FanDuel, DraftKing, Sports Fantasy Website Lawsuits Consolidated For Pretrial Proceedings

The U.S. Judicial Panel on Multidistrict Litigation (JPML) has decided to consolidate all DraftKings and FanDuel lawsuits filed over the controversial fantasy sports websites, centralizing all cases pending throughout the federal court system that allege websites are illegal gambling operations and engage in unfair practices.

FanDuel.com and DraftKings.com are websites and mobile apps that allow consumers to choose certain athletes or teams, and then compete with a pool of selections by other participants based on performance that week. Participants pay entry fees and win cash prizes based on how their selections perform in comparison to others involved in the same fantasy pool.

Amid aggressive marketing that advertises any fan can win, the sports fantasy games have risen in popularity and become a huge industry. However, there are now at least 80 lawsuits pending in 30 different federal districts, each involving some combination of three main allegations: illegal gambling, insider trading, and bonus fraud.

The illegal gambling claims allege that FanDuel and DraftKings use the “fantasy sports” theme as a thin veneer for illegal online sports gambling, allowing the sites to get around bans on internet sports betting.

The insider trading complaints involve allegations that the companies allow employees of the other site to participate in fantasy games. The employees have inside information about trends from other participants, which the lawsuits allege provides them with an advantage and a better opportunity to win the substantial financial prizes from the pooled entry fees.

The bonus fraud complaints involve claims that DraftKings promised to match initial account deposits of up to $600, but players later found that the only way to receive the full match was to pay thousands of dollars more over a four-month period.

According to a transfer order (PDF) issued by the U.S. JPML on February 4, the cases will all be centralized for coordinated pretrial proceedings before U.S. District Judge George O’Toole, Jr. in the District of Massachusetts, as part of an MDL, or Multi-District Litigation.

The JPML determined that, despite there being three types of claims, consolidating them all before one judge for pretrial proceedings will help eliminate duplicative discovery and contradictory rulings from different courts. It is also designed to serve the convenience of the parties, witnesses and Courts.

“While these actions involve differing theories of liability, such differences are not a bar to centralization where common factual issues exist,” the panel wrote. “We acknowledge that the arguments to exclude the bonus fraud and illegal gambling actions from this MDL have some logic. Nevertheless, we find that the benefits of centralizing all three types of actions at issue in this litigation are significant.”