DraftKings, FanDuel Class Action Joins Fantasy Sports Litigation

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Plaintiffs in a fantasy sports multidistrict litigation have consolidated their allegations into a single DraftKings and FanDuel class action lawsuit.

With their 226-page complaint, 19 named plaintiffs from around the country are taking on defendants DraftKings Inc. and FanDuel Inc. and the companies that handle their payment processing.

They allege the companies violated dozens of state and federal laws with a colossal, multi-million dollar gambling operation.

Both DraftKings and FanDuel offer online fantasy sports platforms known as daily fantasy sports, or DFS.

These platforms are contests in which individual players gain points based on the real-life performance of actual competitive athletes.

The new complaint coordinates and streamlines allegations lodged in an earlier and longer complaint filed a few months before.

Generally, the plaintiffs accuse DraftKings and FanDuel of running a rigged gaming operation that lures in unsophisticated players only so they can be exploited by more sophisticated, higher-dollar players.

The DraftKings and FanDuel class action lawsuit includes quotes from CEOs Jason Robins and Nigel Eccles from various online forums in which they both express a priority for supporting the winnings of high-roller players by recruiting newer, less experienced players.

Plaintiffs say some of these more sophisticated players – allegedly referred to by the companies as “sharks” – had backgrounds in statistics, mathematics or economics, and they allegedly quit jobs as analysts with major corporations to play daily fantasy sports full-time.

The plaintiffs also accuse the companies of allowing each other’s employees to play on the other company’s website, using proprietary statistical data that gave those employees a money-winning advantage over the general public.

Plaintiffs claim DraftKings and FanDuel employees used access to individual player histories to target and exploit weaker players.

DraftKings and FanDuel allegedly promoted their operations like a get-rich-quick scheme for the everyman, even though they knew only a fraction of their players won more often than they lost.

The companies promoted their websites not just as pay-to-play games but as a potential for making serious profits, according to plaintiffs.

Advertising that depicted “regular” and “average” guys playing and winning misled consumers as to their actual odds of winning, the plaintiffs say.

But according to the DraftKings class action lawsuit, FanDuel told its investors that only the top 0.1 percent of players actually make money. The top 10,000 players had a negative “return on investment” of 9.5 percent, the plaintiffs claim.

This DraftKings and FanDuel class action lawsuit raises claims for violation of a slew of different states’ consumer protection laws, plus common law claims and allegations that the defendants violated the federal Racketeer Influenced and Corrupt Organizations Act.

The DraftKings and FanDuel class action lawsuit joins dozens of other DFS lawsuits already consolidated into a single multidistrict litigation, or MDL, in a federal court in Massachusetts.

The MDL was created in February 2016 with a consolidation of more than 80 separate claims.

The plaintiffs propose two nationwide Classes respectively consisting of all persons in the U.S. who deposited money into a DraftKings or FanDuel account within the last five years. They also propose subclasses for each of the named plaintiffs’ home states.

They seek an award of actual, compensatory and statutory damages, restitution of all monies wrongfully obtained, and reimbursement of court costs and attorneys’ fees, all with pre- and post-judgment interest.

Lead counsel for the plaintiffs are Christopher Weld Jr. of Todd & Weld LLP, Hunter J. Shkolnik of Napoli Shkolnik PLLC, Jasper D. Ward and Alexander C. Davis of Jones Ward PC, and Melissa R. Emert and Howard T. Longman of Stull Stull & Brody.

The Draft Kings and FanDuel Class Action Lawsuit is Famiglietti, et al. v. DraftKings Inc., et al., Case No. 1:16-cv-11784, in the U.S. District Court for the District of Massachusetts.

The DraftKings and FanDuel Multidistrict Litigation is In re: Daily Fantasy Sports Litigation, MDL No. 2677, also in the U.S. District Court for the District of Massachusetts.

UPDATE: On Dec. 12, 2018, FanDuel players claimed that the company’s user agreement was purposefully obscure, arguing that they are not bound by the arbitration pact.