By
Lisa Spencer
Senior Editor Updated: 01 January 2024
Lisa Spencer Senior Editor
As a Senior Editor at Betting.US, Lisa Spencer is a valuable member of our expert team. With a Master’s degree in Applied Mathematics, Lisa is adept in gambling theory and analyzing odds. She contributes by writing online sportsbook reviews and finding competitive markets to help our readers make an informed choice.
DraftKings, one of the largest online sports betting operators in the United States, is facing a proposed class action lawsuit that accuses the company of using deceptive marketing techniques to lure in new customers.
The lawsuit, filed in a Massachusetts state court, focuses on a DraftKings promotional offer for new customers that advertised a “$1,000 Bonus” upon signup. However, the plaintiffs allege that in the fine print, customers would actually need to deposit $5,000 and gamble $25,000 within 90 days – all on bets with odds of at least -300 – in order to receive $1,000 in bonus funds that cannot even be withdrawn as cash.
The lawsuit argues that DraftKings intentionally designed its offer to mislead consumers who see the $1,000 bonus advertised across various channels like TV and social media. It alleges these consumers, especially sports betting novices, would reasonably expect to receive $1,000 immediately instead of incrementally through additional high-risk gambling. The lawsuit stated:
DraftKings knowingly designed an unfair and deceptive offer likely to deceive their intended targets – sports bettors new to DraftKings unfamiliar with betting terminology.
The suit was brought by the Public Health Advocacy Institute (PHAI), which has previously targeted industries like big tobacco over concerns around public health risks. PHAI argues that as a gambling operator, DraftKings should take extra precautions around promotions due to the addictive nature of sports betting.
In response to the lawsuit, DraftKings said it “respectfully disagrees” with the allegations and claims of intentionally deceiving consumers. Its attorneys noted that at least one of the plaintiffs did in fact receive the $1,000 in bonus funds as advertised.
Nonetheless, the company says it takes responsible gambling and consumer protection very seriously. DraftKings indicated it had attempted to resolve PHAI’s concerns out of court prior to the lawsuit being filed.
With the class action now moving forward, DraftKings says it intends to mount a solid legal defense. The sports betting leader has faced scrutiny around its advertising tactics and promotions before, so the lawsuit represents a heightened risk around public perception and trust.
However, similar cases in the past have often proven difficult for plaintiffs to win. Online gambling operators like DraftKings have huge budgets – and they’re often prepared to throw pretty much everything they have against fighting these lawsuits to deter copycat class action suits in the future.
The lawsuit also comes amid tighter scrutiny of sports betting marketing on the whole. Massachusetts gaming regulators already prohibit advertising deposit match bonuses or other offers as “free” or “risk-free” due to problem gambling concerns.
As of December 2023, the online gambling regulator is actively looking at how welcome bonuses and deposit bonus promotions are advertised, and it’s likely that we’ll see additional regulation introduced in the future to protect vulnerable gamblers and ensure that advertising standards are adhered to.
So, while DraftKings remains confident that it’s operated legally, this specific lawsuit could well become an important milestone in the world of regulation in online gambling in the US. It’s clear that regulators want to balance the huge surge in sports betting growth with responsible gambling safeguards.
As more states advance sports betting legislation, operators will need to toe the line carefully to both attract customers and avoid legal trouble or damaging PR headaches. For DraftKings and its competitors, for example, it’s likely more expensive lawsuits will come their way – but ones like this, in the company’s home state of Massachusetts, could prove pivotal, and lead to tighter marketing laws in regulated markets.
Betting Bill Fails to Get Past Alabama Conference CommitteeRead ArticleLisa SpencerMay 18, 2024
North Carolina Lawmaker Introduces Bill to Ban College Prop BetsRead ArticleLisa SpencerMay 15, 2024
November Referendum on Sports Betting Likely in MissouriRead ArticleLisa SpencerMay 13, 2024