Lawsuit Challenges DraftKings on Deceptive Bonus Promotions

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: December 16, 2023

DraftKings, a sportsbook powerhouse located in Boston, is facing legal trouble after the Public Health Advocacy Institute (PHAI) filed a proposed class-action complaint in Massachusetts’ Middlesex Superior Court, accusing the company of using misleading marketing strategies. PHAI, well-known for its successful legal battles with large tobacco companies, asserts that DraftKings deceives consumers with deceptively complex advertising campaigns.

The Allegations Unveiled – Deceptive Bonus Terms Trigger Legal Action

The main focus of the complaint is a recent sign-up offer made by DraftKings in Massachusetts, which entices prospective wagerers with a “$1,000 Bonus” when they create an online betting account. But according to the lawsuit, the tiny print paints a different picture, with consumers being only eligible for the bonus after making a $5,000 deposit and betting $25,000 within ninety days. The promotion becomes even more confusing when one has to wager on odds of -300 or higher.

The class-action lawsuit claims that the DraftKings promotion, which reads, “Join DraftKings Sportsbook,” was falsely marketed. Get a $1,000 DK Dollar deposit bonus as a new customer!” There was a link to “view terms” beneath this message. The lawsuit contends that it is not reasonably foreseeable for a new customer to infer from the marketing that the $1,000 incentive would not be awarded upon making the first deposit. Rather, the bonus is earned gradually, and in order to get the entire bonus, players purportedly need to wager and stake $25,000 within a ninety-day period.

A Legal Heavyweight Enters the Arena – Famed Attorney Takes on DraftKings

The primary target of the complaint is a recent Massachusetts-based DraftKings sign-up promotion that entices potential bettors with a “$1,000 Bonus” upon opening an online betting account. However, the lawsuit claims that the fine language presents a different image, stating that players can only receive the bonus after depositing $5,000 and placing a $25,000 wager within ninety days. The requirement to wager on odds of -300 or greater complicates the promotion even further.

The DraftKings promotion that says, “Join DraftKings Sportsbook,” is the subject of a class-action lawsuit alleging that it was fraudulently advertised. As a new customer, receive a $1,000 DK Dollar deposit incentive!” This message has a “view terms” link underneath it. According to the lawsuit, a new customer could not have reasonably been expected to deduce from the advertisement that they would not receive the $1,000 bonus when they made their initial deposit. Rather, players must allegedly gamble and bet $25,000 during a ninety-day period in order to receive the total bonus, which is earned gradually.

DraftKings Responds – Company Defends Against Allegations

DraftKings responded to the complaint with a statement that rejected the allegations as baseless. Reiterating its dedication to responsible gaming and consumer safety, the corporation refutes the claims made by the Public Health Advocacy Institute. DraftKings disclosed that it had made an effort to communicate with the PHAI in order to reach a mutually agreeable resolution outside of court; nonetheless, the institution opted to take legal action instead.

The advertising methods of the sports betting business have come under growing scrutiny. State gambling authorities in Massachusetts, where legal sports betting began on January 31, have placed restrictions on online sportsbooks. Specifically, sportsbooks are not allowed to advertise sign-up bonuses or promotions as “risk-free” or “free.”

While DraftKings gets ready to mount a fierce defense against the accusations, the verdict in this legal dispute may have wider ramifications for how sports betting companies advertise their bonuses and promos, particularly in areas where regulations are changing. The conflict between industry heavyweights and consumer advocacy groups highlights the continued difficulties in striking a balance between marketing tactics and open, consumer-friendly procedures in the quickly expanding sports betting business.