, I think we can close this out. Correct, Caitlin. We can close this session out and then we'll go into our other virtual deliberations room. Again, Drakens have a good day. Thank you. Bye sir. Thanks everyone.