Class Action Lawsuit Claims FanDuel, DraftKings Sportsbooks Cause Serious Economic Harm for Users

Lawsuit alleges players with addictive personalities are identified and targeted by sophisticated, psychologically-designed ads they are untrained to resist.

The owners of the sports betting sites FanDuel and DraftKings face a class action lawsuit by former players who say the platforms are designed to cause gambling addiction, leading to serious financial and emotional harm.

The complaint (PDF) was filed by John Farley and Michael Fox in the U.S. District Court for the Southern District of New York on April 27, seeking class action status for sportsbook gamblers nationwide. It names Betfair Interactive US LLC, which does business as FanDuel Sportsbook, FanDuel Inc., FanDuel Group Parent LLC, Flutter Entertainment PLC, and DraftKings Inc. as defendants.

Farley and Fox claim the defendants engaged in deceptive practices, failed to intervene despite clear signs of compulsive behavior and violated consumer protection laws.

Online Sportsbook Risks

Online sports betting sites, known as sportsbooks, became legal in the U.S. following a 2018 Supreme Court ruling that placed the decision to allow sports gambling in the lap of each individual state. Since then websites like DraftKings, FanDuel and BetMGM have become increasingly popular and profitable.

However, critics say the rise of these sports betting apps is linked to the use of aggressive and deceptive promotions, algorithms that detect problem gambling habits in consumers and exploit them, and illegal operations in states where the practice has not been approved.

Farley and Fox’s class action seeks to hold the sportsbooks accountable for the economic and social damage caused to consumers. Many of these individuals were allegedly defenseless against an onslaught of psychologically sophisticated advertising and promotions pushing them to wager more often and in higher amounts than they can afford.

The complaint joins a growing number of similar sportsbook addiction lawsuits filed in courts nationwide by consumers, states and local governments, which claim the sites are intentionally fostering compulsive gambling, particularly among young, college-aged users. These players are allegedly more comfortable with quick, online transactions, yet have little life experience running their own finances.

Sportsbooks Class Action Lawsuit

According to the lawsuit, Farley and Fox, both New York residents, were roped into losing large sums of money on the sportsbook sites, with Farley primarily using FanDuel and Fox mainly using DraftKings.

Both indicate they were flooded with repeated promotions such as profit boosts, bet-refund promotions and other marketing designed to encourage their continued gambling. This happened despite the players exhibiting evidence of habit-forming behavior and other red flags, which should have made obvious to the sports betting sites that the two men were developing gambling addictions.

At issue is whether those actions make the companies liable for the men’s losses. Plaintiffs note that online sportsbooks are a new form of gambling never seen before. They indicate the apps are able to be quickly redesigned to continually display new betting opportunities as they arise and can change gambling odds in real time. These features encourage users to stay active on DraftKings and FanDuel for long periods, particularly during live sporting events.

“These product features did not merely make sports betting more convenient. They materially increased the speed, volume, and frequency of wagers that users could place and increased the likelihood that users would continue betting for longer periods of time and in larger amounts than they originally intended.”

– John Farley et al. v. Betfair Interactive US LLC et al

The lawsuit indicates Farley has gambled at least $11,000 on sportsbooks over the last four years. Fox has lost about $5,000 in the course of only one year.

The lawsuit claims these interactions are typical of sportsbook users. Therefore, it seeks class action status for national and New York state consumers who maintained accounts on FanDuel, DraftKings or both. It presents claims of violation of New York General Business Law, negligence and unjust enrichment.

Sports Betting Addiction Lawsuits

To date, most sports betting addiction lawsuits have been individual financial and emotional damage lawsuits, filed by individuals who say they were targeted by the platforms once the algorithms identified them as likely to become addicted. They were then flooded with personalized promotions, loyalty rewards and in some cases, appointed a personal handler, all of which normalized betting practices and downplayed the financial peril.

Gambling addiction lawyers anticipate hundreds of such claims, or more, will be filed in the coming weeks and months. As a result, investigations into potential cases are ongoing nationwide. 

To determine if you qualify for a sports betting lawsuit, submit information about your potential claim for an attorney to review. All cases are handled on a contingency fee basis, meaning you pay nothing unless a settlement is obtained.

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