DraftKings class action alleges deceptive risk-free promotions

On January 8, 2025, a class action lawsuit against DraftKings was filed in the U.S. District Court for the Western District of Kentucky. The plaintiffs, James Beyer and Wyatt Robertson, allege that DraftKings, Inc. and its subsidiary Crown KY Gaming LLC engaged in deceptive advertising practices to attract new gamblers and underage users in Kentucky. The case, numbered 1:25-cv-00003-GNS, claims that the plaintiffs and others like them were misled by DraftKings' promotions, resulting in financial losses.

James Beyer and Wyatt Robertson are leading this lawsuit, hoping to represent a larger group of people who believe they were similarly affected. They accuse DraftKings of making false promises about "risk-free" bets and sign-up deposit bonuses. These promotions, they argue, were not truly free of risk, as they came with hidden terms that were not clearly communicated to users.

The plaintiffs claim that DraftKings' advertisements promised new users risk-free bets and deposit bonuses, which were misleading. For instance, the "risk-free" bets required users to deposit their own money, and if they lost, they received "Bonus Bets" instead of a cash refund. These Bonus Bets had no cash value and had to be wagered again, often expiring quickly, which pressured users to continue betting.

Furthermore, the lawsuit alleges that DraftKings' deposit match promotions were also deceptive. Advertisements suggested that new users would receive a matching amount of up to $1,000 for their first deposit. However, the plaintiffs argue that the terms required users to deposit and wager large sums to receive a portion of the bonus, which was not clearly explained in the ads.

The lawsuit also highlights concerns about DraftKings' marketing practices aimed at younger audiences. It claims that DraftKings allowed minors to create accounts and participate in free contests with real money prizes, which encouraged them to start gambling as soon as they reached the legal age. James Beyer, for example, was able to create multiple accounts and engage in these contests before he turned 21.

Wyatt Robertson, a college student at the time, signed up for DraftKings after seeing advertisements featuring well-known personalities. He expected to place a bet without risk, but was surprised to learn that he did not receive a cash refund when he lost his first wager. Instead, he received a "bonus" credit that had to be wagered again.

The plaintiffs argue that DraftKings' practices are unfair and misleading, violating the Kentucky Consumer Protection Act and other common law claims. They seek damages for the money lost and ask the court to stop DraftKings from making such claims in the future.

As of now, these allegations remain unproven in court. DraftKings and Crown KY Gaming LLC will have the opportunity to respond to the claims. The case will likely proceed with discovery, where both sides will gather evidence, and may continue to trial if not settled earlier.

This lawsuit is significant because it challenges the practices of a major player in Kentucky's sports gambling market. With more than $1 billion wagered on DraftKings in Kentucky, the outcome of this case could have implications for the industry and consumer protection laws.