Judge finds jury issues in DraftKings class action

Attorney Amy Crafts was recently featured in Massachusetts Lawyers Weekly, sharing her insights on a recent state court decision in a consumer protection case. Read the full article below.

A Superior Court judge has cleared the way for a trial on class action claims brought by two bettors who allege DraftKings engaged in unfair and deceptive practices in advertising a “Deposit Bonus” to entice new customers.

Judge Debra A. Squires-Lee denied in part the sports betting service’s motion for summary judgment on Chapter 93A claims brought by plaintiffs Melissa Scanlon and Sean Harris in 2024.

The judge found “genuine factual disputes exist as to whether DraftKings’ deposit bonus promotion and associated advertising was misleading, failed to adequately disclose limiting terms and conditions to Massachusetts consumers, and caused Plaintiffs harm, and untrue and misleading advertising as a result … .”

But DraftKings found success paring down the claims against it. Squires-Lee granted the defendant summary judgment to the extent the plaintiffs’ Chapter 93A claims were based on allegations DraftKings unlawfully collected and misused the plaintiffs’ personal identification information, finding the plaintiffs failed to show cognizable harm stemming from any such use or misuse.

Further, the judge found the plaintiffs’ claim for injunctive relief under G.L.c. 266, §91, moot since it was undisputed that DraftKings discontinued the deposit bonus promotion for Massachusetts customers in 2023, and also because the plaintiffs had not shown or even argued there was an ongoing statutory violation.

Defense attorney Andrew S. Dulberg of WilmerHale in Boston declined to comment. Instead, a DraftKings spokesperson issued a statement noting that the ruling was based on an evidentiary ruling that acknowledged DraftKings’ heightened burden in the summary judgment context and did not grant the plaintiff any relief, nor did it determine any liability.

“DraftKings is confident that the evidence will show that the applicable terms and conditions for the first-time Deposit Bonus were clearly disclosed to eligible customers, and that those terms were straightforward and easy to understand,” the statement adds.

The plaintiffs’ attorney, Andrew A. Rainer of Northeastern University School of Law’s Public Health Advocacy Institute, did not respond to a request for comment on the ruling.

According to court records, DraftKings advertised the deposit bonus in connection with the company’s March 10, 2023, launch of its online and mobile sportsbook platform, DK Sportsbook. Under the terms of the promotion, new Massachusetts customers who opened a DK Sportsbook account, deposited funds with the platform, and met certain betting thresholds were paid a deposit bonus of up to $1,000.

However, the bonus was accrued in a bettor’s DK Sportsbook account as “DK Dollars,” which were not withdrawable or the equivalent of cash. Instead, they constituted credits for use by customers to place more bets on the platform.

The bonus advertised by DraftKings had other conditions as well.

To obtain the full $1,000 Deposit Bonus, customers were required to deposit $5,000 in their accounts and were subsequently required to place $25,000 in wagers over the next 90 days.

A customer who initially deposited the minimum amount of $5 was only eligible for a $1 bonus credit, which could be earned only after placing $25 in bets.

In advertising the bonus online and in other media, DraftKings used various pitches, including “GET A PLAY-THROUGH BONUS UP TO $1,000 IN SITE CREDITS WITH FIRST DEPOSIT,” “Download & bet with DraftKings today to unlock a $1000 play-through bonus,” “Get a $1000 play-through bonus on DraftKings,” “GET A DEPOSIT BONUS OF UP TO $1000 IN SITE CREDITS WITH YOUR FIRST DEPOSIT,” and “$1000 DEPOSIT BONUS!”

Scanlon opened a DK Sportsbook account on April 9, 2023, making an initial deposit of $25 and placing a wager in that amount. Scanlon called DraftKings to complain that she did not receive the $1,000 bonus and instead was credited with only $1 in DK Dollars.

A DraftKings representative informed Scanlon that she was not eligible for the maximum bonus amount given her $25 deposit. Disappointed, Scanlon immediately stopped using the DK Sportsbook.

According to Scanlon, she opened her account based on advertising emphasizing a “$1,000 Deposit Bonus!” Further, she denied being presented with the terms and conditions of the deposit bonus prior to depositing funds.

Plaintiff Harris opened his DK Sportsbook account with a $25 deposit in March 2023 on the same day DraftKings launched the platform for Massachusetts users. Based on DraftKings’ advertising, Harris said he believed that, by opening an account, he would be entitled to either $1,000 of withdrawable money or betting credits in that amount.

According to court records, Harris in 2015 had opened and deposited funds in a DraftKings Daily Fantasy Sports account. Because he was not a “new customer” under the terms of the promotion, Harris was not eligible for the deposit bonus. So when Harris opened his DK Sportsbook account in March 2023, he was not automatically presented with the terms and condition of the deposit bonus promotion.

Harris received no bonus or credits upon depositing funds or making his initial wager. Nonetheless, at the urging of other gamers, Harris continued to place bets through the platform until about May 2023. All told, Harris placed $1,059 in bets without receiving any bonus or credits.

The plaintiffs sued DraftKings in April 2024, alleging Chapter 93A claims for unfair and deceptive practices and untrue and misleading advertising in violation of §§2, 9. The plaintiffs further asserted a claim under G.L.c. 266, §91.

In August 2024, Squires-Lee denied the defendant’s motion to dismiss.

In moving for summary judgment on the plaintiffs’ Chapter 93A claims, DraftKings contended that its advertisements could not have materially misled a reasonable consumer because all new customers eligible for the deposit bonus promotion were presented with the promotion’s terms and conditions before making a deposit on the DK Sportsbook platform.

Squires-Lee acknowledged that there was no genuine dispute that the deposit bonus terms and conditions were set in language that a reasonable consumer would comprehend.

However, she concluded that DraftKings was not entitled to summary judgment with respect to Harris’ claim because DraftKings had admitted that no terms were provided to him when he opened his account, given the fact that he was not a new customer.

With respect to Scanlon, DraftKings’ argument foundered on the company’s acknowledgment that it did not maintain records of customers’ initial “deposit userflows” during the deposit bonus promotion.

Instead, DraftKings attempted to fill that gap in the evidence with “computer recreations” of the terms and conditions the defendant alleged Scanlon would have received.

Squires-Lee found the computer recreations inadmissible since they had not been properly authenticated.

Amy Crafts, a lawyer at Boston’s Sheehan, Phinney, Bass & Green, represents businesses in consumer protection cases.

“This is really a cautionary tale for entities selling products in Massachusetts, because Judge Squires-Lee found no issue with the terms and conditions,” Crafts says. “But then she focused on the ‘if, when and how’ the terms and conditions were communicated.”

Crafts points out that DraftKings still has the opportunity to address the authenticity and hearsay issues with the computer recreations the judge identified.

“But if they’re not able to recreate the process in a way the judge finds admissible, then DraftKings doesn’t have evidence to support that ‘if, when and how’ question that is still open,” she says.