- The current DraftKings app may not be compliant with the Interstate Wire Act.
- DraftKings will have to move its “wallet server” from New Jersey to West Virginia.
- The necessary delay should take only a few weeks.
CHARLESTON, W.V. –West Virginia’s rollout of mobile sports betting has been nothing if not beleaguered. Ever since the Wheeling Island and Mardi Gras casinos pulled their Miomni-powered BetLucky app in March, the state’s missed out on substantial tax revenue.
However, a deal with DraftKings looks to make up much of that lost ground.
The daily fantasy sports (DFS) powerhouse is partnered with the Hollywood Casino to launch a statewide mobile betting platform.
Unfortunately, the rollout – slated for June 2019 – has been temporarily delayed. During recent testing, it was determined that one of the product’s servers needs to be relocated.
The concern here is related to the platform’s necessary compliance with the Interstate Wire Act. It is incumbent on DraftKings and the Hollywood Casino to take steps to ensure compliance with federal law.
The Wire Act requires that domestic sportsbooks do not accept wagers from players located in other states. To do this, apps like the DraftKings sportsbook use geofencing technology.
Geofencing ensures that those placing bets are doing so from inside West Virginia borders.
This is a very technical concern, and it’s of chief importance to online sports betting operators.
In 2018, the US Department of Justice’s Office of Legal Counsel (OLC) released its opinion that the Wire Act applied to all forms of gambling. This prompted a legal challenge by several states and was overturned in federal court earlier this week.
But while lotteries and casino gaming are exempt from the law, sports betting remains bound by its terms.
The issue isn’t even wholly about interstate wagering from a bettor’s perspective. While the DraftKings app can make sure a user is physically inside West Virginia when betting, that’s only half the challenge.
The other half lies in how wagering information is routed between in-state bettors and in-state sportsbooks. If betting data is automatically routed to an out-of-state server before arriving at its in-state destination, this could be a violation of federal law.
Working with the West Virginia Lottery’s oversight, the Hollywood Casino and DraftKings have determined that the placement of their chosen backend system is potentially problematic for legal sports betting.
To run its West Virginia wagering app, DraftKings uses two servers. The “bet server” is located in Charles Town, West Virginia. The “wallet server” is not. This component is located in New Jersey and is also used in DraftKings’ operations there.
The solution is simple: DraftKings just has set up a wallet server in West Virginia. According to state lottery director John Myers, the relocation could take “several more weeks.”
In other words, remote West Virginia bettors will miss out on the rest of the NBA Finals and Stanley Cup Finals. However, the DraftKings sportsbook should be up and running well ahead of the start of football season.
Andy has been writing professionally for nearly two decades, with the last three years being dedicated to his primary passions: sports wagering news and gambling industry analyses. A walk-on punter, Andy has a particular interest in professional football, baseball, and horse racing betting. Come early May, you can always catch Andy – clad in all white, mint julep in hand – on Millionaires Row at Churchill Downs. In his dreams.