Baltimore’s lawsuit targeting sports betting giants DraftKings and FanDuel will now be decided in federal court.
The two operators have yet to file a responsive pleading to Baltimore’s complaint. Instead, the operators chose first to file a Notice of Removal, taking the case from the local confines of the Circuit Court for Baltimore City and placing it in the hands of the United States District Court for the District of Maryland.
The suit against DraftKings and FanDuel was filed in April and left many within the industry wondering how a city could sue companies licensed by the state.
Why DraftKings, FanDuel suit moved
The notice was filed pursuant to 28 U.S.C. § 1332 – this statute grants federal courts subject matter jurisdiction over civil actions (including, claims based on state law) upon a satisfactory showing of the following two conditions: (1) the plaintiff and defendant are citizens of different states, and (2) the amount in controversy (i.e. damages sought) is greater than $75,000. The notice states each factor is met because:
- Baltimore is in Maryland, whereas DraftKings is based in Nevada with its headquarters in Boston and FanDuel’s parent company, Flutter, is located in Ireland.
- Baltimore seeks civil penalties and other damages well in excess of $75,000, based on numerous individual violations of the ordinance cited in the complaint.
In a case largely premised on companies taking advantage of a specific group of citizens located in the area in which the lawsuit was filed (Baltimoreans), the decision to move this action to federal court – where the parties will be afforded a wider pool of jury members to select from – may prove to be strategic in nature.
However, DraftKings and FanDuel hope to have this matter resolved long before reaching that stage in legal proceedings.
Baltimore sues wrong company
The notice does not constitute a waiver of either company’s right to defend itself in federal court, and conspicuously references one of the likely multiple bases each company intends to rely upon in order to have the case dismissed.
Specifically, DraftKings states that it “does not concede that the proper entity has been named and reserves the right to move for dismissal on this and other grounds.”
Furthermore, Flutter contends that it is not subject to the personal jurisdiction of the state, as the actual entity licensed and charged with operating FanDuel’s online sportsbook in Maryland is Betfair Interactive US, LLC, which is not named as a defendant in the lawsuit.
DraftKings, FanDuel to file for dismissal
Shortly after the notice was filed, the parties filed a joint motion to set a briefing schedule. As a result, DraftKings and FanDuel’s joint motion to dismiss Baltimore’s complaint is due before June 13. The city’s response is due July 18, leaving DraftKings and FanDuel with a deadline of Aug. 8 to file a joint reply.
Based on that timeline, a court decision regarding the legal sufficiency of Baltimore’s claims likely will not be received until shortly before the start of the 2025 NFL season.
In addition to its procedural arguments, the operators will also look to demonstrate that the city’s arguments fail to state a cause of action for relief and/or otherwise cannot be proven under any set of facts, because its promotions are offered in accordance with the state’s regulations governing sports betting, found at Code of Maryland Regulations (COMAR) Title 36, Subtitle 10.
But will case be dismissed?
However, the regulations provide various “catch all” provisions that allow for broad judicial interpretation to determine if a violation has been committed, including that sports wagering licensees may not (i) conduct promotions in violation of federal, state, or local law or regulation, or (ii) advertise, promote, or conduct sports wagering in a manner that may adversely impact the public or the integrity of sports wagering.
Because Baltimore’s complaint alleges that DraftKings’ and FanDuel’s respective predatory practices tied to their offering of promotions violate the city’s ordinance and adversely impact the city of Baltimore, and courts are required to accept the factual allegations in a complaint as true and construe them in the light most favorable to plaintiff at the initial stages of litigation, the likelihood of the operators’ prevailing on a motion to dismiss does not appear to be in their favor.
