- The City of Baltimore is suing both FanDuel and DraftKings
- DraftKings and FanDuel prey on those with gambling disorders, the complaint notes
- The lawsuit alleges the sports betting operators are in violation of the city’s Consumer Protection Ordinance
The Mayor and City Council of Baltimore have filed a lawsuit against DraftKings and FanDuel for what they believe is a violation of the city’s consumer protection ordinance.
The city, represented by the Baltimore City Department of Law and Dicello Levitt LLP, takes aim at the sports betting giants for what they describe as a “two-pronged scheme” to take advantage of Maryland sports betting customers with gambling addictions.
“They leverage the vast array of data they have about their users, along with sophisticated analytics and personalized inducements, to identify those who suffer from a gambling disorder, and then extract what they can from them. Far from being responsible companies, the lawsuit details how DraftKings and FanDuel routinely identify those who exhibit disordered gambling and work their hardest to keep the users who are suffering in the game,” Dicello Levitt reps wrote in a press release announcing the lawsuit.
Mayor Alleges ‘Shady Practices’
A spokesperson for FanDuel told Sports Betting Dime the company has no comment on the lawsuit. A request for comment from DraftKings was not returned by the time of publication.
The lawsuit alleges that both DraftKings and FanDuel attract bettors through the use of “bonus bets” and other promotions. The companies then use the “vast array of data” the collect from users, along with analytics of their betting practices, to identify those who may have a gambling disorder.
Counsel wrote in the lawsuit that reporting has shown both DraftKings and FanDuel “collect troves of user data” to identify customer betting habits, propensity for gambling, and susceptibility to marketing. This data, the lawsuit alleges, is used to identify users “who they can hook; hook them; and then keep them betting.”
“These companies are engaging in shady practices, and the people of our city are literally paying the price,” said Baltimore Mayor Brandon Scott in a press release. “DraftKings and FanDuel have specifically targeted our most vulnerable residents – including those struggling with gambling disorders – and have caused significant harm as a result. This lawsuit is a critical step to hold them accountable and protect all Baltimoreans.”
The lawsuit asserts both DraftKings and FanDuel are in violation of the Baltimore Consumer Protection Ordinance, which is designed to protect consumers and others against “unfair, abusive, or deceptive trade practices.”
Counsel for Baltimore is requesting the following:
- Awarding the maximum amount of statutory penalties for each violation of Baltimore’s Consumer Protection Ordinance
- Injunctive relief mandating DraftKings and FanDuel cease targeting and exploitation of disordered gamblers
- Injunctive relief requiring DraftKings and FanDuel reform their platforms’ exploitative platform design feature restriction and enhanced marketing restrictions
- Awarding such other relief as may be available and appropriate under the law or in equity
Taking Aim at VIP Programs
Counsel takes aim at the operator’s VIP programs in the lawsuit, noting that both companies user their programs to exploit vulnerable customers.
“DraftKings’ and FanDuel’s sophisticated loyalty and retention programs enable and reinforce addictive gambling patterns. Industry experts advocate offering loyalty programs and promotions to help strengthen players’ desire to play, leading to “high lifetime value.” While presented as customer service, these retention tactics can make it harder for at-risk players to break problematic gambling cycles by offering escalating rewards and status tied to betting volume.”
The data collected on these customers are used to entice them to bet more, counsel wrote in the lawsuit, even going so far as to target those with obvious gambling disorders to continue to use their services.
“DraftKings and FanDuel put corporate greed ahead of the well-being of Baltimoreans, getting users hooked to their gambling platforms and then leveraging troves of data to identify, target, and exploit the most vulnerable among them,” said City Solicitor Ebony Thompson with the Baltimore City Department of Law in a press release. “Their predatory practices have caused significant harm to our community, and we are taking action to hold them accountable and protect our citizens.”
The city of Baltimore has filed a lawsuit against daily fantasy sports giants FanDuel and DraftKings, alleging that the companies engaged in deceptive and unfair practices that misled consumers and violated state law.
The lawsuit, filed in Baltimore City Circuit Court, accuses FanDuel and DraftKings of engaging in false advertising, fraud, and unfair trade practices. The city claims that the companies misled consumers by promoting their games as games of skill rather than games of chance, which would make them illegal under Maryland law.
According to the lawsuit, FanDuel and DraftKings used deceptive advertising tactics to lure consumers into playing their games, including offering misleading statistics about the chances of winning and falsely claiming that players could win large sums of money with little or no skill involved.
The city also alleges that FanDuel and DraftKings failed to adequately disclose the risks associated with playing daily fantasy sports, such as the potential for addiction and financial harm. The lawsuit claims that the companies targeted vulnerable populations, such as young adults and low-income individuals, with their deceptive advertising.
In response to the lawsuit, FanDuel and DraftKings have denied any wrongdoing and have vowed to fight the allegations in court. Both companies have argued that their games are legal under Maryland law and that they have taken steps to ensure that their advertising is truthful and transparent.
The outcome of the lawsuit could have significant implications for the daily fantasy sports industry as a whole. If Baltimore is successful in its case against FanDuel and DraftKings, it could set a precedent for other cities and states to take legal action against these companies for alleged deceptive and unfair practices.
In the meantime, consumers are advised to exercise caution when participating in daily fantasy sports and to carefully read the terms and conditions of any games they choose to play. It is important to be aware of the risks involved and to make informed decisions about whether or not to participate in these types of games.