Colossus Bets, Diogenes Sue DraftKings Over 7 Cash-Out Patents

Last Wednesday, UK’s Colossus Bets and Diogenes have filed a patent infringement complaint against DraftKings in a Federal Court in Wilmington, Delaware. The complaint is 53 pages long and covers seven patent infringement claims over DraftKings’ use of the cash-out button on its gaming and sports betting products.

Colossus Bets and Diogenes Ask for Million-Dollar Damages

The two UK companies claim their patents apply to all US bets with a cash-out feature since the repeal of the Bradley Act or PASPA (Professional and Amateur Sports Protection Act) in 2018. The Bradley Act was a bill that prevented US states from providing legal sport betting services with several exceptions. The US Supreme Court struck down the bill as unconstitutional on May 14, 2018.

Accordingly, the pair seeks damage on all US bets that have been placed with DraftKings’ sportsbook while using the cash-out feature starting August 2018. Diogenes owns the seven patents under discussion, while Colossus has the exclusive license for them.

Colossus is now prepared to claim damages that are equal to the US bets’ gross revenues for those bets that have used the cash-out feature. The claim could easily go over $1 billion from DraftKings for the alleged patent infringements, as well as any current or future infringements.

Provided Colossus can prove DraftKings has been using its patents willfully and deliberately, and the numbers could skyrocket. The UK companies have also asked that the Delaware court would block further unauthorized use of their inventions. 

Bernard Marantelli, CEO of Colossus, said the company takes its intellectual property right “very seriously.” Their lawsuit comes as a logical step to protect their rights and income across the gaming industry in the country. Colossus has licensed its cash-out concept to Esports Technologies and bet365.

Colossus Has Been Trying to Solve the Patent Problem Amicably Since 2018

Colossus allowed DraftKings to make amends regarding its patent infringement problem ever since 2018, when it issued its first warning. The company has continuously sent countless notices regarding the ongoing infringement, generously providing them with many opportunities to fix their alleged wrongdoings.

The recent lawsuit filed against DraftKings is the first attempt Colossus has had to enforce its patent on a sportsbook in the US. The company has hired DLA Piper to handle the legal matters.

In July 2021, DraftKings has also been sued by Engine Media over similar alleged infringement claims regarding two patents for technology related to sports betting. In its quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934, DraftKings claimed it could not predict the outcomes of the respective proceedings with a degree of certainty. The company also stated it would not be able to determine the extent of the potential liabilities. DraftKings is involved in additional ongoing patent infringement disputes with Interactive Games LLC and Arrow Gaming.

Potential Outcomes

Whether some or all of these patent cases will end up in settlement agreements remains to be seen. These settlements usually include either ongoing license deals or one-off payments. The riskier alternative refers to the dispute reaching a court, where a judge would decide if the patent is a valid and enforceable one. If this is the case for Colossus’ patents, the company could expect to receive some significant damages.