DraftKings Sportsbook is now facing a second class action, this time a federal lawsuit in the Southern District of New York for its promotional “risk-free” bets.
The lawsuit, filed by plaintiff Samantha Guery, says that DraftKings engaged in deceptive, misleading, fraudulent and unlawful by advertising a risk-free wager.
The suit claims that the way DraftKings awards its free bet resulted in compensation that failed to match the amount of money a person had to wager in order to receive the offer.
Suit says DraftKings free bets are fraudulent and misleading
“The promotion required that the customer place a bet with their own money. If a customer lost their bet, they were not returned to their original position. Instead, their accounts were credited with a “Free Bet” that was worth less than its counterpart in U.S. dollars implied by the promotional materials.”
The complaint went so far as to break down its mathematical approach:
“Free Bets cannot be withdrawn and must be wagered to be converted to U.S. dollars. Furthermore, wagers made with Free Bets are not paid out like wagers made with U.S. dollars. A $100 winning bet made with U.S. dollars at even odds recovers the $100 stake plus the $100 winnings less the sportsbook’s cut (known as the “vig” or “rake”) of 9%, which results in a payment of approximately $191. By contrast, a winning bet made with a $100 Free Bet converts only to $100 US dollars less vig, which results in a payment of approximately $91.”
The suit notes that several states like Ohio and Massachusetts banned the use of “risk-free” in advertising but did not note that most operators, including DraftKings, have voluntarily stopped using the phrase risk-free in advertising across all North American markets.
DraftKings declined to comment on this story.
Similar class action continues in Massachusetts
The suit bears a resemblance to another class action lawsuit filed at the state level in Massachusetts and backed by the Public Health Advocacy Institute. The plaintiffs claim that the $1,000 sign-up bonus in the state was misleading. While the plaintiffs brought the suit in the Superior Court, DraftKings successfully requested a venue change to the state’s Business Litigation court. In that venue change request, DraftKings indicated it would file its motion to dismiss with the new venue.
The Public Health Adovcacy Institute confirmed to SBC Americas that it is not involved in the New York case and has no comment on the matter.
