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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.
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.”
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?
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:
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.