PRESS RELEASE: DraftKings Sued in New York for Deceptive Practices

Today’s lawsuit marks the fourth state where the online gambling giant faces class-action lawsuits for alleged violations.

NEW YORK CITY – Today, attorneys from the Chicago-based civil rights law firm of Loevy + Loevy filed a new class-action lawsuit in the name of two individual New York plaintiffs against the online gambling site DraftKings. The suit—filed in the U.S. District Court for the Southern District of New York—alleges that the online sportsbook deceives New Yorkers and misleads them into betting and losing large amounts of money, in violation of state and federal laws.

This complaint makes New York the fifth state—after Massachusetts, Illinois, Kentucky, and New Jersey—in a growing list of jurisdictions where the online giant faces lawsuits over deceptive practices, with four of those suits being brought by Loevy + Loevy this year. New Yorkers have wagered more than $56 billion since sports betting was legalized in the state in 2022. more than $19.3 billion through DraftKings alone, according to the New York State Gaming Commission.

“DraftKings’ activities in New York are a textbook example of its pattern of skirting and sometimes flat-out ignoring laws and regulations intended to protect consumers,” the complaint contends.

Even before the legalization of online gambling in New York, the complaint alleges, DraftKings began offering “daily fantasy sports” contests to New York consumers, including sometimes to those who were under the age of eighteen. Because the vast majority of online gamblers lose money, and many lose far more than they can afford, it is an industry that must constantly snare a steady stream of new young customers and influence them to act against their best interests.  

This ugly reality of the online gambling industry, the lawsuit argues, is what drives DraftKings to lure new customers with promotional gimmicks that rely on “deception, fraud, false promises, and misrepresentations.”

“New Yorkers should be able to rely on one of the leading sports gambling outfits in the country to do what it promises and play by the rules,” says Isaac Green, one of the Loevy + Loevy attorneys representing the plaintiffs. “Our clients allege that DraftKings is misleading and manipulating customers in violation of the law.”

At the core of today’s lawsuit are specific DraftKings promotions that the plaintiffs allege are deceptive and hide features that are designed to inculcate problem gambling habits in new users. These include DraftKings’ so-called “Risk-Free Bets,” which lead new customers to believe they can place a bet without risking losing their money, and the company’s widely publicized deposit match offers. In reality, the fine-print terms of these promotions lure new users to deposit and gamble almost exclusively with their own money, which they almost always lose.

The lawsuit also alleges that DraftKings ignores its own stated “player protection” policies, and instead deliberately targets players it has reason to know are experiencing gambling addictions. Rather than cutting a user off when they begin showing signs of a gambling problem, DraftKings pairs them with personalized “VIP Hosts” who—acting as if they were friends—milk them for every dollar they have. VIP Hosts deploy a specific playbook of tactics, such as contacting their assigned users when they have not logged on to the platform for a few days—or have just experienced a sizeable loss—and luring them back with offers of promotions that require them to deposit more of their own money and place more bets.

“This is deceptive marketing, plain and simple,” says Mike Kanovitz, the partner at Loevy + Loevy who is leading the litigation. “We do not tolerate corporations lying in any industry. In the context of gambling, where the risk of addiction is so well understood, corporate deception is particularly cruel and abusive, and can even be criminal. It must be punished to the full extent of the law.”

The individual plaintiffs in today’s complaint both made deposits after being lured by DraftKings’ promotions advertising bets as no-risk, only to discover that they did not get their original stakes back when they lost. One named plaintiff lost over $45,000 within a year of creating his account. At points he was losing as much as $10,000 a day, while his “VIP Hosts” repeatedly called and texted him, offering more deceptive promotions and urging him to make new deposits to try to win back his money. 

“Hey thanks for the $500 bonus,” the plaintiff texted his VIP Host at one point, in an exchange cited in the complaint. “But now I just lost my last $1,750 because of it. Can’t pay my bills this month now.”

Plaintiffs are represented by Mike Kanovitz, Jon Loevy, Anand Swaminathan, Isaac Green, and Aaron Tucek of the law firm of Loevy + Loevy. The lawsuit charges DraftKings with violating several state laws—including violations of several sections of the New York General Business Law that protect consumers against deceptive practices and false advertising—and asks for injunctive relief and damages related to DraftKings widespread and ongoing deception of its customers.

“The complaint highlights DraftKings’ ubiquitous promotional advertising, promising in large print an ‘all-upside’ gambling experience,” say Green. “But, as our clients discovered, it’s easy to miss the small print that obscures the truth: once you give them your money, it’s all downside.” 

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A copy of the complaint can be found here.

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