Former customers have leveled lawsuits against fantasy sports giants DraftKings and FanDuel, according to a review of federal court records by the News-4 I-Team.
Some of the customers are seeking class action status for their cases, which could broaden the cases to include large numbers of former or current players. In one suit pending in federal court in California, attorneys said thousands of players could join and demand damages totaling more than $5 million.
The lawsuits, the latest challenges to the fast-growing industry and its two biggest websites, claim both companies have been misleading with some of their promotions and enticements to players.
Each suit alleges “false or misleading advertising” by either DraftKings or FanDuel and each seeks “restitution” for customers. Federal lawsuits are pending against DraftKings in Illinois and Massachusetts and against FanDuel in California, the I-Team found.
FanDuel and DraftKings have combined to spend more than $207 million in TV and cable ads this year, according to a report by a New York media analytics company. Comcast, which owns NBC Universal, has invested in FanDuel.
In one suit filed by California resident Wesley Leung, Leung argues FanDuel advertised a promotion to new customers offering, among other things, “Deposit now and we’ll match up to 200 bucks dollar for dollar.” Leung contends the advertisement was misleading.
His suit said, “If a customer signs up and deposits $200 as his initial deposit, FanDuel does not match the customer’s deposit with a bonus of $200 and the customer does not have $400 in his account.”
The suit said, “Instead the customer is required to spend his deposit money by entering contests. If the customer enters a contest for $200, spending his entire deposit on a single contest, FanDuel distributes a bonus of $8 (4% of the contest entry fee).
"Based on this formula, the customer that made an initial deposit of $200 will have to spend $5,000 in contest entry fees in order to receive FanDuel's deposit matching bonus of $200," the suit reads.
“This action was filed because FanDuel appears to be preying on ordinary sports fans that have an interest in fantasy sports," Leung’s attorney, Ed Zebersky said. “It is our assumption based on demographics that there are thousands of people in California that have not been properly paid the bonus they were promised through the FanDuel promotions.”
If class-action status is granted, Zebersky said, total damages could top $5 million in California.
The Washington, D.C.-based law firm ZwillGen is defending FanDuel against these legal challenges. The firm referred the I-Team to a spokeswoman for FanDuel.
The spokeswoman has not responded to requests for comment.
At this point, no courts or judges have approved any of these cases as class action suits, according to the I-team review of court records and attorneys involved in the cases.
In a suit against DraftKings pending in federal court in Massachusetts, plaintiff Jeff Gardner contends the website engaged in misleading adversiting.
Gardner argues, “As part of this advertising scheme, DraftKings represents that up to $600 of a user’s initial payment will be immediately matched by the site, for example that if they deposit a payment of $100, consumers will immediately have $200 with which to enter DraftKings’ contests.”
Gardner’s suit contends, “Indeed, consumers receive no money upon depositing. They discover, instead, that they are required to incur additional and substantial monetary obligations to obtain the 'bonus' and that they will never 'double [their] cash.'”
DraftKings, in a statement through its attorney to the I-Team, said, “The terms of DraftKings service, including the terms of DraftKings bonus matching program are disclosed and known and agree to by players before they enter their first contest. DraftKings will vigorously defend itself in connection with the pending litigation."