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DraftKings faces a new class action filed yesterday (17 April) in the Southern District of New York over its promotion of “risk-free” bets.

The suit, filed by Reese LLP on behalf of Samantha Guery, alleges the operator engaged in deceptive marketing practices, including the advertising of “risk-free” bets.

The attorneys said these promotions required a consumer to bet with their own money, who would then be offered a free bet of equivalent cash value if they lost.

However, the lawsuit argued these free bets were not worth the stated cash value, highlighting that they must be wagered in order to be withdrawn into dollars.

If a free bet is successful, it would also generate less money than a bet made with a user’s own cash, since the initial stake disappears in the event of a victory, said the suit.

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

Lawsuit alleges state law breaches

The suit argued marketing these promotions violated state consumer protection law by misleading customers.

DraftKings violated New York General Business Law Section 349 which prohibits deceptive business practices, it alleged.

The complaint also said New York law requires gambling operators to comply with the advertising guidelines within the state’s Racing, Pari-Mutuel Wagering and Breeding Law section 1363.

Guery’s attorneys are requesting the court to certify all affected by the promotion as a class and is seeking compensatory damages.

Trade body the American Gaming Association (AGA) amended its Responsible Market Code in March 2023 to prohibit the offer of “risk-fee” promotions.

The class action is argued on similar terms to the Public Health Advocacy Institute’s December class action that sought to challenge DraftKings’ “unfair and deceptive” marketing practices.

That suit was drawn up by Northeastern law professor Richard Daynard, who played a major role in the litigation strategy that proved the legal liability of the tobacco industry.

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