DraftKings' Deposit Bonus Advertising At Issue In New Class-Action Lawsuit
Legal Sports Report

Nothing But The Truth? DraftKings Faces New Class-Action Lawsuit For Alleged False Advertising

A new class-action lawsuit was filed reagrding DraftKings’ alleged false advertising regarding its deposit bonus, making it at least the sixth case where similar legal action has been brought against either FanDuel or DraftKings.

Cause for complaint?

The latest complaint, filed in the United States District Court for the Southern District of Illinois, was brought by plaintiffs against DraftKings, last week.

At issue in the case, and in other similar cases, is the promise of a 100% match of deposits vis a vis truth in advertising laws that exist in several states. In this specific case, the Illinois Consumer Fraud Act and the Missouri Merchandising Practices Act were cited in the complaint.

Deposits being matched in the manner done by DraftKings and FanDuel is nothing new — in fact it is the industry standard. Deposit bonuses are released over time, as a player enters more real-money contests. What is at issue is how the deposit bonus is advertised.

From the complaint, one of the plaintiffs’ claims: “during the 2014 National Football League season made an initial deposit of $25 on the DraftKings website, www.draftkings.com, after receiving a promise from DraftKings that he would receive a “100% First-Time Deposit Bonus,” and despite that promise did not receive the entirety of the bonus.”

Doubling up

The plaintiffs’ filing goes on to detail how DraftKings’ claim of a 100 percent deposit match does not satisfy truth in advertising laws in Illinois and Missouri:

Indeed, consumers receive no money upon depositing. They discover, instead, that they are required to incur additional and substantial monetary obligations to obtain the “bonus” and that they will never “DOUBLE [THEIR] CASH.”

Specifically, to receive their so-called “bonus,” consumers have to pay to enter contests and then receive only a small amount, four percent or less of every dollar they spend within four months, until those small returns total the initial deposit or the four months expire.

At the high end, a consumer who had deposited $600 would have to spend at least $15,000 on contests, and do so within four months, to obtain what was promised as a “100% First-Time Deposit Bonus” or “DOUBLE YOUR CASH” bonus of $600; that would be $14,400 more than his or her initial payment.

How are bonuses actually unlocked at the two big DFS sites?

  • According to DraftKings’ website: “Deposit bonuses release in increments of $1 for every 100 Frequent Player Points (FPPs) that you earn by playing in paid contests. All deposit bonuses expire four months after they are created.”
  • According to FanDuel’s website: “Deposit bonus is released as real cash at a rate of 4% of the entry fee of the contest you enter. For example, if you enter a $25 contest, $1 of deposit bonus will be released into your main funds account. Users collect deposit bonus upon settlement of the contest entered.”

The complaint also argues that DraftKings’ terms of use constitutes an “illusory contract” that should not be enforced by the court, calling it “a maze of fine print that consists of nearly 6,000 words in single-spaced tiny print.”  A separate filing was made for class certification for the plaintiffs.

Not the only case

Sports law and gaming law attorney Daniel Wallach originally reported the existence of this case. He also noted the status of three class action cases against FanDuel that have apparently been resolved, and two other cases against DraftKings that are still pending:

  • A case in Illinois‘ Northern District, Izsak v. Draftkings, Inc., remains active.
  • A case in Florida‘s Southern District, Aquirre vs. DraftKings, was brought in January, and remains unsettled. According to Wallach, the case will be dismissed this week unless the summons and complaint have been served to DraftKings.
  • Cases against FanDuel in Florida (Carroll v. FanDuel), California (Sidisin Jr., et al v. Fanduel, Inc., et al) and New York (Buzin et al v. Fanduel, Inc.) have have been voluntarily dismissed, according to Wallach, meaning the cases were likely settled.

All of those cases involved truth in advertising laws, as well. Since similar laws are in the books in many states, it will be interesting to see if even more lawsuits pop up in coming months.

Interestingly, Illinois is also one of the states considering legislation to deal with possible regulation of daily fantasy sports.

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Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.