False advertising lawsuit against DraftKings in Massachusetts set to continue

• A Massachusetts judge has allowed part of a consumer protection lawsuit against DraftKings to move forward, while dismissing other claims
• The case, filed by the Public Health Advocacy Institute (PHAI), alleges that a $1,000 deposit bonus promotion was marketed in a misleading way
• DraftKings disputes the allegations and maintains that its bonus terms and conditions were fully disclosed to customers

DraftKings has been dealt a setback in a lawsuit filed against the company in Massachusetts by the Public Health Advocacy Institute (PHAI) in December 2023. The complaint alleges that the promotional offers used by the company at the time were advertised under false pretenses.

DraftKings will continue to fight off a false advertising lawsuit in Massachusetts

Specifically, the lawsuit alleges that DraftKings failed to clearly disclose the $1,000 deposit bonus terms and conditions, and thus misled customers. Essentially, for a player to secure the maximum amount of the bonus, they would need to first wager $5,000 of their own money, and then roll over the bonus to the tune of $25,000 to release any winnings thereof.

The bonus itself was not a withdrawable amount, as well, and this was not clearly disclosed to participants, the complaint further alleges. Judge Debra A. Squires-Lee has denied part of DraftKings’ motion to dismiss, allowing the core claims in the complaint to proceed.

In a summary judgment, Judge Squires-Lee dismissed the claim that DraftKings misused customer information, which she disagreed with, but agreed to move forward with the claim about deceptive advertising practices.

The decision elicited a strong response from PHAI, whose Executive Director, Mark Gottlieb:

"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."

However, this decision is not an immediate victory for the plaintiffs. As a class-action lawsuit, the complaint needs to be certified, meaning that there would have to be enough plaintiffs claiming that they have been misled by the DraftKings promotion.

Actual trial - if it comes to that - is still a far way off

Once enough plaintiffs are found and the complaint is certifiedas a class-action lawsuit, discovery will begin, a long, complicated, and expensive process that could push back a possible trial.

It is possible for the plaintiffs and DraftKings to reach an out-of-court settlement and for things to never escalate to a full trial.

DraftKings has maintained that its terms and conditions are transparent and straightforward and that it has never hidden or withheld any information from its customers, which is true.

The lawsuit focuses on the fact that users would have to read the fine print in order to be aware of these changes, while DraftKings created an impression that the $1,000 was readily available.

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