DraftKings Sued Over Allegedly Deceptive Gambling Advertising – Gaming

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Last week, DraftKings was sued in Massachusetts Superior Court for allegedly using misleading gambling advertising to attract new customers. In Scanlon et al. v. DraftKingsThe plaintiffs claim that the operators of the popular sports betting app “knew or should have known” that their $1,000 sign-up bonus promotion would deceive potential customers.

As our readers know, gambling advertising companies must ensure compliance with numerous and varied regulations across national borders. State gambling commissions continue to impose heavy fines to ensure compliance with their respective gambling advertising regulations. Scanlon is notable because the lawsuit was led not by a government agency but by Professor Richard Daynard, the same law professor who secured a $206 billion settlement from Big Tobacco in 2000.

The topic of sports betting advertising

DraftKings ran the gambling advertising campaign in question in
Scanlon on social media, TV and radio and offers new customers a bonus of up to $1,000. In the fine print, DraftKings clarified that new customers would need to do the following to receive the $1,000 bonus:

  • Make an initial deposit of $5,000;

  • Risk a total of $25,000 within 90 days; And

  • Make sure your bets qualify by only placing bets with odds of “-300 or higher”.

Although DraftKings did not essentially guarantee that new customers would receive $1,000 Only To sign up, the advertisements mentioned in the complaint certainly do not suggest that an immediate deposit of $5,000 is required. The putative class action lawsuit alleges that DraftKings designed the advertising in question to maximize customer acquisition without regard to whether or not the advertising was misleading. For this alleged misconduct, the plaintiffs, on behalf of all class members, request that the court award promised bonuses of $1,000 in actual damages and attorneys’ fees and costs.

The spread of online sports betting

The legalization of sports betting continues to spread across the country. Currently, six states have sanctioned online casino gaming within their borders (Rhode Island is scheduled to join in early 2024). 26 states and the District of Columbia have legalized online sports betting. Residents of Massachusetts, where DraftKings is headquartered, took just seven months after legalization for their total accumulated betting amounts to exceed $3 billion. Of course, massive revenue from legal sports betting translates into huge state tax revenue (around $24 million per month last year in New Jersey alone). Accordingly, we expect that additional states will continue to legalize online gambling.

Why is Scanlon Relevant to your company?

With online sports betting becoming more prevalent in the United States, it can be quite lucrative for companies to advertise to casino and sports gambling operators and licensees. However, before embarking on any gambling advertising effort, it is important that marketing companies first understand that they need to obtain a license to do so. Interested marketing companies need to be clear about what type of license they are applying for and go through the process carefully.

Once licensed, marketers must comply with state gambling regulations, which subject them to strict scrutiny upon starting their business. These regulations impose hefty fines and vary by state. Accordingly, companies interested in conducting gambling advertising should consult experienced legal counsel.

Klein Moynihan Turco attorneys carefully monitor evolving gambling marketing regulations to ensure clients continue to comply with applicable state and federal laws.

Similar blog posts:

Could responsible gambling marketing have prevented the sports betting scandal?

The New Market for Sports Gambling Marketing: Ohio!

Should gambling advertising laws change in New York?

The content of this article is intended to provide a general guide to the topic. Specialist advice should be sought regarding your specific circumstances.

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