DraftKings Penalized for Selective Disclosure

(Reuters) – Sports betting company DraftKings (NASDAQ:DKNG) has agreed to pay a $200,000 penalty for selectively disclosing material non-public information on social media accounts rather than to all investors, the U.S. Securities and Exchange Commission announced on Thursday.

In posts on X and LinkedIn in July of last year, the company’s public relations firm boasted of DraftKings’ strong growth even though the company had not released its second-quarter financial results, according to the SEC.

The company then asked for the posts to be deleted but did not disclose relevant information to all investors for a week, the agency said in a statement.

“It is essential that, when companies disseminate material, non-public information, they do so fairly to all investors,” John Dugan, associate enforcement director in the SEC’s Boston office, said in the statement.

If they choose to use social media accounts to release key information, companies must inform investors in advance as to which social media accounts will be used, according to the SEC.

Representatives for DraftKings did not immediately respond to a request for comment.