Lawsuit Filed Against DraftKings Following Controversial Sports Betting National Championship

DraftKings Sportsbook was just two months into operations when it announced it would host the DraftKings Sports Betting National Championship featuring $2.5 million in payouts.

As the Jersey City event neared, DraftKings grew into the sports betting powerhouse of New Jersey.

Now, DraftKings is in hot water.

A controversial ending to the NJ sports betting event staged Jan. 11-13, featured DraftKings paying out some wagers in time to bet on the final game of the weekend but not getting to others.

Also, according to the lawsuit, DraftKings rejected some wagers yet accepted others on the same events.

As a result, a class-action lawsuit was filed in New Jersey by contestant Christopher Leong, “on behalf of himself and all other similarly situated,” according to the suit.

DraftKings SBNC lawsuit in a nutshell

Seeking damages that could eclipse $1 million — including refunds of the $10,000 entry fee to all 192 contestants — the suit alleges:

“DraftKings’ “negligent, arbitrary, and capricious operation of the SBNC, while continually marketing to a national and large audience of participants, was, among other things, an unconscionable commercial practice that denied Plaintiff and the Class of the fundamental benefit underlying the opportunity to participate in the SBNC.”

“Defendant’s conduct has rendered the initial entry fee entirely or substantially worthless.”

DraftKings declined to respond as company policy prevents it from commenting on pending litigation.

A closer look at the lawsuit

Filed by attorneys William Pillsbury and Mac VerStandig, the lawsuit states that DraftKings violated the New Jersey Consumer Fraud Act.

Among the complaints in the lawsuit: “The defendants …

  • … arbitrary and capricious acceptance of some wagers and rejection of other similar wagers.”
  • “Prompter grading of wagers for persons physically present in Jersey City.”
  • “Crediting some SBNC participants with winning funds from a given sporting contest upon which bets had been placed, before crediting other SBNC participants with winnings funds from the same contests on which bets had been placed.”
  • “Permitting at least one SBNC contestant to wager after the announced close of wagering in the SBNC; and general operation of the SBNC in an arbitrary, capricious and uniformly haphazard manner.”

All of these factors, per the suit, “constitute unconscionable practices in connection with the Defendant’s sale of merchandise, in contravention of N.J.S.A. 56:8-2.”

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Betting limits highlighted in the case

Additionally, the lawsuit mentioned betting limits at the SBNC, specifically as they pertained to a pre-event tweet from DraftKings’ senior product manager Jon Aguiar.

DraftKings allegedly rejected various wagers due to bet size, according to the filing. As such, the defendant’s actions constitute “an unconscionable commercial practice, a deception, a false pretense, a false promise, and a misrepresentation in connection with the Defendant’s sale of merchandise, in contravention of (New Jersey law).”

All wagers placed during the SBNC were made through the DraftKings Sportsbook app, to be clear.

Following the event, DraftKings issued a statement saying it did not stray from SBNC rules:

“While we must follow our contest rules, we sincerely apologize for the experience several customers had where their bets were not graded in time to allow wagering on the Saints-Eagles game. We will learn from this experience and improve upon the rules and experience for future events.”

More contestants could join the lawsuit

While Leong, who did not win any money in the event, is the only contestant with his name listed in the lawsuit, the possibility of more joining could be on the horizon.

From the suit:

“Should this Honorable Court for any reason find Mr. Leong is alone insufficient to represent the Class, at least five (5) other persons, all similarly situated, are prepared to join this case as named plaintiffs.”

The lawsuit concludes that DraftKings’ conduct “was carried out with a lack of good faith, honesty in fact, and observance of fair dealing.”

“As a consequence of Defendant’s conduct, Plaintiff has suffered an ascertainable loss. Specifically, Defendant’s conduct, as set forth above, has rendered the benefits of Plaintiff and proposed Class members’ entry fee valueless or of minimal value.”

About the Author

Grant Lucas

Grant Lucas is a longtime sportswriter who has covered the high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant has covered games and written features and columns surrounding prep sports, Linfield, and Oregon State athletics and the Portland Trail Blazers throughout his career.