DraftKings Lawsuit Claims Online Sportsbook Violates Numerous States’ Internet Gambling Laws

Lawsuit alleges DraftKings Sportsbook lets users change self-imposed betting limits without required 24-hour waiting period

A class action lawsuit filed by a Michigan man alleges DraftKings violates multiple state laws, by sidestepping rules that allow consumers to set their own betting limits.

In the states of Michigan, Colorado, Connecticut, Indiana, Iowa, Louisiana and New York, sports betting laws require the option for gamblers to put limits on their own activities, such as setting wager limits and deposit limits that require a 24-hour waiting period for the consumer to change. This is designed to counteract impulse gambling and potential financial hardship.

However, according to a complaint (PDF) filed in the U.S. District Court for the Eastern District of Michigan on December 30, Michael Koester argues that the sportsbook site does not fully include the legally mandated protections. The lawsuit, filed against DraftKings Inc. and its subsidiaries, seeks class action status for all users of the site in the affected states.

Sportsbook Gambling Addiction Concerns

The U.S. Supreme Court issued the Murphy v. NCAA ruling in 2018, which lifted a federal ban on sports betting. Since that decision, 39 states and the District of Columbia have legalized sports betting. In 30 of those districts, this allows gambling via mobile access through platforms like DraftKings, FanDuel, BetMGM and Caesars.

This expansion has fueled a surge in sports betting, which has been linked to a rise in gambling addiction, particularly among young men. Many now seeking treatment for sports-betting problems describe a similar progression into compulsive gambling, often beginning with so-called “risk-free” promotions, in-game betting features and other aggressive marketing tactics.

The financial consequences of sports betting have emerged as one of the most devastating impacts of mobile gambling expansion. Many individuals who develop gambling problems report rapid and severe losses, often accumulating tens of thousands of dollars in debt within a short period of time through repeated bets, credit card use and online payment services linked directly to sportsbook apps.

A survey published late last year by the University of Maryland found that problem gambling rose sharply between 2010 and 2024, in some cases doubling. The most serious gambling addictions, known as disordered gambling, increased from 3.4% in 2010 to 5.7% in 2024, the findings revealed. The survey found higher rates of gambling problems among men who were single, African American or Hispanic, and among those who have a high school diploma education or less.

Mental health experts warn that the speed and accessibility of mobile sports betting can accelerate financial harm in ways not seen with traditional forms of gambling. In-game betting, instant deposits and constant push notifications allow losses to compound quickly, while the illusion of control created by live odds and promotional incentives can drive repeated attempts to recover money that has already been lost.

As a result of these addictive designs and predatory marketing tactics, sport betting addiction lawsuits now accuse leading sportsbook operators like DraftKings, FanDuel and BetMGM of using data analytics to track user behavior, prolong betting sessions and suppress warning signs of addiction.

According to Koester’s lawsuit, some of those tactics include violating state laws that allow gamblers to set limits on their betting habits which cannot be changed for at least 24 hours. The complaint claims this is intentionally designed to ensnare and addict consumers in an effort to bypass the safeties put in place by those states.

Koester indicates DraftKings violates the laws of Michigan and locations with similar statutes by not including the 24-hour waiting period. This “cooling off” period is key to the laws’ functioning, by giving consumers time to think about potentially harmful betting decisions. Without this 24-hour period, the laws are useless, he argues.

First signing up in 2021, Koester set deposit limits on his DraftKings account to keep his gambling reasonable. However, when he went to adjust those limits, he discovered that the platform failed to enforce the 24-hour waiting period requirement, allowing him to increase deposit limits immediately several times between January 2022 and January 2023. The lawsuit indicates this led to illegal deposits in excess of $25,000.

“But for this immediate ability to increase gaming limits, Plaintiff would have been able to delay the gambling impulse and avoid falling into a destructive gambling cycle which caused him significant harm.”

– Michael Koester et al v. DraftKings Inc.

Koester presents claims that DraftKing violated regulations in Michigan, Colorado, Connecticut, Indiana, Iowa, Louisiana and New York, as well as negligence per se, breach of contract, statutory conversion, negligent infliction of emotional distress, and violations of the Electronic Fund Transfers Act.

Sportsbook Betting Lawsuits

The complaint joins a growing number of similar claims filed nationwide, claiming that betting sites target college-age users or other individuals vulnerable to gambling addiction, encouraging them to place high-frequency bets, even when their algorithms single the users out as having signs of problem gambling.

Some of these users continued to receive personalized incentives and marketing offers after requesting account closures or appearing on self-exclusion lists, raising serious concerns about how platforms exploit vulnerable behavior.

If you or someone you love suffered financial harm from compulsive gambling on these apps, contact a sports gambling lawyer to see if you are eligible to recover losses and hold companies accountable for their potentially addictive design and predatory targeting practices.

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