A Massachusetts court has rejected DraftKings’ motion to dismiss a class action lawsuit brought against the business by the Public Health Advocacy Institute (PHAI).  

The PHAI initially filed the lawsuit in December 2023 on behalf of two plaintiffs, Shane Harris and Melissa Scanlon, concerning alleged false advertising around a DraftKings sign-up offer.

The offer in question was for a $1,000 sign-up bonus available for new customers.  

The plaintiffs claim the offer didn’t disclose that new customers were required to make an initial $5,000 deposit to qualify for the promotion.  

Following that, players would then have to wager $25,000 on certain qualifying bets over a given period. Only then would they be eligible to receive non-withdrawable credits to use on the platform as promised in the initial welcome offer. 

As DraftKings’ motion to dismiss was denied by the Massachusetts Superior Court, the next hearing in the case is set to take place on December 10, 2024. 

The case will then move to its discovery phase where the PHAI will have the opportunity to depose those involved and gather information as to how the sign-up offer came to be. 

Richard Daynard, PHAI president and professor of law at Northeastern University, was confident the plaintiffs have a strong case.  

He said: “This bogus promotion, designed to lure customers into an addictive trap, required new users to risk large amounts of money and gamble hundreds of dollars – each and every day – to qualify for credits that could only be used for more gambling.  

“We think this will be an easy case to prove.” 

Dr Harry Levant, PHAI director of gambling policy, added: “The very sort of gambling this promotion requires of new customers, including a $5,000 deposit and gambling $15,000 to $25,000 over a limited time, is not, by any definition, responsible play.  

“Instead, it’s a recipe for addiction. Yet DraftKings hypocritically exhorts its customers to ‘gamble responsibly’ in every advertisement. I don’t believe that’s what DraftKings actually wants.” 

EGR North America­ has contacted DraftKings for comment.

Earlier this month, DraftKings recorded Q2 2024 revenue figures of $1.1bn, up 26% year on year.

However, the earnings period was colored by the operator’s plans to introduce a gaming tax surcharge in New York, Pennsylvania, Illinois, and Vermont.

Less than two weeks after publishing the policy, DraftKings cited customer feedback as a reason to nix the strategy.

The Boston-based business had seen its rivals, most significantly FanDuel, pass up on implementing respective surcharges to customers.

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