By: Kate Donovan
The legalization of sports betting in Massachusetts was in August of 2022 which made Massachusetts one of another thirty-six states that have legalized sports gambling. The narrative has shifted around sports gambling after the Supreme Court of the United States held that banning sports betting at the state level was unconstitutional. As many Massachusetts natives know, sports are a huge part of the culture and the fans bases of all the major teams are known as some of the best in the country. With the love of sports also comes a number of individuals who are betting on those sports. The issue that DraftKings is currently facing arose from an online advertisement that has generated a class action lawsuit.
DraftKings was incorporated in 2012 and has mainly specialized in fantasy sports contests and sports betting and part of the draw is the different features that have allowed players to win money based on player performances and team performances. As of 2021, DraftKings had a market capitalization of $20.64 billion and had over 3,000 employees. The company has since acquired different investors and has become a key player in the sports betting industry. Prior to the legalization of sports betting in Massachusetts, there was still a concern around what was illegal sports betting and some suggest that this was the trepidation that Massachusetts legislatures were facing prior to the legalization. Some said there was “already a primary audience for sports wagering, and already existent gambling on sports often at harmful levels.” In Massachusetts alone from March to October of 2023, there was an average of $451,033,643 spent per month on online sports gambling and around (50.7%) of these transactions were completed through DraftKings online sports betting website or app.
Regarding the pending lawsuit, Scanlon v. DraftKings where the main issue is that in an online advertisement was seeking players to put down $1,000 deposit bonus was not accurately portraying the terms and conditions that came with the advertisement offer. The lawsuit was brought as a class action by an anti-gambling group known as the Public Health Advocacy Institute, their argument being that the plaintiffs did not understand the terms of the sign-up bonus that would require them to spend at least $25,000 over 90 days to actually qualify for the bonus. They also argue that DraftKings knew that the advertisement bonus was “deceptive” and used it as a way to target their consumers. Massachusetts has instated different protections for consumers that partake in sports betting, and the suit has also alleged that DraftKings violated the Massachusetts Consumer Protection Act which is meant to protect individuals from “bait and switch advertising and deceptive advertising.” The Massachusetts Consumer Protection laws are mainly enforced by the Attorney General; the main concern is regulating unfair and deceptive practices. This includes what the plaintiffs are claiming as “bait and switch advertising which makes consumers believe something is a good price when it really is not.” For the plaintiffs to prevail in this case they need to establish that the defendant DraftKings had generated unfair actions that were deceptive and the actions had resulted in loss of money, or property, real or personal to that consumer. DraftKings has since responded to the lawsuit stating that they “take the consumer protection and responsible gaming seriously.”
One of the main concerns for the prolonged legalization of sports betting in Massachusetts was the risk of addiction to consumers. In 2015 alone, prior to the establishment of legal sports betting, it was reported that 2% of Massachusetts adults had a gambling addiction and that number has likely increased with legalization of sports betting. The claims from the plaintiffs in this lawsuit are concerning because of the terms from this online advertisement can leave the individuals who have bought into this ad likely “chasing the money.” The stipulations of the advertisement can be broken down showing that over the course of the 90 days, players would have to spend roughly $276 each day to reap the benefits of the advertisement. For the average person, this is not sustainable and based on this lawsuit it was a large group of people that were unable to understand the fine print in the advertisement. This group of people have likelysuffered from this online advertisement hence, the pending lawsuit. This was one of the main concerns of legislators in Massachusetts when originally legalizing sports betting, because significant losses can sometimes result in furthering an addiction to make up for those losses. Another reason this case isimportant is because it is one of the first suits against a company that is centered around sports betting, so it is likely the outcome will have greater influence across all sports betting platforms. Sports betting is already being heavily regulated in Massachusetts because of the real concerns of addiction but also consumer protections. There has been prior litigation surrounding the terms and conditions of online agreements that suggest with technological developments, that businesses can create a clear narrative within their terms and conditions that don’t leave them open to lawsuits because of consumer confusion or advertisement manipulation.
It is unclear the way that this lawsuit will unfold in the Middlesex Superior Court, but both parties intend to move forward. The plaintiffs must show that the defendant DraftKings did conspire the advertisement to target and deceive consumers while coinciding with the fact that the consumer has also suffered money loss. An issue here may be showing the gravity of money lost because people that are frequently sports betting are most likely already losing money in other transactions or different platforms. However, the fact that this is a class action lawsuit suggests the online advertisement has affected and confused many of the users of DraftKings and has shown the real concern that legislatures had when legalizing sports betting and the repercussions that have unfolded. This will be a case to keep up with over the next few months and see the future response in Massachusetts, other states, and sports bettingplatforms.
Student Bio: Kate Donovan is a second-year law student at Suffolk University Law School. She is a staff member for the Journal of High Technology Law. Kate received a Bachelor of Arts degree in Political Science and Psychology from Syracuse University in 2021.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
