Boston-based daily fantasy and sports betting operator DraftKings agreed to pay nearly $8 million to settle its part of a multidistrict class action lawsuit and take steps to prevent compulsive player behavior.
DraftKings and FanDuel
The lawsuit was filed by players against the two big boys in daily fantasy sport (DFS) and sports betting, DraftKings and FanDuel, accusing them of running illegal gambling, by using new player deposits as a prize pool for more experienced, high-volume players.
The dozens of consumer class-action lawsuits filed against DraftKings and FanDuel were consolidated into a nationwide multidistrict litigation (MDL) federal court case in Massachusetts by the Judicial Panel of Multidistrict Litigation in 2016.
Following arbitration in November 2019, DraftKings and FanDuel were separated with regards to the settlement of the case. According to the agreement, pending approval by US District Judge George A. O’Toole, the Boston-based gaming operator will set up two settlement funds, one for players with open accounts who joined the multidistrict lawsuit, and another, for players who have closed their playing accounts.
DraftKings will fund the open account settlement fund with $7.28 million, site credit, and allocate to the fund for closed player accounts $720,000. Any player who is not a lifetime winner at the operator and made a first-time deposit on the website before January 1, 2018, will be eligible to receive compensation from the fund.
As part of the settlement agreement, DraftKings is implementing a set of measures to prevent players from excessive play. These include limiting each player to only one player account, preventing employees from entering public contests with entry fees, as well as distinguishing experienced players by attaching a specific mark to their usernames.
Besides the measures which will be effective for 2 years, DraftKings agreed to create player statistics to display how many players are on the winning side, how many are breaking even or losing money for a period of 30 days, preceding the release of the statistics.
With regards to players with compulsive player behavior, DraftKings will include links to useful resources to help them identify their problems and seek professional help.
DraftKings will also pay $1.9 million in attorney fees and reimburse $100,000 in expenses to lawyers from Napoli Shkolnik PLLC, Jones Ward PLC, Kantrowitz Goldhamer & Graifman PC, and Todd & Weld LLP, the law agencies representing players.