A Massachusetts judge on Tuesday handed down a blow to DraftKings in a major lawsuit. The case involves a gambling promotion offered during its 2023 sportsbook launch.
The case against the Boston-based DraftKings can proceed to class certification, classwide discovery, and trial.
DraftKings Denied Summary Judgment
Superior Court Judge Debra Squires-Lee ruled that “genuine factual disputes exist” as to whether DraftKings’ deposit bonus promotion and associated advertising were misleading and failed to “adequately disclose” the terms and conditions to consumers, causing potential harm.
Squires-Lee ruled that DraftKings failed to present “admissible evidence” that all new customers eligible for the bonus promotion were presented with its terms before depositing.
From the ruling:
“DraftKings acknowledges that it did not maintain records of customers’ initial deposit userflows during the deposit bonus promotion — hence its efforts to recreate or reverse engineer them. These efforts, however, apparently rested on the presumption that by opening a test account and assigning to that account the appropriate terms and conditions of the deposit bonus, the DS Sportsbook platform would generate the same userflows the proposed class members encountered. But this core presumption is belied by DraftKings’ need to produce and manually edit successive versions of these exhibits which differed in terminology and appearance. DraftKings has offered little or no explanation as to the basis for the manual edits or why the adjustments were necessary.”
She denied DraftKings’ motion for summary judgment here. The online gambling operator secured summary judgment against claims that it misused customer personal information.
DraftKings Lawsuit Background
In December 2023, the Public Health Advocacy Institute (PHAI) filed the class action lawsuit in Massachusetts over an allegedly misleading advertisement.
The suit claimed that DraftKings misrepresented requirements to receive $1,000 in so-called “bonus bets.”
In August 2024, the court in Boston denied DraftKings’ motion to dismiss the case.
“This decision will allow the case to proceed to the discovery phase, where we have the opportunity to depose those involved with the deceptive promotion and collect internal communications to gain insight into how it was developed and executed,” executive director of the PHAI at Northeastern University School of Law Mark Gottlieb said in a 2024 release.
Risky Promo
The advertisement, which ran on social media, television, and radio, offered a $1,000 bonus to new customers.
The fine print said that to receive the full bonus, a player must make an initial deposit of $5,000. A user also had to wager $25,000 in 90 days, which two people claim was misleading.
Plaintiffs Shane Harris and Melissa Scanlon filed the suit with the Massachusetts-based PHAI.
DraftKings Sportsbook launched in Massachusetts in 2023. Harris and Scanlon signed up for the sportsbook at separate points in the spring of 2023, each making initial deposits.
The lawsuit stated that they wouldn’t have deposited “if they understood the odds or costs of the promotion.”
Big Tobacco Comparisons
The case involves prominent attorney Richard Daynard. He is the PHAI’s president and a Northeastern University Distinguished Professor of Law.
Daynard developed a legal strategy against Big Tobacco, which led to a historic $206 billion settlement in 1998.
“This bogus promotion, designed to lure customers into an addictive trap, required new users to risk large amounts of money and gamble hundreds of dollars each and every day in order to qualify for credits that could only be used for more gambling. We think this will be an easy case to prove,” Daynard said in a press release.
According to problem betting statistics, about half of online bettors chase losses.
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