DraftKings Sued for ‘Risk-Free’ Marketing Language, Plaintiff Alleges Sportsbook Duped Consumers

Posted on: April 23, 2024, 09:24h. 

Last updated on: April 23, 2024, 09:55h.

DraftKings is named as a defendant in a proposed class-action lawsuit filed in New York’s Southern District federal court for the sportsbook’s alleged deceptive marking practices.

DraftKings sports betting sportsbook
A still from a DraftKings Sportsbook commercial advertises risk-free first bets for new account registrations. A proposed class-action lawsuit filed in a New York federal court seeks financial damages for the sportsbook’s alleged advertising deception. (Image: DraftKings)

Bronx resident Samantha Guery is the plaintiff and proposes on behalf of all others similarly impacted by DraftKings’ financial damages plus punitive and statutory compensation for claimed injuries inflicted by DraftKings’ deception. Guery’s attorneys allege DraftKings misled consumers by advertising “risk-free” first bets up to $1,000 that were anything but risk-free.

DraftKings deliberately did not communicate that customers availing themselves of the Risk-Free Bet promotion would only be credited with a Free Bet. The ‘$1,000 Risk-Free Bet’ offered … made no suggestion that the Risk-Free Bet would be turned into a Free Bet that was, in fact, far less valuable than the same figure in U.S. dollars,” the complaint read.

Guery’s proposed class-action lawsuit qualifies anyone who registered an account with DraftKings in New York and participated in a “risk-free” promotion. The litigation is seeking a jury trial.

Lawsuit Allegations

Guery signed up with DraftKings in July 2023 and made what she thought was a risk-free bet. The wager lost, and that’s when the plaintiff says she realized her money wasn’t simply going to be returned.

DraftKings instead credited Guery’s account with “free” bet credits in the same amount as her original losing wager. Her lawsuit contends that the credited money doesn’t function the same as cash on the sportsbook platform.

Free bet credits cannot be withdrawn until they’re wagered. A winning bet on a credit wager also only returns the net win in cash to the player, not also the credit that was used to place the bet.

In simpler terms, a $100 winning cash bet on -110 odds would return $190.91 to the player’s account. With a winning credit bet on the same line, the account would receive only $90.91 back in cash that would be available for withdrawal.

“The Free Bet is worth less than half of the initial bet,” the lawsuit explained. “The difference renders the supposed ‘risk-free’ promotion anything but risk-free.”

Guery’s attorneys say DraftKings knowingly deceived consumers by including the dollar symbol in its promotional materials while understanding that a free bet credit is unlike traditional money in its monetizing capabilities.   

Marketing Crackdown 

Sportsbooks have faced scrutiny in recent years from federal and state lawmakers, as well as gaming regulators, for misleading advertising. Numerous states now prohibit sportsbooks from running adverts that include wording like “risk-free” or “free bet.”  

Last year, DraftKings was penalized $150K in Ohio for its “risk-free” language.

If something is claiming to be free or risk-free, then it has to absolutely not require the patron to incur any loss or risk their own money,” explained Ohio Casino Control Commission Executive Director Matthew Schuler. “We are not supportive of trying to put the truth in small print.”

In New York, state Attorney General Letitia James is also a critic of “risk-free” sportsbook advertising.

“New Yorkers have been bombarded with misleading ads … that claim ‘risk-free’ bets and ‘$1,000 welcome offers,’ which sound like free money but often come with strings attached without consumers’ awareness,” James said in a 2022 consumer alert.