The Boston-based sports betting company DraftKings is facing a proposed class-action lawsuit in Massachusetts’ Middlesex Superior Court. The lawsuit alleges that the sportsbook uses deceptive marketing tactics to lure in customers.
The lawsuit, brought by the Public Health Advocacy Institute (PHAI), claims that DraftKings’ advertising programs deceive consumers into signing up for their services. The legal claim focuses on a recent signup promotion in Massachusetts that offers new bettors a “$1,000 Bonus” upon registering their online wagering account.
However, the lawsuit alleges that customers only receive the $1,000 in bonus bets after they deposit $5,000 and wager $25,000 within 90 days. Additionally, the fine print requires the bettor to make the $25,000 in bets on odds of -300 or longer.
The lawsuit argues that the advertising for the DraftKings promo was misleading, as it did not make it clear that the $1,000 bonus would not be provided at the time of the initial deposit, and that instead, the bonus would be earned at a rate of $1 for every $25 wagered.
The case was brought in part by Richard Daynard, a noted attorney and Northeastern University law professor who was involved in uncovering evidence of the risks of big tobacco in the 1980s. The lawsuit alleges that DraftKings is aware that it operates a product prone to addiction and dependence and should take special precautions to minimize addiction risk.
In response to the lawsuit, attorneys representing DraftKings have stated that the claims are without merit, and that the company takes consumer protection and responsible gaming seriously. DraftKings has attempted to work with the PHAI to resolve the matter out of court, but the Institute chose to file the lawsuit instead.
The sports betting industry has faced scrutiny regarding its advertising, and in Massachusetts, state gaming regulators have banned sportsbooks from advertising signup incentives or any other promotions as “risk-free” or “free.”