Lawsuit Alleging That DraftKings Misled Customers Proceeds

American betting giant DraftKings has failed to dismiss a class action lawsuit by the Public Health Advocacy Institute. According to a report by Next.io, the class action will now proceed, adding to the operator’s ongoing legal woes.

The class action stems from PHAI’s claim that DraftKings offered misleading sign-up bonuses that didn’t properly convey all the necessary conditions that players had to keep in mind. According to plaintiffs Shane Harris and Melissa Scanlon the promotion contained conditions that were not clearly communicated by the gambling operator.

For context, players needed to make an initial deposit of $5,000 and gamble at least $25,000 over 90 days in order to be eligible to receive the promised $1,000 sign-up bonus. Additionally, customers were only allowed to gamble on bets with odds of at least 3-1, making players more likely to lose money while aiming for the bonus.

Players who failed to meet the aforementioned conditions, the lawsuit noted, were only able to claim the bonus as a non-refundable credit.

DraftKings Failed to Dismiss the Lawsuit

DraftKings tried to dismiss the lawsuit appealing to three principal arguments as to why it should be dismissed. First of all, the operator pointed out that no distinct injury has been alleged by the plaintiffs.

Additionally, DraftKings tried to refute the claims that its promotion was misleading, claiming that the promotion’s disclosures adequately described its nature. Lastly, the company said that Harris should be dismissed as a named plaintiff because he failed to send a demand letter to the operator prior to the lawsuit.

While DraftKings tried to dismiss the lawsuit, Massachusetts Superior Court Judge Debra Squires-Lee concluded that the sportsbook’s arguments against the case were not sufficiently convincing.

Legal Expert Who Sued the Tobacco Industry Backs the Suit

The class action lawsuit was filed last year. It is supported by Northeastern University law professor Richard Daynard who was previously involved in a litigation against the tobacco industry which concluded with a $206 billion settlement in 1998.

Daynard remains critical of the online gambling industry, claiming that operators are purposefully making their products as addictive as possible. Slamming online gaming as a “public health disaster,” Daynard accused DraftKings of engaging in deceptive promotions to hook customers. He compared this practice to what cigarette companies do to attract clients.

The ongoing lawsuit adds to DraftKings’ legal woes. While one of the lawsuits faced by the company was recently dropped by the plaintiff, other outstanding challenges remain.