Massachusetts Court Allows Deceptive Advertising Claims Against DraftKings to Proceed

A significant legal challenge against major sports betting operator DraftKings has received a green light to advance in Massachusetts courts. The Public Health Advocacy Institute (PHAI) filed the complaint in December 2023, alleging that DraftKings engaged in deceptive advertising concerning its promotional offers, specifically a prominent $1,000 deposit bonus.

The core of the lawsuit's allegations centers on the purported lack of transparency surrounding the bonus's terms and conditions. PHAI contends that to unlock the maximum $1,000 bonus, players were first obligated to wager $5,000 of their own funds. Furthermore, to release any winnings derived from this bonus, an additional rollover requirement of $25,000 had to be met. A key point of contention is also the claim that the bonus itself was non-withdrawable, a critical detail that the complaint asserts was not clearly disclosed to participants.

Judge Debra A. Squires-Lee recently delivered a ruling denying a portion of DraftKings' motion to dismiss the case. While the judge sided with DraftKings in dismissing a claim related to the misuse of customer information, she permitted the primary allegations regarding deceptive advertising practices to move forward.

The decision was met with a strong reaction from PHAI's Executive Director, Mark Gottlieb, who stated, "The jig is up for DraftKings and its highly deceptive marketing ploy to lure new customers to wager tens of thousands of dollars chasing a bogus bonus." His remarks underscore the plaintiffs' conviction regarding the alleged misleading nature of DraftKings' promotions.

However, this development does not signal an an immediate victory for the plaintiffs. The lawsuit is structured as a class action, meaning it must undergo a certification process. This involves identifying and verifying a sufficient number of individuals who claim to have been misled by the DraftKings promotion. Only once certified can the case proceed to the discovery phase, which is typically a prolonged, intricate, and expensive legal undertaking that could substantially delay a potential trial. There remains the possibility of an out-of-court settlement between the parties, averting the need for a full trial.

DraftKings has consistently asserted that its terms and conditions are explicit and easily understandable, maintaining that it has never intentionally concealed or withheld information from its users. The legal dispute appears to hinge on the contrast between the impression created by DraftKings – suggesting a readily available $1,000 – and the plaintiffs' argument that the true complexities and substantial wagering requirements were obscured in the fine print, necessitating careful scrutiny from customers.