Pennsylvania Lawsuit Accuses DraftKings of Deceptive Business Practices

Five former DraftKings customers filed a class action suit in the Eastern District Court of Pennsylvania in Philadelphia this week, alleging that the online casino and sports betting giant engaged in deceptive advertising practices in the way it advertised its “risk free” and “free bets” casino bonuses as being something of substantive value when instead it was often used to trap players into “depositing money, which they almost always lose,” due to difficult to understand and punitive terms and conditions.

If nothing else, the lawsuit lays bare the facts surrounding attempts to earn the $2,000 match-play bonus while playing blackjack under DraftKings' Terms and Conditions. This point has been highlighted by many other commentators, but to our knowledge, not in US District Court documents. 

Loevy and Loevy, a firm much more well-known for its robust civil rights caseload, lays out their complaint this way. If the $2,000 match offer is chosen, the depositor must play 10 times the match amount and 10 times the deposit amount. They must complete the $40,000 in play within the seven days outlined in the terms and conditions. 

But because DraftKings doesn’t count all games the same, blackjack players only get credit for 20% of their playthrough. Which now leaves them staring down $200,000 in playthrough in 7 days. But wait, couldn’t they just forfeit their deposit match? Well, yes, but they would lose most, if not all, of their deposit as well.

So, DraftKings' “no-risk' $2000 match has become a trap that not only might cost many players their entire original deposits but also causes even novice players to bet huge amounts to meet play-through requirements, at the risk of spurring a gambling disorder. 

As the attorneys laid out in their brief, if a new player used to betting 25 cents on a slot machine wanted to clear their bonus on blackjack, they would need to bet $50 a hand on blackjack, playing one hand per minute, for something like 66 hours during that first week. 

Though we and other commentators find the idea of only one blackjack hand a minute more than laughable, it doesn’t alter their point that not only is risk free a huge misnomer but also that, besides risking your deposit to win your match, many are forced to play at higher stakes and time periods far beyond what they ever intended. 

Another specific example of malfeasance that has been broached in several other lawsuits against both Flutter and DraftKings in Kentucky, New Jersey, and Massachusetts, as well as a well-publicized case where the city of Baltimore has filed suit against the operators, is the use of data analytics to target customers who clearly show signs of gambling disorders.

In this case, a plaintiff states that DraftKings inundates individuals who are on self-exclusion lists with targeted ads the moment they come off the list. Another said that he had asked DraftKings for self-exclusion in 2020 but lost $350,000 before the company agreed to shut down his account, almost four years after the initial request. 

In the Baltimore case, attorneys filed complaints that Flutter, aka FanDuel, collects more than 150 different attributes for each gambler, including not only their propensity to gamble but also their ability to be persuaded by advertising. They accused both DraftKings and Flutter of using that trove of data to manipulate and coerce customers to gamble more than they should. Charges are not to be taken lightly when filed by city attorneys in Baltimore Circuit Court.

While the outcomes of these cases remain to be seen, they represent a serious escalation in legal scrutiny over how online gaming operators structure their offers, manage player protection, and use personal data in marketing. It is likely that with these lawsuits beginning to pile up, at least a few changes will need to be made sooner rather than later, both to advertising and to the use of customer data in incentivizing gambling past people’s desired constraints.