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DraftKings Faces Lawsuit for Unfair and Deceptive Bonus Bet Advertising

Signage Draftkings Sportsbook Ribbon Cutting Seabrook New Hampshire
Signage at the DraftKings Sportsbook in Seabrook, New Hampshire. Scott Eisen/Getty Images for DraftKings/AFP.

Last week, the Public Health Advocacy Institute announced a class-action lawsuit against DraftKings, the Massachusetts-based sports betting giant, regarding the wording of its bonus bet promotions.

Deceptive Wording

Northeastern University Distinguished Professor of Law, Richard Daynard, made a name for himself in the 80s by skewering big tobacco and now he’s back at it through an organization he founded called the Public Health Advocacy Institute (PHAI). Only this time the object of his derision is not big tobacco but online sportsbooks, specifically DraftKings, and the way they advertise their incentives.

DraftKings is now in PHAI’s crosshairs after two customers, Shane Harris, and Melissa Scanlon, argue they were misled by the online sportsbook’s bonus bet offer. The organization has filed a suit in Massachusetts’s Middlesex Superior Court on their behalf.

PHAI Executive Director Mark Gottlieb said in a release, “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.”

DK’s Bonus Bet Offer Not New

Signup bonuses and promotional advertisements are nothing new in the world of sports betting, but the lanes have narrowed as to how a sportsbook can present its offers and what’s needed to obtain those generous enhancements.

The term, “risk-free,” is now taboo in most states when it comes to sportsbook advertising as there is always a risk involved, even if it is mitigated by a “free” bet if the initial wager loses.

You see, the second bet could lose as well, which would mean that whatever money was used on the initial bet is gone for good. That’s the risk a bettor takes, which means the words risk-free are misleading and states have caught onto that, with many forbidding it in advertising.

The Offer in Question

However, the term risk-free is nowhere to be found in DraftKings’ advertisement, but that hasn’t stopped the PHAI from taking issue with it and leveling a lawsuit because of it. The offer in question deals with DK’s $1,000 bonus bet, which requires a $5000 deposit with a 5x rollover within 90 days.

This means a total of $25,000 would have to be wagered over those three months regardless of whether those wagers win or lose. Once that requirement is met, customers must use the bonus in the form of wagers and cannot withdraw it as cash.

The complaint alleges, “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.”

Attorney Daynard is now comparing the addictive nature of tobacco with sports betting, stating in a press release, “Online gambling is creating a public health disaster with increasingly addictive products right before our eyes. 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 is not lying down and vowed to fight the suit stating, “As a customer-first organization, DraftKings takes consumer protection and responsible gaming seriously. Regrettably, the Institute ignored our multiple attempts to engage in an in-person dialogue to carefully examine their concerns and, instead, filed suit.”

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