BetMGM Falsely Promises ‘Risk-Free’ Bets to New Users, Class Action Says

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A proposed class action lawsuit claims BetMGM “lures” new bettors with deceptive offers of “free” and “risk-free” starter bets.

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The 26-page complaint alleges that BetMGM’s advertisements are “intentionally” misleading because they neglect to disclose to new users the realistic risks and material facts about the online sports betting service, in particular that “virtually any money wagered by a new user is at great risk of being lost in part or in whole.”

The suit charges that BetMGM’s promotions—whereby the company claims it will provide new users with a “risk-free first bet” of up to $1,000—are patently false given that there is “no realistic way for consumers to recoup money if their first bet loses.”

“At no time in BetMGM’s marketing or during BetMGM’s sign-up process were [users] warned of the true financial risks of using the BetMGM service for an initial bet—including the immediate and acute risk of losing the entire amount in that initial bet and the risk that losses will never be reimbursed by Defendant,” the case summarizes.

After signing up, a consumer is required to make an initial deposit on the BetMGM website, and winnings are paid as normal if the user’s bet succeeds, the complaint explains. However, if the bet loses, the funds are returned to the bettor not in cash but as bet credits that can be used only on the BetMGM app, and that expire in seven days, the filing says.

What’s more, any further bets made with those bet credits are even less “risk-free,” as a user would have to win a subsequent bet or series of bets made with the credits just to break even, the lawsuit adds.

The defendant’s “deceptive” offers, which are promoted on television, BetMGM’s website and mobile app, and in print and social media campaigns, are part of an “intentional initiative” to exploit “the addictive nature of gambling, and the established susceptibility of online sports betters [sic],” the suit contends.

“Such tantalizing offers have been effective at persuading Plaintiff and other Americans to open and use betting accounts, but new users later learn a startling reality: even so called [sic] ‘free’ or ‘risk-free’ bets can result in the customer losing every dollar of a wager,” the case reads.

To make matters worse, “risk-free” bet offers like those promoted by BetMGM can serve to “seduce[]” novice users into wagering “over their heads” and “normalize betting larger amounts than consumers would otherwise wager,” the complaint stresses.

The plaintiff, a New York resident, made an initial bet of $10 with BetMGM under the assumption that “risk-free” meant that his account would be credited with withdrawable cash if he lost the bet, the filing says. After the plaintiff’s bet lost, he was not reimbursed by BetMGM but was instead provided with bet credits that would expire in seven days, the suit states.

To avoid losing the credits, the man made additional bets but still ended up with less money than he had originally deposited, the case relays.

“Plaintiff and the Class members have been injured by signing up for and using BetMGM for so-called ‘free’ or ‘risk-free’ initial bets that actually cost them money,” the filing reads.

The lawsuit looks to represent anyone in the United States who signed up for a “free bet,” “risk-free” bet or similar promotion with BetMGM and lost any portion of their first bet.

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