DraftKings Ordered to Honor Nearly $1 Million in Payouts After MLB Parlay Error

A trading system failure has left DraftKings responsible for nearly $1 million after Massachusetts regulators refused to allow the sportsbook to void winning MLB wagers tied to a flawed betting market. The Massachusetts Gaming Commission voted unanimously to require DraftKings to pay $934,137 in connection with a set of correlated parlays placed during the 2025 American League Championship Series (ALCS).

The dispute involves 27 multi-leg parlays placed by a Massachusetts sports betting customer, who committed a total of $12,950 on Toronto Blue Jays outfielder Nathan Lukes. A configuration issue within DraftKings’ internal trading system incorrectly identified Lukes as a non-participant rather than an active player. That designation disabled safeguards designed to prevent bettors from combining correlated outcomes within the same market.

The wagers were placed in DraftKings’ Player to Record X+ Hits in Series market during the seven-game ALCS matchup between Toronto and Seattle. Because of the internal misclassification, the bettor was able to stack multiple Luke's hit thresholds into single parlays, including five or more, six or more, seven or more, and eight or more hits. 

To further increase potential payouts, the bettor added unrelated, high-probability legs such as NFL moneyline selections. Luke appeared in all seven games and finished the series with nine hits, surpassing every listed benchmark. Twenty-four of the 27 parlays cashed successfully, while three lost due to unrelated college football outcomes.

DraftKings argued that the wagers should never have been accepted and contends that the customer acted unethically by exploiting what it characterizes as an obvious error. Commissioners rejected that claim, concluding the situation does not meet the regulatory definition of an obvious error. 

DraftKings acknowledged the root cause is an internal configuration issue rather than a problem with a third-party data provider. The company removed the affected markets, left the wagers unsettled while regulators reviewed the case, and applied internal fixes. 

Despite those actions, the commission determined the payouts must be honored. All that, and the bettor didn't even need to take advantage of any Massachusetts sportsbook promos.

DraftKings launches federally regulated prediction markets

As the Massachusetts ruling unfolds, DraftKings has expanded into a separate line of regulated products, throwing its hat into the world of prediction market apps. At the end of last week, the company launched DraftKings Predictions, a platform offering event-based prediction markets under federal oversight.

DraftKings Predictions allows users to trade contracts tied to real-world outcomes, with sports and financial events available at launch. New categories such as entertainment and culture will be introduced as the platform expands. 

Contracts for events will be issued in 38 states, including some states that do not allow traditional sports betting. 

The newly expanded initiative is also integrated into the company's Responsible Trading program. Users will be able to set account deposit limits, activate cool-off periods, self-exclude, or access educational materials all within the DraftKings Predictions app itself, which will be launched over time through app stores.