A class action lawsuit accusing DraftKings of deceptively advertising a $1,000 sign-up bonus offer will proceed after a Massachusetts court last week denied the sportsbook’s motion to dismiss.
The lawsuit, brought by the Public Health Advocacy Institute on behalf of Massachusetts residents Shane Harris and Melissa Scanlon, alleges that DraftKings failed to clearly disclose the stringent requirements needed to qualify for the bonus.
New customers needed to make an initial $5,000 deposit and place $25,000 in wagers within 90 days to receive the $1,000 non-withdrawable credit, according to the lawsuit. The Boston-based firm claims that these terms were not prominently displayed, leading many to believe they were receiving a straightforward bonus offer.
More on DraftKings bonus program
The court’s decision opens the door to the discovery phase.
The PHAI will press DraftKings for information about the signups.
“This is a preliminary victory,” Mark Gottlieb, executive director of PHAI, said. “This allows us to move the case to discovery where we’re able to depose the executives who ran the promotion we’re alleging was deceptive and resulted in false advertising. We’re curious to find out how many folks actually were able to obtain the bonus. We think it’s gonna be a very small number.”
DraftKings could seek protective order
As the case moves forward, that signup data promises to be a key point of contention. Sports betting companies have long fought to keep that information private and Gottlieb anticipates DraftKings will cite concerns about the data’s competitive sensitivity.
“I think it’s gonna be a real fight in discovery and I’m quite confident that they will seek protective orders for this kind of data because there are competition implications in it,” Gottlieb said. “It’s not our goal to provide that data publicly, but in this case, I think it’s indispensable to proving our case.”
DraftKings previously said it will “vigorously defend” itself against the allegations. The company maintains that it takes consumer protection seriously and expressed disappointment that PHAI chose litigation over direct engagement.
DraftKings did not respond to a request for comment on this story.
Next steps and industry-wide implications
The next hearing in the case will be a status check on December 10, 2024.
The PHAI has ties to successful litigation against major industries. One of its leaders is Northeastern University Distinguished Professor of Law Richard Daynard, who helped lead a lawsuit against big tobacco for its health risks in the 1980s. The case could have broader implications for the US sports betting industry as a whole, where the environment around bonuses and promotions has rapidly changed over the past several years.
“We’re not in this to reach a quick settlement for money. We’ll obviously do what’s in the best interest of our clients, but we’re in it to hopefully make these products a little safer, and one of the ways we can do that is to hold their feet to the fire,” Gottlieb said. “It is an incredibly competitive business. All of these sportsbooks are trying to fight each other and get to the lowest customer acquisition cost so there’s a real temptation to use deceptive means to get people to sign up.”
The PHAI is also advocating for consumer protections at the federal level through the SAFE Bet Act.
