A federal judge in New York dismissed a class-action lawsuit this week against DraftKings over "deceptive" promotions involving deposit bonuses.
The case was filed by plaintiff Nerye Aminov last December. Chief Judge of the US District Court for the Eastern District of New York Margo K. Brodie threw out the case on Monday, claiming that DraftKings sufficiently described the terms and conditions related to the promotion.
In her decision, Brodie noted that “reasonable” DraftKings customers would’ve correctly interpreted the terms of the deal.
Failing to make his case
Aminov’s suit was filed in defense of himself and others who alleged that the sports betting giant purposefully misled them by deceptively describing the terms of the deposit bonus.
He claimed that DraftKings' offer included violations of New York General Business Law sections 349 and 350, and common law violations, including fraudulent inducement, intentional misrepresentation, and unjust enrichment.
Aminov stated that he believed he would receive $1,000 for his $500 deposit but was left shocked when he only received $100.
However, DraftKings’ terms stated that customers would only receive 20% of the amount they deposited in bonus bets, which are a form of native currency that can be redeemed and used to fund wagers at DraftKings. That meant that customers needed to deposit $5,000 to receive the full $1,000 bonus.
Also included in the terms was a playthrough requirement, which stated that the amount earned through the deposit bonus would be awarded at a rate of $1 in bonuses per $25 wagered. That means that for a customer to receive their $1,000 deposit bonus, they needed to wager $25,000 cash within the allotted time to receive the funds.
The judge wrote:
“Plaintiff fails to allege that the promotion could deceive a reasonable consumer because the promotional terms fully disclosed the requirements to be eligible for the full value of the promotion in a conspicuous manner. [DraftKings stated that customers] ‘will receive a 20% deposit bonus up to $1,000! Bonus funds are earned as you play.’”
DraftKings’ legal issues
On top of Aminov failing to show enough support to his claim that DraftKings used deceptive practices and violated general business or common laws, the court noted that he never countered DraftKings’ arguments for dismissal.
“Prior to depositing funds into a DraftKings account, a reasonable consumer would have seen the promotional terms that were displayed on the deposit screen.”
The win was much needed for DraftKings, which has been in the news for the wrong reasons this week.
The Boston-headquartered company received a state record $450,000 fine from the Massachusetts Gaming Commission for repeated instances of allowing credit card deposits to fund wagers, which is banned by the state’s gaming laws.
The company also previously dealt with a lawsuit in Massachusetts regarding the same bonus offer. Its motion to dismiss was denied last year by Judge Febrea A. Squires-Lee, who said there was an “overall deceptiveness” to the sign-up process and the terms and conditions. The discovery process in that case is still ongoing.
DraftKings also earlier this month reached an agreement to settle with the Connecticut Department of Consumer Protection after it raised issues with the same promotion. DraftKings maintained its lack of wrongdoing but said it would return $3 million in customer deposits to the state.