DraftKings Faces Massachusetts Sports Betting Lawsuit

Another Massachusetts sports betting lawsuit has been filed. And this time, it’s against a familiar industry face: DraftKings.

The lawsuit in question is a class action filing. It takes aim at one of the online operator’s bonus structures available to new customers.

Though this is not the first controversy to impact sports betting in Massachusetts, it arguably is the most high profile. DraftKings was among the first sportsbooks to get a Massachusetts sports betting license. They are also one of the most popular online sportsbooks in the United States and have been since the country’s gambling laws were overhauled. Heck, DraftKings’ popularity even predates the United States Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act back in 2018.

Founded in 2012, DraftKings cut their teeth as a provider of Daily Fantasy Sports. They eventually transitioned into online sports betting and have since dominated the USA’s market share right alongside FanDuel.

Furthermore, the fact that DraftKings is headquartered in Massachusetts only adds more intrigue to the fold. And finally, states have recently started focusing on marketing practices from sportsbooks. This class action lawsuit aligns with that priority. Does that increase the likelihood it’s successful? Could it also be the domino that incites change across the country?

A $1,000 DraftKings Bonus is at the Center of the Massachusetts Sports Betting Lawsuit

Jericho Tran and Asher Klein of NBC 10 in Boston have the full scoop on the DraftKings Massachusetts sports betting lawsuit:

“DraftKings, the popular Massachusetts-based sports betting company, is facing a class-action lawsuit over a signing bonus that was offered to new customers, which the lawsuit says had some misleading terms. The $1,000 bonus at the heart of the lawsuit, filed in Middlesex Superior Court Friday by the Public Health Advocacy Institute at Northeastern University, had fine print that revealed it would only be paid out if customers made an initial deposit of $5,000 and gambled $25,000 within 90 days on bets with odds of -300 or longer. ‘Even if one were to try to read it, I don't think an average consumer is going to make heads or tails out of most of these terms," said Mark Gottlieb, executive director of the Public Health Advocacy Institute.’”

Mr. Gottlieb has a valid case. Though DraftKings is arguing their bonus contained clearly outlined terms, the provided description is at best convoluted. At worst, it is intentionally misleading language aimed at bagging new clients who don’t qualify for the stated bonus.

Incidentally, the class action is made up of plaintiffs who did not meet the DraftKings sportsbook bonus criteria. The company maintains this should invalidate the entire action. But Massachusetts sports betting officials have shown a propensity for penalizing both the wrong and the ambiguous.

Will the Massachusetts Gaming Commission’s Track Record Impact the DraftKings Lawsuit?

Along with Ohio sports betting officials, Massachusetts sports betting officials have been among the most proactive when it comes to monitoring potential infractions made by gambling operators. Heck, this isn’t even the only issue the stat has dealt with in the past month.

Right around Thanksgiving 2023, Penn Entertainment was getting set to release ESPN Bet. The application was branded by the sports media goliath, but it was operated by Penn Entertainment. Previously, Penn had branded their sportsbook application under the BarStool umbrella. When they launched ESPN Bet, they didn’t change their mode of operations. Marketing material, social media accounts, the app itself all remained the same. Only the ESPN branding changed.

Most states didn’t give Penn Entertainment an issue with this when clearing them to open up operations. But the ESPN Bet launch caught the attention of Massachusetts sports betting officials. They forced Penn to map out a plan that clearly differentiated ESPN Bet from the ESPN media company before clearing the app to go live.

This is all to say, the Massachusetts Gaming Commission (MGC) has harped on matters smaller than this. And generally speaking, they have aired on the side of consumer protection. Are they really going to just let this issue go?

Truthfully, the MGC may not have a choice. They are not technically the ones overseeing this case. Lawsuits get filed through an actual court. That same court may take the MGC’s compliance leanings into consideration. But the MGC itself will not be overseeing this verdict.

What will Happen to DraftKings if This Massachusetts Sports Betting Lawsuit is Successful?

When you see that a Massachusetts sports betting lawsuit has been filed against DraftKings, you might be inclined to wonder whether they could lose their license in the state. Theoretically, the plaintiffs could absolutely be seeking their removal from the Massachusetts sports gambling market. But that’s not what is happening here. As Gottlieb said on behalf of the Public Health Advocacy Institute: “We just want them to just try and market their products fairly.”

Reading between the lines, it seems this lawsuit could, at worst, cost DraftKings a hefty fine. It would be a total shock if this issue elevated beyond that. (Whether it should, of course, is a separate matter altogether.)

Knowing how much money DraftKings can basically print, the next question is “Why don’t they just settle this and get their name off negative headlines?” It’s a fair inquiry. And it could technically be a course they consider in due time.

Immediately, though, any company in this situation will be inclined to prove they’re not liable. If they settle or accept blame in the matter, DraftKings could open themselves up to further litigation and discipline in the future. That is not something any company will leave to chance.

So, we should expect DraftKings to fight this. And we should also expect even more updates and details to roll out on this. The Massachusetts sports betting lawsuit was only just filed. Litigation takes time. There’s a chance DraftKings will find themselves in the Massachusetts sports betting crosshairs for a while.

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