DraftKings Under Fire In Their Own Land

Sportsbook leader DraftKings is under fire on two fronts in its own land, Massachusetts, because of allegedly “unfair and deceptive” bonus bet advertising and illegally accepting out-of-state credit card payments.

Tough credit card controls was a bedrock of legislation when sports betting was legalised in the so-called “Codfish State” in August 2022.

But now DraftKings–currently the number two sportsbook in America behind Flutter’s FanDuel–is facing a potential non-compliance review from Massachusetts regulators after making an “egregious” error in allowing wagers paid with off-state credit cards.

The Commonwealth’s Investigations and Enforcement Bureau (IEB) has the issue under review and will deliver a ruling in the New Year.

Allegedly DraftKings, headquartered in Boston, allowed 218 users to make 242 wagers totaling US$83,663 between March 10 and July 13 this year.

“Proper safeguards, as agreed under statute, were not in place,” a highly-placed source in the regulatory Massachusetts Gaming Commission told iGamingFuture.

For its part, DraftKings has responded by claiming the “errors were caused by miscommunication”.

Meantime, the sportsbook, currently operating legally in 19 US iGaming territories, is also under fire in its home state for allegedly misleading customers over bonus bet offers.

The Massachusetts Public Health Advocacy Institute (PHAI) has filed a class-action lawsuit against the gambling company in the Middlesex Superior Court on behalf of two Massachusetts bettors, Shane Harris and Melissa Scanlon.

Harris and Scanlon claim they were misled into believing they would receive a US$1,000 bonus after depositing money into an account.

Public Health Disaster

“Shane and Melissa are typical of many thousands of people in Massachusetts who were misled by the bonus offer and would not have signed up had they understood DraftKings’ unfair and deceptive requirements,” said PHAI Executive Director Mark Gottlieb.

The DraftKings US$1,000 bonus bet offer requires customers to deposit US$5,000 into an account and wager US$25,000 within 90 days.

The legal complaint claims a bettor would have to wager more than US$276-a-day for three months to qualify for the full bonus.

“DraftKings knew, or should have known, that its advertisement and promotion was deceptive to their target customers, who were new to sports betting and were extremely unlikely to understand the gambling lingo in the fine print,” asserts the lawsuit.

DraftKings is certainly up against tough legal opposition in the bonus bet court action.

Based at the Northeastern University School of Law in Boston, the PHAI led the charge against Big Tobacco for posing catastrophic risks to health in a series of storied lawsuits in the 1980s and 90s.

“Online gambling is creating a public health disaster with increasingly addictive products right before our eyes,” asserted Northeastern’s Distinguished Professor of Law Richard Daynard.

“In fact, massive advertising–using unfair and deceptive promotions to hook customers on an addictive product–bears an uncanny similarity to what the cigarette companies used to get away with.”

DraftKings plans to “vigorously defend” itself against the allegations, the sportsbook told iGF’s US correspondent Lauren Harrison.

“[We] are a customer-first organization (sic). And we take consumer protection and responsible gaming very, very seriously.

“Regrettably, the institute ignored our multiple attempts to engage in an in-person dialogue to carefully examine their concerns and, instead, filed suit.”

Loyal iGF readers are urged to watch this space for updates on DraftKings’ legal battles throughout the New Year.

With Additional US Reporting by Lauren Harrison.

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