Class Action Lawsuit Claims DraftKings Misrepresents that Its Daily Fantasy Sports Contests Are Legal In California

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A proposed class action lawsuit accuses DraftKings of misrepresenting that its Daily Fantasy Sports and Pick6 contests are legal forms of gambling in California.

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According to the 51-page lawsuit, DraftKings’ services are advertised on the company’s website and app as completely legal in California, with the company “repeatedly assur[ing]” prospective customers that its Daily Fantasy Sports games are allowed in the state.

The case alleges, however, that DraftKings’ operation of its Daily Fantasy Sports and Pick6 contests violate sections of the California Penal Code that prohibit various forms of gambling and its operation, and that the company has misled proposed class members for its own benefit.

“Put simply, the outcomes of the Daily Fantasy Sports contests are contingent and unknown at the time the bets and wagers are collected, recorded (i.e., booked), and pooled by DraftKings,” the complaint states. “And as a result, DraftKings’ Daily Fantasy Sports violate California Penal Code Sections 319, 320, 321, 330, 330a, 337a, and 337j.”

In particular, the suit states that a company violates California law when it “engages in pool selling, bookmaking, or accepts or records any bets or wagers on the result of any contest and/or any unknown or contingent event whatsoever,” including bets related to fantasy sports.

With regard to DraftKings, the suit says that although the company purports that its Daily Fantast Sports contests are similar to traditional fantasy sports, the reality is that the contests occur between strangers through DraftKings’ gambling platforms and include tens of thousands of participants. Moreover, DraftKings holds all participants’ bets and wagers until the end of a contest, with a portion of the pooled money distributed to winners and DraftKings taking a cut of each pool, the complaint shares.

The foregoing examples are only a small sampling of the ways in which DraftKings’ Daily Fantasy Contests, contrary to the company’s representations, are unlike traditional fantasy sports and thus illegal in California, the lawsuit contends.

“Ultimately, regardless of which Daily Fantasy Sports contest-type DraftKings customers select, they have no control over the outcome of the fantasy game they have wagered on,” the case summarizes. “The outcome is determined entirely based on athletes’ actual in-game performances (i.e., the athletes’ performances in the actual sporting events) and are entirely outside the control of the participants of Daily Fantasy Sports.”

The lawsuit charges that all money lost by DraftKings users in California was illegally taken from them. According to the complaint, California has broadly prohibited commercialized gambling for more than 150 years, with only certain forms of gambling permitted in the state.

The case goes on to relay that DraftKings has a section on its website and apps titled “Where is DFS legal?” that displays a map of the states where DraftKings’ Daily Fantasy Sports contests are available to play. The map also displays, in grey, states where the company’s contests are unavailable, the filing shows.

On the map, California is shaded green, ostensibly indicating that DraftKings’ services are legally allowed in the state, the suit relays.

The filing notes that two 2022 ballot measures that, if approved by voters, would have legalized in-person and online sports betting in California were resoundingly defeated at the ballot box. Nevertheless, DraftKings has continued to operate in California, and daily fantasy sports contests in particular have “proliferated” in the state, the lawsuit relays.

DraftKings players in California would not have participated had they been made aware of the illegality of the services, the filing contends.

This class action lawsuit against DraftKings seeks to represent all California residents who wagered or bet using DraftKings’ website or app while in the state.

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