DraftKings Sportsbook Loses Motion to Dismiss Lawsuit Over Welcome Offer

Michael Savio
By: Michael Savio
08/23/2024
Sports Betting
DraftKingillustraion
Photo by Flickr, CC BY-NC 2.0

Key Takeaways

  • Lawsuit centers on $1,000 Deposit Match
  • Bettors claim the wording deceived them into spending large amounts to claim bonus
  • DraftKings recently buckled to public pressure by canceling a planned surcharge for 2025

DraftKings Sports finds itself in hot water yet again. 

The Middlesex Superior Court has ruled that a lawsuit against DraftKings Sportsbook over one of their welcome offers. The Public Health Advocacy Institute (PHAI) filed the lawsuit, representing a group of bettors. The lawsuit alleges that the bettors were misled about the offer and preyed on by DraftKings due to their inexperience. 

While the lawsuit is still in its early stages, the ruling is a bad sign for the industry-leading sportsbook.

Lawsuit Claims Bettors Were Swindled

The legal challenge focuses on DraftKings’ $1,000 Deposit Bonus, available to all new players. While the offer is advertised as a $1,000 deposit match, the operator only does so for 20% of the original amount. That means a bettor must deposit $5,000 to receive the entire bonus.

In addition to the wording around the deposit match, the lawsuit also states that DraftKings did not clarify that the bonus would be in the form of Bonus Bets. Those bets cannot be withdrawn for cash and must be wagered before expiring.

“The very sort of gambling this promotion requires of new customers ... is not, by any definition, responsible play,” Harry Levant, the PHAI gambling policy director  Harry Levant said after the motion failed. “Instead, it’s a recipe for addiction. Yet DraftKings hypocritically extorts its customers to ‘gamble responsibly’ in every advertisement. I don’t believe that’s what DraftKings actually wants.”

MGC Has Tumultuous Relationship with Bookmakers

The Massachusetts Gaming Commission (MGC), which regulates sports betting in the state, has a long history of battles with operators. One of the most prominent issues between the two sides is how operators advertise. The regulator has penalized several online sportsbooks over the issue, including Barstool Sportsbook, which chose to exit the US market amid a dispute.

While the lawsuit does not directly involve the MGC, that does not mean they will remain on the sidelines. Depending on how the lawsuit plays out, the regulator could pursue its recourse against DraftKings and its controversial welcome offer. 

DraftKings Continues to Take Losses

While DraftKings remains an industry giant, this ruling represents another public embarrassment at the worst time for the operator. 

The sportsbook recently announced it would add a surcharge to betting winnings in four markets to offset rising tax rates. However, a large public uproar led to the cancellation of the plan just days later. 

Michael Savio covers the US online casino industry, giving readers insights and information they won’t find anywhere else. He has followed the retail industry since his time living in Las Vegas and has continued to do so as the online industry has taken off. Michael covers everything from online casino reviews to industry news, making him one of the most trusted insiders in the business. Check out Michael’s latest articles at casinos.com to see what he has to offer!