DraftKings Faces Class-Action Lawsuit in New York Over Alleged Misleading Practices
DraftKings is under legal scrutiny in New York. A class-action lawsuit has been filed by Clara De Leon and Eric W. Mirsberger Jr., alleging deceptive promotional tactics and exploitative practices that they claim contribute to gambling addiction.
Allegations Against DraftKings
The lawsuit accuses DraftKings of employing misleading promotions to entice new users while failing to provide clear terms and conditions.
Promotions like “risk-free bets” or “no-sweat bets” are cited as being especially deceptive. According to the plaintiffs, these offers promise no-risk wagering but return lost bets in bonus credits rather than cash, forcing users to continue gambling to see any tangible rewards.
Additionally, the lawsuit alleges that DraftKings:
- Targets inexperienced gamblers: Plaintiffs argue that the company deliberately exploits individuals unfamiliar with sports betting, encouraging higher and more frequent wagers.
- Fails to disclose conditions: Terms for promotions, such as needing to place additional winning bets to reclaim losses, are described as confusing and unclear.
- Promotes addictive habits: By incentivizing repetitive betting, the company allegedly fosters long-term gambling habits.
- Limits successful players: DraftKings is accused of restricting betting opportunities for users who demonstrate thoughtful and strategic wagering habits.
- Targets vulnerable users: The lawsuit claims that DraftKings assigns “VIP Hosts” to high-spending customers, some of whom are problem gamblers, to encourage further deposits and betting activity.
Legal Implications
DraftKings is accused of violating New York state laws on fair advertising, responsible gambling, and consumer protection. The plaintiffs allege fraud, negligence, and deceptive marketing practices, seeking damages and a court injunction to prevent further harm.
This isn’t the first time DraftKings has faced legal challenges over its promotions. Similar lawsuits have emerged in states like Massachusetts, Illinois, Kentucky, and New Jersey.
In previous cases, the company was criticized for aggressive marketing strategies, including alleged misrepresentation of deposit bonuses and wagering conditions.
The lawsuit highlights the financial devastation experienced by some users. One plaintiff reportedly lost over $45,000 in a single year, including $10,000 on one day, while being encouraged by a DraftKings “VIP Host” to continue betting.
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