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A Boston court denied DraftKings’ request to have the Public Health Advocacy Institute (PHAI) class action case dismissed on August 21. The case can now proceed as a result of the court’s ruling; the next hearing is set for December 10, 2024.
DraftKings is accused in the December 2023 complaint by PHAI of using “unfair and deceptive marketing practices” in connection with its $1,000 signup incentive. PHAI claims that by giving the idea of an easy prize when in fact it required significant gambling engagement, this offer deceived potential customers.
PHAI, based at Northeastern University School of Law, argues that the promotion constituted false advertising. “This decision will allow the case to proceed to the discovery phase, where we have the opportunity to depose those involved with the deceptive promotion and collect internal communications to gain insight into how it was developed and executed,” stated Mark Gottlieb, Executive Director of PHAI. He further emphasized the risks of sports gambling, adding, “Sports gambling carries enough risks without adding false advertising and deceptive promotions to dupe customers into signing up.”
PHAI, through its Center for Public Health Litigation, has a history of using the civil justice system to tackle public health issues. The nonprofit targets misleading practices in industries such as tobacco, unhealthy foods, and gambling.
The lawsuit claims that DraftKings’ promotion was designed to entrap new users into excessive gambling. According to the complaint, customers had to deposit $5,000 initially and then wager $25,000 on qualifying bets to unlock the $1,000 bonus. After meeting these requirements, users would receive non-withdrawable credits for use on the DraftKings Sportsbook platform.
Richard Daynard, President of PHAI, criticized the promotion, stating, “This bogus promotion, designed to lure customers into an addictive trap, required new users to risk large amounts of money and gamble hundreds of dollars, each and every day, to qualify for credits that could only be used for more gambling. We think this will be an easy case to prove.”
As the case advances, the court will examine the claims to determine if DraftKings’ marketing practices were indeed deceptive and unfair.