DraftKings Defeats Class Action Suit In New York

In a ruling that could have an impact on the online sports betting industry across the country, a class action suit filed against DraftKings for deceptive marketing was dismissed in the Southern District Federal Court of New York.

Judge Denise Cote ruled that lawyers for the plaintiffs failed to prove that the DraftKings “no sweat bet” promotion would be capable of deceiving a reasonable consumer.

The promotion, available to new DraftKings customers, offered a so-called “no sweat” first bet of up to $1,000. The offer stated that new players would “get a bonus bet back in the amount of your original wager if your first bet doesn’t hit.”

However, to obtain the full benefit of the promotion, a user must deposit $5,000 and place bets with minimum odds of -300, risking at least $25,000, all within 90 days of signing up and opening a new DraftKings account.

The plaintiffs argued that these terms and conditions were misleading because a player would need to wager $25,000 to keep the $1,000 from the no sweat bet.

The plaintiffs were seeking undisclosed punitive damages.

The judge didn’t buy the argument of the plaintiffs

Putting forth the argument that it is the responsibility of the customer to read the fine print before agreeing to any offer, Judge Cote ruled that the terms and conditions attached to the DraftKings promotional offer were easily accessible for all customers.

“The terms of the promotions are readily available on the app and are presented to the user before and during the purchasing process,” Judge Cote wrote in her ruling. “They are accessed through the very same pages that the consumer uses to place the promoted bet.

“A reasonable consumer of an online platform would be expected to look at the terms of promotion, which are readily accessible, before accessing the promotion.”

Cote also noted that the plaintiffs weren’t able to point to a specific DraftKings promotional ad as the root cause of the problem.

Judge Cote also dismissed the product liability claim made by the plaintiffs, noting that no physical harm was done to people by the product.

“The product is an online betting service, which is not a physical product and therefore not generally covered by products liability law,” Judge Cote wrote. “Even if products liability law could apply to certain types of online services … plaintiffs would still be required to plead that they were physically injured through the use of the DraftKings platform.”

A similar case is still active in Massachusetts

DraftKings is facing a similar lawsuit in Massachusetts. The exact argument that failed in New York is being put forth by a class action suit filed in Suffolk County, Massachusetts state court.

Lawyers for DraftKings were unsuccessful in their bid to have the suit dismissed in the same manner through which they’ve just enjoyed success in New York.

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