DraftKings Inc. is facing the prospect of a class action lawsuit in its home state over an allegedly misleading promotion for its online sportsbook.
The Northeastern University-based Public Health Advocacy Institute (PHAI) and its associated Center for Public Health Litigation announced the legal action on Friday, which they said was in response to a $1,000 bonus promised to new DraftKings bettors in Massachusetts.
Its claims have yet to be tested in court and the case has yet to be certified as a class action in the state. Nevertheless, the lawsuit alleges DraftKings customers were unaware they needed to deposit $5,000 and gamble $25,000 via bets of -300 or longer within 90 days to qualify for the $1,000 sign-up bonus. And, even if all that was done, the lawsuit claims bettors would only receive “non-withdrawable credits” for use with DraftKings.
In other words, the lawsuit charges, DraftKings customers didn’t realize they would need to bet an average of more than $276 a day for three months to earn their sign-up gift. This left the named plaintiffs, Shane Harris and Melissa Scanlon, allegedly wondering why they never received their sign-up bonus.
“Shane and Melissa are typical of many thousands of people in Massachusetts who were misled by the bonus offer and would not have signed up had they understood DraftKings’ unfair and deceptive requirements,” PHAI Executive Director Mark Gottlieb said in a press release.
Going after Big Sportsbook?
A DraftKings spokesperson told Covers on Friday that the company plans to defend itself.
"As a customer-first organization, DraftKings takes consumer protection and responsible gaming seriously," the bookmaker said. "DraftKings respectfully disagrees with the claims and allegations made by the Public Health Advocacy Institute. Regrettably, the Institute ignored our multiple attempts to engage in an in-person dialogue to carefully examine their concerns and, instead, filed suit. DraftKings intends to vigorously defend this lawsuit."
Massachusetts launched online sports betting in March of this year, allowing a handful of mobile operators to legally take wagers in the Bay State.
That said, the legal sports betting industry faced pushback over its advertising practices even before the Massachusetts launch, leading regulators and lawmakers to rejig marketing rules.
The industry is now facing the possibility of a lawsuit that its architects are framing similarly to those that confronted Big Tobacco. The president of PHAI was even involved in those legal actions and now is part of the lawsuit facing DraftKings.
“Online gambling is creating a public health disaster with increasingly addictive products right before our eyes,” said Richard Daynard, a distinguished professor of law at Northeastern University and president of the institute. “In fact, massive advertising using unfair and deceptive promotions to hook customers on an addictive product bears an uncanny similarity to what the cigarette companies used to get away with.”
The $1,000 question
The lawsuit alleges the bookmaker “heavily promoted” its $1,000 offer in Massachusetts and now seeks damages from DraftKings including the full $1,000 bonus that was promised.
“DraftKings knowingly and unfairly designed its promotion to maximize the number of consumers that would sign up for its sports gambling platform, the number of bets that would be placed through the platform, and the amount of money that would be placed on bets through its platforms," the lawsuit alleges. "This is a particularly unfair business practice because of the addictive nature of the underlying product offered by Defendant.”
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