DraftKings Faces Massachusetts Sports Betting Lawsuit

A Massachusetts sports betting lawsuit against DraftKings will proceed after a court refused to grant the company’s motion to dismiss.

The lawsuit in question accuses the online sportsbook of “deceptively advertising a $1,000 sign-up bonus” to new customers. The filing was made by the Public Health Advocacy Institute (PHAI), as part of a class action, on behalf of anyone betting on sports in Massachusetts. According to multiple reports, the plaintiffs intend to argue that DraftKings failed to be transparent with the “stringent requirements” they set for users to claim their $1,000 online sportsbook bonus.

“This is a preliminary victory,” said Mark Gottlieb, the executive director of PHAI, per Legal Sports Reports Sam McQuillan. “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.”

These sentiments by Gottlieb have piqued attention across the industry. User data is one online sportsbooks in the U.S. have fought to keep in-house since the Professional and Amateur Sports Protection Act was overturned in 2018.

As a result, industry insiders and analysts agree this is a case that won’t just impact DraftKings but all online sportsbooks in the United States. Promotional advertisements may be the focus, but the transparency that the PHAI is angling for could flip entire business models on their head.

Full Details on the Massachusetts Sports Betting Lawsuit Against DraftKings

Anyone who has ever placed a wager knows about the sportsbook betting promotions and bonuses. Companies use them to build up their customer base and distinguish themselves from competitors. This is especially true whenever an operator enters a new market. Sign-up bonuses also tend to be aggressively pushed during tent-pole events, like the start of online NFL betting each regular season.

In this case, PHAI has taken issue with the fineprint attached to the DraftKings $1,000 sign-up bonus. Here’s McQuillan with more details:

“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.”

DraftKings has since stated that they will “vigorously defend” themselves against these charges. And you can, ahem, bet on them doing just that.

Sure, DraftKings’ resources are absurd. But this Massachusetts sports betting case has far-reaching implications on the entire industry. As noted above, PHAI wants data on how many customers actually received the bonus. That information is generally kept private. If it becomes public, there’s a chance it opens the floodgates for lawsuits against other online sportsbooks in the USA that insist on acquiring the same data.

This Issue isn’t Going Away for DraftKings—or Other Online Sportsbooks—Anytime Soon

Cynics may expect this case to fade into the background no fuss. Many assume DraftKings will pay a hefty fine and pony up in settlement talks. That’s how so many other litigious matters in this industry end.

However, we wouldn’t count on this ending anytime soon. For starters, the Public Health Advocacy Institute doesn’t seem to be in this for a quick payoff.

On the contrary, Gottlieb’s comments suggest they’re trying to impact Massachusetts sports betting laws and general United States sports betting laws at a fundamental level. This jibes with the coalition’s support of additional consumer protections in the sports betting industry.

Many will still believe DraftKings emerges from this unscathed. And look, it’s possible. But PHAI actually has a history of leaving their mark in cases like this. As McQuillan pointed out, “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.” That’s a big deal.

Some even believe DraftKings is showing signs of weakness in this situation. Two of its founding members recently sold off millions of dollars worth of stock that was already declining in value.

This could be a coincidence—a development that means nothing. But it could also imply, however faintly, that DraftKings stakeholders are bracing for repercussions.

The Massachusetts Sports Betting Lawsuit is Part of a Larger Trend

Issues like this aren’t just arising in Massachusetts. All throughout the United States, we’re seeing sports betting regulators attempt to crack down on various forms of sportsbook advertisements. While The Bay State seems to be at the forefront of this movement, so too are Ohio sports betting regulators. Other states are gradually, if not meteorically, taking more interest as well.

All of which makes this lawsuit against DraftKings in Massachusetts extremely pivotal for both sports betting operators and consumers. Could the end result change the way online sportsbooks in the USA offer sign-up bonuses forever? Will it impact advertising at large in the sports betting industry? Might this result in a landmark payout from DraftKings? May we see tons of data previously considered proprietary leak out to the masses?

Everything appears to be on the table at this stage. And like we said before, this case isn’t going anywhere anytime. We mean that literally. The next “status check” for the lawsuit is scheduled for December 10, 2024. In all likelihood, then, we won’t see a resolution to this Massachusetts sports betting case until 2025.

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