DraftKings facing class action lawsuit in home state over promotional offer
Massachusetts-headquartered operator taken to task by Public Health Advocacy Institute funded lawsuit over $1,000 sign-up bonus promotion
DraftKings is facing a class action lawsuit funded by the Public Health Advocacy Institute (PHAI)’s Center for Public Health Litigation in its home state of Massachusetts, concerning an alleged misleading $1,000 sportsbook sign-up bonus promotion.
The lawsuit, filed on behalf of several individuals including lead plaintiffs Melissa Scanlon and Shane Harris, concerns DraftKings’ terms and conditions relating to the bonus.
It alleges class action members were unaware that, to qualify for the sign-up bonus of $1,000, new customers were required to make an initial deposit of $5,000.
After that, they had to gamble $25,000 on certain qualifying bets over a finite time period. If they did all of that, they would qualify to receive non-withdrawable credits to use on the platform.
The plaintiffs concerned assert they were unaware why they had not received the $1,000 sign-up bonus, with PHAI branding it an “unfair and deceptive” promotion.
The lawsuit, filed with the Middlesex Superior Court in Massachusetts, alleges violations of Commonwealth law in two areas, firstly using unfair or deceptive business practices and secondly of using untrue or misleading advertising.
It claims that DraftKings knew its advertising and promotion was deceptive to its target customers, which included those new to sports betting and who were unlikely to understand the details of the promotion.
“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 class action lawsuit states.
“This is a particularly unfair business practice because of the addictive nature of the underlying product offered by defendant,” it adds.
The plaintiffs are seeking injunctive relief, including repayment of the bonus and damages.
“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.
PHAI president and Professor of Law Richard Daynard echoed Gottlieb’s comments, attacking not only DraftKings, but the wider industry and its practices.
“Online gambling is creating a public health disaster with increasingly addictive products right before our eyes,” said Daynard.
“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,” he added.
According to the Financial Times, Draynard was previously the chair of the Tobacco Products Liability Project and spearheaded litigation against the tobacco industry in the 1980s.
Responding to an EGR request for comment, a spokesperson for DraftKings said: “As a customer-first organization, DraftKings takes consumer protection and responsible gaming seriously. 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,” DraftKings added.