DraftKings Faces Charges for Allegedly Deceptive “Risk-Free” Wagers Promotion

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A class action suit was reportedly submitted on April 18, 2024, in NY federal court that charges DraftKings of deceiving its newest clients into thinking their 1st bet would be without risk, according to news media.

The class action lawsuit

The class action suit was submitted by Samantha Guery, who reportedly wants undefined compensation in the name of the rest of the DraftKings New York-based clients who suffered the loss of their no-risk wagers, as reported by Bloomberg. Additionally, the lawsuit claimed that “after DraftKings lured users into opening accounts based on the promise of Risk-Free Bets, many new users discovered their money was indeed at risk.”

Relatedly, specific advertisements guaranteed clients that they would be credited with a “free bet” should they lose their alleged “risk-free bet.” However, the catch is that clients would double their earnings by placing the identical wager with money than with this so-called credit.

All of this reportedly shows that DraftKings wasn’t clear with clients that this no-risk wager would become an inferior free wager, according to Covers.

Furthermore, the lawsuit claims that by advertising the mentioned promotions, the firm breached the state law on consumer protection by deceiving clients. It also reportedly breached Section 349 of the New York General Business Law, which forbids misleading practices by firms.

Under NY law, all gambling operators are ordered to act in accordance with the advertising instructions under section 1363 of the Racing, Pari-Mutuel Wagering and Breeding Law. In addition, the American Gaming Association (AGA) modified its Responsible Market Code last March to forbid the offering of “risk-free” marketing.

Similar lawsuit against DraftKings in the past

The company also recently faced an identical issue in another important legalized sports wagering market, namely Massachusetts, where it is headquartered. It’s a class-action lawsuit that accused DraftKings of a reportedly false promotion of its online bookie, according to Covers.

The legal action was filed last December by the Public Health Advocacy Institute (PHAI), headquartered out of Northeastern University in The Bay State, and its affiliate Center for Public Health Litigation. In addition, the lawsuit reportedly claimed that the firm’s clients didn’t know that they had to make a $5,000 deposit and invest $25,000 through wagers of – an average of over $276 a day – or 300 or longer within 90 days – to meet requirements to receive a $1,000 registration bonus.

Lack of transparency claim

Nonetheless, this one represents yet another class action suit that has hit DraftKings seeking compensation for not clearly expressing the specifics of the promotion.

Moreover, the lawsuit reportedly claims: “DraftKings knowingly and unfairly designed its promotion to maximize the number of consumers that would sign up for its sports gambling platform, the number of bets that would be placed through the platform, and the amount of money that would be placed on bets through its platform.”

But in a response to this class action, DraftKings informed Covers that the operator “respectfully disagrees with the claims and allegations made by the Public Health Advocacy Institute” and plans to defend itself in this case.”

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