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Ohio Foreclosure Defense & Consumer Law > Blog > Consumer Law > DraftKings, FanDuel Facing Lawsuit For Consumer Fraud, False Advertising

DraftKings, FanDuel Facing Lawsuit For Consumer Fraud, False Advertising


A class-action lawsuit has been filed against the sports betting companies FanDuel and DraftKings over allegations of consumer fraud, false advertising, and negligence. The lawsuits have been filed in New York and Illinois. A Kentucky resident filed the first case alleging that the two companies allowed employees to enter on the other’s site for cash prizes available. The suit further alleges that DraftKings “performs analytics to determine winning strategies, return on investment for certain strategies, and even how lineups on FanDuel would do if they were entered into DraftKings contests. According to the lawsuit, DraftKings employees have won $6 million playing FanDuel games over the past few years.

The lawsuit alleges that the two sports betting companies duped fans into believing that they could win big on the site so long as they were “smarter than the average fan.” Rather than being smarter than the average fan, FanDuel and DraftKings employees routinely win on these sites because they have insider information that the average fan does not have.

The complaint raises several counts including:

  • Unlawful conspiracy
  • Negligence
  • False advertising
  • Deceptive practices
  • Consumer fraud

The plaintiff is hoping their lawsuit will become a class action to represent the millions of players who routinely gamble on these sites. Eyes began to be raised after a DraftKings employee made a post about player roster percentages and his subsequent $350,000 take in a FanDuel contest. This raised questions concerning insider information.

As an example of a potential betting strategy that works to the advantage of a sportsbook employee, top prizes are often won when a daily fantasy participant has a player on their roster who has a big game and few of the other participants have that player. If an employee for one of the companies has access to how many people selected that player, the person could use that information to their advantage.

According to the ESPN piece on the matter, an internal investigation launched by DraftKings said that the employee did not have access to any advantageous information that would give him a leg up in the competition. However, DraftKings co-founder Paul Liberman told a conference last month that his employees earn more money in FanDuel competitions than they make with their salaries.

One impediment to the plaintiff’s lawsuit is an arbitration clause that requires any disputes against the companies to be settled by an arbitrator out of court. DraftKings and FanDuel will likely argue that their employees have a specific skill set that makes them potentially smarter than the average fan. In other words, they don’t have insider information that represents a potential breach of trust between the sites and their players.

Talk to a Columbus Consumer Fraud Attorney Today 

The Columbus consumer attorneys at Kohl & Cook, LLC represent the interests of consumers who have been defrauded by unconscionable business tactics. Call our office today to schedule a free consultation and learn more about how we can help you get your money back and recover damages related to the fraud.



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