DraftKings filed a lawsuit against the city of Philadelphia on Thursday, hoping to block it from conducting an investigation into the company and enforcing a local consumer protection law, according to Reuters.
Key Takeaways
- Philadelphia obtained information regarding multiple areas of DraftKings’ operations.
- DraftKings said the information that was uncovered applied to the broader Pennsylvania, not Philadelphia.
- An existing state law prevents local ordinances from conflicting with the state’s authority.
The lawsuit stems from an April 2024 city investigation authorized by the Philadelphia Consumer Protection Ordinance (PCPO) and a subpoena issued to DraftKings. Local officials reserved the right to use any information obtained during the investigation for further action by the company.
The PCPO, passed in 2024, empowers Philadelphia’s Law Department to investigate and penalize businesses for unfair, deceptive, or fraudulent practices.
DraftKings claims attorneys shared during a July 9 meeting that Philadelphia was expected to pursue a civil enforcement action for alleged violations of the PCPO. However, the operator believes Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) preempts the ordinance and prevents Philadelphia from enforcing it.
Additionally, DraftKings claims the UTPCPL grants enforcement authority to the state attorney general and district attorneys, not cities or local governments.
The Boston-based gambling company also said the PCPO inherently violates the First Class City Home Rule Act, a state law passed in 1949 that prevents city ordinances from conflicting with state authority.
DraftKings further argued the Pennsylvania Gaming Control Board (PGCB) holds the exclusive authority to regulate key areas of its operations, including promotions, advertising, and responsible gaming. Based on that, it asserts Philadelphia does not have the right to use the PCPO to penalize DraftKings.
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DraftKings disputes Philadelphia’s authority
DraftKings ultimately hopes to have the PCPO declared preempted by state law and obtain an injunction barring Philadelphia from enforcing it.
The ordinance was necessitated because of the “absence of a specialized local mechanism within the mayor’s chain of command,” the city claimed.
Despite the ordinance's local scope, DraftKings claims the subpoena obtained by investigators exceeded its scope of authority. The company wrote in its complaint that the city gathered information and documents related to Philadelphia user revenue and betting metrics, data collection and targeting, advertising and marketing campaigns, promotional offers, disclosures, and VIP programs.
The Pennsylvania sports betting giant said all this information did not relate to its activity in Philadelphia. In acquiring information related to broader Pennsylvania, DraftKings again concluded the right to enforcement belonged to the PGCB.
“The city has acted beyond the scope of its authority on matters governed by state law and regulated by the Pennsylvania Gaming Control Board,” a DraftKings spokesperson said. “DraftKings remains committed to operating responsibly and in full compliance with Pennsylvania law, and we look forward to addressing this issue through the legal process.”
Previous run-in with Philadelphia
DraftKings appeared in a Philadelphia federal court April 8 regarding promotional practices that were labeled “misleading.”
The gaming company moved to dismiss the class-action lawsuit, which challenged DraftKings' “Casino Deposit Match,” “Risk-Free Bet,” and “$1,000 Sportsbook Deposit” promotions. The plaintiffs argued customers were not adequately informed of wagering requirements tied to the offers. The court dismissed part, but not all, of the case.
