DraftKings, a sports betting app, has been hit with a crop of suits claiming it is carefully designed to turn its users into gambling addicts.

Class action lawsuits filed in courts in Illinois, Kentucky and New Jersey on Tuesday claim DraftKings is leveraging misleading promotions and addicted users to earn revenue.

"DraftKings’ business model has long involved pushing the boundaries of the law, misleading consumers, and luring naïve gamblers into developing addictions," claimed one suit, filed by Loevy & Loevy of Chicago.

DraftKings did not respond to a request for comment about the lawsuits.

'Marks'

The online gambling industry has started off slow but got a boost during the COVID pandemic and has expanded rapidly since then, the suits state.

New Jersey was the first state to legalize and regulate online casino gambling in 2013, and in 2023 the total U.S. revenue for sportsbooks was $10.92 billion, according to the suits.

The plaintiffs claim DraftKings advertises an all-upside gambling experience by falsely promising new users that they will get free money that they can wager without any risk, the suits state.

But in reality, DraftKings has allegedly created an all-upside opportunity for itself—Its contracts require new users to deposit and gamble almost exclusively with their own money, which they almost always lose, the suits state.

DraftKings also allegedly requires users who have an initial win to make worse and worse bets until their funds are exhausted, the suits claim.

"DraftKings uses these tactics to identify and cultivate the people it wants on its platform: those who are susceptible to these sorts of advertisements and most likely to lose a lot of money sports betting. In other words, marks," the suits state.

Alleged Tactics

The suits reference one particular tactic that DraftKings allegedly uses to convince new users to sign on by convincing them that their first bet would pose no financial risk to them.

The company's Risk-Free Bet, or No Sweat First Bet, requires that a customer deposit funds and make a bet with their own money.

If the customer loses the bet, their accounts are replenished with an expiring "Bonus Bet" rather than the amount the user originally wagered, the suits state.

Receiving "Bonus Bets" when the original bet loses does not make the original bet risk-free as advertised, the suits claim.

Bonus Bets cannot be exchanged for cash, but must be both wagered and won before they have any cash value, the suits claim.

In addition, wagers made with Bonus Bets are allegedly not paid out with wagers made with U.S. dollars. A winning $100 bet made with U.S. Dollars at even odds recovers the $100 stake plus $100 winnings, less the sportsbook's cut of roughly 9%, the suits said, for a payment of $191. However, a winning bet made with a $100 Bonus Bet converts to $100, which results in a payment of $91 after the sportsbook takes its cut, the suit said.

Such offers are allegedly effective at persuading new users to open betting accounts that they might not otherwise have opened, and to wager amounts they may not otherwise have risked, the suits claim.

'Too Easily Accessible'

That's what happened to the named plaintiffs, including Wyatt Robinson, who is a plaintiff in the Kentucky case, that suit claims.

Robinson, 19, signed up for DraftKings in 2023 after seeing a commercial for the platform with comedian Kevin Hart, the suit said. Since then, he has bet and lost a considerable amount of money on DraftKings, the suit claims.

Robinson was "surprised and frustrated" when all he allegedly received was an expiring Bonus Bet when he first lost a bet placed pursuant to a no-risk promotion, the suit claimed.

Robinson allegedly remembers feeling aggrieved after making a deposit to take advantage of DraftKings' sign-up deposit match promotion and finding out he had not received the cash value of his deposit matched as DraftKings had led him to believe he would, the suit claimed.

"DraftKings intentionally targets young men who are most vulnerable to develop gambling addictions and designs its interface to prevent them from understanding the terms of offers advertised to them," the suits claimed. "Both the current edition of the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders (DSM-V) and the World Health Organization treat addiction to gambling in the same diagnostic category as addiction to heroin, cocaine, and tobacco."

"Sports betting apps are the tobacco industry of this decade: harmful, deceptively marketed, and too easily accessible to young people," said Michael Kanovitz of Loevy & Loevy. "Rather than acting responsibly to address these problems, DraftKings is taking full advantage of them to pad its bottom line. Its so-called risk-free bets are a fraud designed to lure inexperienced and susceptible consumers with an illusion that their money is safe. It is not. Most people who fall prey to the ads never see their money back, and far too many chase their losses and suffer tragic results. DraftKings knows this up front and is making a business out of that suffering. This is a national problem and we are bringing litigation to address it.”

The suits are in the District of New Jersey, the Western District of Kentucky and Cook County, Illinois Circuit Court. The company has not entered appearances in those cases. The suits bring claims for intentional representation, negligence, unjust enrichment, conversion and violation of various state consumer protection laws.