FanDuel, DraftKings Lawsuit Removed to Federal Court Over Gambling Addiction Allegations

Baltimore’s lawsuit seeks a $1,000 penalty for each time DraftKings or FanDuel targeted users showing signs of sports gambling addiction.

A lawsuit filed by the city of Baltimore against DraftKings and FanDuel over their alleged role in fostering widespread gambling addiction has been removed to federal court, after city officials accused the online sportsbooks of using personalized algorithms and deceptive practices to keep users betting, even after showing signs of compulsive behavior.

The lawsuit was originally filed on April 3, 2025, in Baltimore City Circuit Court by the Mayor and City Council of Baltimore, naming DraftKings Inc. and Flutter Entertainment plc, the parent company of FanDuel as defendants. According to the DraftKings and FanDuel lawsuit, the two sportsbooks violated Baltimore’s Consumer Protection Ordinance by designing their platforms to encourage disordered gambling behavior. City officials allege that both companies used personalized algorithms, targeted promotions and retention tactics to exploit vulnerable users, many of whom were showing signs of addiction.

Since Maryland legalized mobile sports betting in 2021, the state has seen an explosion in online wagering, particularly in urban centers like Baltimore. In fiscal year 2024 alone, Maryland residents wagered over $5 billion on sportsbooks. By January 2025, more than $457 million in bets were placed through DraftKings and FanDuel by users in Baltimore, according to figures cited in the complaint. The lawsuit argues that both companies intentionally leveraged this popularity by integrating predatory mobile sports betting features into their apps that make it difficult for problem gamblers to stop.

The city claims that these features go far beyond standard advertising, alleging that the platforms actively monitor user behavior to identify patterns linked to compulsive gambling, such as “loss chasing,” frequent late-night logins and repeated session activity. When these behaviors are detected, users are allegedly targeted with bonus bets, push notifications and invitations to exclusive “VIP” programs intended to keep them betting. By contrast, users who demonstrated control or consistent success were often deprioritized or excluded from these incentives.

This pattern of behavior, city officials argue, is not accidental. The complaint accuses DraftKings and FanDuel of exploiting known psychological triggers and failing to implement available tools to prevent harm, all in pursuit of higher profits from their most vulnerable users.

Not only have city officials begun to take legal action, but sports betting addiction lawsuits are also being filed nationwide by individuals who developed gambling disorders after using these same platforms. Many of these users, often college students or young adults, report racking up tens of thousands of dollars in losses and receiving repeated promotions even after requesting self-exclusion or help. These lawsuits claim that the platforms ignored red flags and continued marketing to users who were clearly in distress.

In one of the case’s latest developments, attorneys for DraftKings and FanDuel filed a Notice of Removal (PDF) on May 7, 2025, shifting the case to the U.S. District Court for the District of Maryland. They argue that the lawsuit qualifies for federal jurisdiction because the parties are from different jurisdictions, with DraftKings incorporated in Nevada and headquartered in Boston, and Flutter incorporated in Ireland with its principal office in Dublin. They also note that the amount in controversy clearly exceeds the $75,000 threshold.

According to city filings, the complaint seeks more than $100,000 in civil penalties, along with injunctive relief, restitution and disgorgement of profits.

Baltimore officials contend that each time the platforms sent a push notification, bonus offer or other promotion to a user who was showing signs of compulsive gambling, it constituted a separate violation of the city’s Consumer Protection Ordinance. Under the ordinance, each violation may be penalized with a fine of up to $1,000. The city argues that these repeated contacts with vulnerable individuals amount to a systematic pattern of abuse rather than isolated incidents.

The lawsuit also asks the court to require significant reforms to the platforms themselves, demanding that DraftKings and FanDuel adopt more robust protections against user exploitation. These include clearer disclosures on promotional offers, safeguards to prevent targeting users who show signs of addiction, and limits on the behavioral data tracking used to trigger incentives. However, many of these sought after reforms have already been opposed by the companies in previous sports gambling lobbying efforts, where the companies pushed back against regulatory proposals aimed at curbing predatory app features.

Both companies deny the allegations and reserve the right to challenge both the legal basis for the claims and whether the correct entities were named. FanDuel’s parent company has noted that the platform is technically operated in Maryland by Betfair Interactive US LLC, a U.S.-based subsidiary of Flutter. Nonetheless, the case is now proceeding in federal court, where discovery and motion practice will determine how the claims move forward.

Baltimore’s complaint is one of the first municipal lawsuits of its kind in the country and may serve as a bellwether for other jurisdictions considering legal action against online gambling platforms.

May 2025 Sports Betting Lawsuit Updates

In addition to Baltimore’s lawsuit, a growing number of individual sports gambling addiction lawsuits are being filed nationwide by users who claim DraftKings, FanDuel and other apps contributed to their gambling addictions.

Many of these individuals say the platforms made it nearly impossible to stop betting, using live in-game wagers, constant alerts and aggressive promotions even after signs of harmful behavior emerged. As a result, attorneys investigating these cases are focusing on individuals who:

• Developed gambling addictions while using DraftKings, FanDuel or similar platforms
• Lost significant amounts of money—typically $10,000 or more
• Were between 18 and 30 years old when their betting behavior escalated
• Continued to receive betting offers or loyalty rewards despite attempts to quit

If you or a loved one suffered severe financial or emotional harm tied to the use of online sportsbooks, you may be entitled to pursue a claim. Lawsuits aim to recover financial losses, cover mental health treatment costs, and hold gambling companies accountable for the devastating impact of their platforms’ design and marketing practices.