Judge Says Deceptive Advertising Suit Against DraftKings Can Go Forward

A Massachusetts judge denied DraftKings’ motion to dismiss a class action lawsuit against the company arguing deceptive marketing schemes Wednesday.

A group of bettors are suing the company for what looked like an easy incentive for new bettors, but it was actually a tough bonus to earn. The gamblers are represented by the Boston nonprofit Public Health Advocacy Institute.

DraftKings ads touted a $1,000 “deposit bonus.” In reality, to get the bonus, customers had to deposit $5,000 and wager at least $25,000 within 90 days—and the $25,000 had to be bet on odds of “-300 or longer” to receive the promotion, the suit says.

The Public Health Advocacy Institute is perhaps best known for its successful lawsuits against tobacco companies. Its longtime president, Richard Daynard, said the deposit bonus was a “bogus promotion, designed to lure customers into an addictive trap.”

To meet the requirements, users would have to bet more than $276 per day for three months to earn the promotion, the case says.

“This decision opens the door for discovery and allows us to depose the DraftKings staff responsible for the promotion and to discover how many of the hundreds of thousands of customers in Massachusetts who signed up for the $1,000 signup bonus actually got what they believed they were getting,” Mark Gottlieb, one of the PHAI attorneys representing the users, said in a statement to Front Office Sports.

DraftKings argued all these details were included in the terms and conditions, and it sought to have the case dismissed. But Judge Debra A. Squires-Lee of the Superior Court of Massachusetts didn’t buy it. In rejecting DraftKings’ motion to dismiss, Squires-Lee wrote that “these allegations plausibly suggest that [bettors] were harmed because they bought into a service worth less than they believed based on the promotion.” Still, she wrote that “the overall deceptiveness of the mobile app and website, sign up process, and terms and conditions cannot be resolved without additional information.” The case marches on, though it’s possible DraftKings could try to end this with a settlement.

Melissa Scanlon and Shane Harris are the users suing DraftKings “on behalf of themselves and all others similarly situated.” DraftKings has been headquartered in Massachusetts since it opened in 2012. A representative for DraftKings did not immediately respond to requests for comment.