DraftKings Lands in Court over Promotion of “Risk-Free” Bets

Gambling and betting giant DraftKings has found itself in hot water because of its promotion of “risk-free” bets in New York. A class action filed in the Southern District of New York on April 17 accuses the operator of deceptive advertising.

The lawsuit was initiated by Samantha Guery through Reese LLP, a professional law firm. It was drawn up by Richard Daynard, a law professor at Northeastern University.

According to the plaintiffs, DraftKings’ promotion of risk-free bets is deceptive and untruthful.

For reference, the operator’s promotion required players to place a wager with their own money. After that, they would be offered a free bet of equivalent value if the original bet lost.

However, the plaintiffs pointed out that the extra bets DraftKings offered were not worth the value of the original bet since their value could not be withdrawn before it was wagered. Additionally, those free bets would make less money, if successful, than bets placed with customers’ own cash.

The lawsuit points out that the free bet is worth less than half of the initial bet. As a result, the promotion isn’t really “risk-free” like DraftKings claims.

“Risk-Free” Is a Controversial Term

According to the complaint, the gambling company’s promotion was misleading and thus violated Section 349 of the New York General Business Law. For context, the section prohibits deceptive marketing practices.

Additionally, the lawsuit alleged that DraftKings’ promotion violated Section 1363 of the Racing, Pari-Mutuel Wagering and Breeding Law.

It should also be noted that the American Gaming Association prohibited “risk-free” promotions in March 2023 amid problem gambling concerns. The changes banned all use of the term in advertising as the AGA sought to protect consumers from predatory practices and illegal betting.

This is not the first time the term risk-free has sparked outrage. Rece Davis, an American sports television journalist for ESPN, recently used the term to describe a betting recommendation as a “risk-free investment.”

Davis eventually corrected himself, saying that all gambling contains risks. He encouraged people who partake in betting to do so with “prudence, care, caution, fiscal and personal responsibility and never over-extend” and said that he hoped people realize that his comment was an exaggeration.