New York Class Action Against DraftKings Is Latest in Series of Suits Over ‘Risk-Free’ Promos

Although US gambling operators dropped the word “free” from their marketing last year, the former popularity of the term continues to produce lawsuits, the most recent of which is a federal class action targeting DraftKings. The plaintiff, Samantha Guery, sued in the Southern District of New York, alleging that the company’s promotion misled new players into believing their first wager wouldn’t cost any money when that wasn’t actually the case.

At one time, DraftKings Sportsbook offered a signup bonus for new users, promising they would be credited with a “free bet” if their first wager lost.

However, it’s common practice in the industry that bets made using this sort of credit return only winnings, not the stake. According to Guery, this equates to half of what they would’ve won had they placed the same wager with cash. (Editor’s note: This is the case when the betting line is close to even money. However, the return for a free bet is proportionally closer to that of a cash bet when selecting a longshot proposition. Conversely, the proportion is even smaller if the player selects a bet with short odds.)

Guery, who signed up with the operator in July 2023, alleges that DraftKings targeted new and inexperienced gamblers who might be against gambling by enticing them with the idea of a risk-free opportunity. However, she says the promotion is anything but “risk-free.

Guery seeks unspecified damages on behalf of herself and other DraftKings players in New York, alleging that DraftKings failed to communicate to its players that their money was at risk when participating in the promotion.

‘Risk-Free’ Language Has Provoked Multiple Lawsuits

The New York lawsuit is the second case against DraftKings using deceptive advertising in the last few months and the latest accusation against sportsbooks using misleading promotional terms.

In December, a class-action lawsuit alleged DraftKings used “unfair and deceptive” marketing and advertising in the operator’s home state of Massachusetts. The plaintiffs, Melissa Scanlon and Shane Harris, were both first-time sportsbook bettors. They say DraftKings offered a welcome promotion with unclear terms and conditions, including obfuscated playthrough requirements. The plaintiffs also didn’t understand that they would receive betting credits or “play money,” as they refer to them, instead of cash.

DraftKings is not alone in facing accusations of false advertisement and marketing. Last year alone, plaintiffs in New York accused BetMGM and Caesars Sportsbook of “untruthful and deceptive promises.” Their suits were similar in substance to the one Guery has now brought against DraftKings, as was a 2022 lawsuit in Colorado against PointsBet—whose North American operations now lie with Fanatics.

All these lawsuits hinge on the allegedly deceptive use of the word ‘”ree.” In the Caesars case, the plaintiff says she deposited $125 only because of the marketing promises. However, when she lost her money, she discovered she had received credits instead of her money back. She claims she wouldn’t have signed up if she had known she could lose money.

The Shift Away From ‘Risk-Free’ Terminology

These days, you’ll rarely, if ever, see a bet described as “risk-free.” Most operators have voluntarily put an end to that language nationwide, though only after beginning to face external pushback in some states. Most of the large US gambling operators are members of the American Gaming Association, which updated its marketing standards last year to prohibit such phrasing.

Last October, the New York State Gaming Commission implemented changes to the marketing and advertising rules for the state’s sportsbooks. Some highlights of these changes include not being able to use words like “free,” “risk-free,” and “free of risk.”

The new rules also told operators not to advertise to those under the legal age and problem gamblers. Since then, New York sportsbooks have started using language such as “no sweat.” Some now state that you get your money back as a bonus bet.

New York is among several states that require operators not to use the language subject to the lawsuits. Ohio could be credited with starting the trend. The state banned terms like “risk-free” and “free” since the launch of sports betting in the state in January 2023. The Ohio Casino Control Commission established itself as a tough regulator from day one. After the launch, it fined several operators, including DraftKings, for not following the rules.

Ohio’s tough stance resulted in additional states, including Pennsylvania and Massachusetts, banning the language. Ultimately, it was easier for operators to comply with the requirement nationally rather than attempt to manage their messaging state-by-state.

About the Author

Chav Vasilev

Chav Vasilev

After years of managing fast-casual restaurants, Chav turned his passion for sports and occasional slot wins into a career as an iGaming writer. Sharing his time between Europe and the US, he has been exposed to betting and gambling for years and has closely followed the growth in the US. Chav is a proponent of playing responsibly and playing only at legal online sites. When not writing, you will find him watching and betting on sports, especially soccer, or trying to land the next big bonus on a slot.
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