DraftKings successfully avoided a class action lawsuit in New York when a federal judge ruled the company's promotional advertising for a "$1,000 Deposit Bonus" didn't mislead consumers under state law.
The case, filed by Nerye Aminov, claimed the promotion lacked clarity and deceived users into depositing money under false pretenses. Aminov said he deposited $500 expecting a $1,000 bonus, but only received $100.
Key takeaways
- A federal judge dismissed a New York class action lawsuit against DraftKings, finding it adequately disclosed promotional bonus terms.
- The plaintiff's claims under consumer protection statutes and common law were found lacking due to insufficient evidence of deception or injury.
- The ruling affirms clear promotional disclaimers can defeat allegations of misleading advertising in gambling offers.
Judge Margo K. Brodie, of the U.S. District Court for the Eastern District of New York, dismissed the suit on July 28, stating the company adequately disclosed promotional terms and they were visible at the point of deposit. The bonus required a $5,000 deposit and $25,000 in wagers within 90 days, conditions that were presented in comparable font alongside the offer details.
The court found no basis for claims under New York's General Business Law or common law. Brodie emphasized disclaimers in gambling promotions are valid when clearly communicated. The decision determined users had full access to the terms before completing a transaction, weakening any deception argument.
Judge Brodie also noted Aminov's unjust enrichment and misrepresentation claims overlapped with dismissed statutory violations and were effectively abandoned, as the plaintiff failed to counter DraftKings' dismissal arguments.
Massachusetts fined DK over credit card violations
While DraftKings avoided legal risk in New York, its regulatory challenges in Massachusetts intensified. The Massachusetts Gaming Commission (MGC) imposed a $450,000 fine on the operator for allowing sports wagers funded by credit cards, a direct breach of state laws and gaming regulations.
The violations took place between March 10, 2023 and Feb. 13, 2024, resulting in 1,160 illegal wagers totaling over $83,000. DraftKings was found to contravene different laws that ban credit card funding of sports bets.
Despite self-reporting the incidents, the MGC concluded DraftKings' compliance processes were insufficient. An internal communication breakdown misrouted the regulatory guidance sent in January 2023, preventing proper implementation. DraftKings' failure to relay the prohibition to its compliance and product teams resulted in three extended periods of noncompliance.
Baltimore sues DraftKings and FanDuel
DraftKings was also under increasing pressure in Maryland, when the city of Baltimore sued the operator and FanDuel parent, Flutter Entertainment, for targeting vulnerable bettors. The city brought suit in April in Baltimore City Circuit Court and accused the companies of allegedly engaging in false advertising and abusing consumers' personal information.
The lawsuit claimed that sportsbooks prey on individuals with behavioral data to stimulate larger bets and retain them with exclusive offers and VIP programs. The city claimed the action contravened Baltimore's Consumer Protection Ordinance.
