The field of online sports betting is facing a new legal showdown, as Boston-based company DraftKings stands accused in a class-action lawsuit of deceptive advertising practices. The suit, filed by the Public Health Advocacy Institute (PHAI) on behalf of two Massachusetts residents, targets the sportsbook's offer of a "$1,000 bonus bet". According to Bloomberg, plaintiffs allege that the conditions to claim the full amount are excessively burdensome, requiring a customer to deposit and wager far more than the advertised bonus.
With backgrounds in pursuing legal action against addictive product industries, the PHAI's involvement has amplified the stakes, especially since the lawsuit suggests that DraftKings designed the promotion to mislead new customers—an audience "extremely unlikely to understand the gambling lingo in the fine print," as they put it. Despite the promotion being available in 22 states, customers must deposit $5,000 and wager $25,000 within 90 days to receive the full bonus, according to the complaint obtained by Financial Times.
Behind the litigation effort is Professor Richard Daynard, a known figure for his work against Big Tobacco. Notably, DraftKings' headquarters are situated a mere mile from the Northeastern University where Daynard teaches. "There's been a monologue from the industry," Daynard told the Financial Times.
In detail, DraftKings' advertisement of a $1,000 bonus is structured so that it is statistically likelier for the customer to lose money rather than claim the promised bonus, as the plaintiffs point out. The bonus, which can't even be cashed out or transferred, is paid in non-withdrawable credit, adding another layer to the claim of deception. DraftKings defended their promotion, saying that one of the plaintiffs deposited only $25 and received exactly what she was promised, according to their lawyers in a letter seen by the Financial Times. "We respectfully submit that claim is not credible," the company's lawyers said, brushing off allegations with the detached assurance only a legal team can muster.
Since sports betting's legalization in many U.S. states over the past few years, the emergence of such disputes was arguably anticipated. DraftKings may face a tough battle, both in court and in the realm of public opinion, as they navigate this contentious litigation that touches on the intricate balance between enticing consumers and engaging in potentially exploitative advertising.
