Lawsuit Alleges DraftKings Predictions ‘Event Contracts’ Are Unlicensed Sports Betting

Class action lawsuit claims individuals would not have placed wagers on DraftKings Predictions platform had they known it was misleading them about the nature and legality of its sports event contracts.

A California man has filed a class action lawsuit alleging DraftKings uses its Predictions platform to offer betting opportunities in states where the company lacks authorization to operate a licensed sportsbook.

The complaint (PDF) was brought by Ricardo Andrio in the U.S. District Court for the Central District of California on August 13, naming DraftKings Inc. and Gus III LLC, doing business as DraftKings Predictions, as defendants.

Andrio seeks to represent California residents who purchased sports event contracts through DraftKings Predictions and lost money they would not have otherwise wagered had they known the company was allegedly misleading consumers about the nature and legality of its platform.

Online Sports Betting Concerns

Online sportsbooks such as DraftKings, FanDuel and BetMGM grew rapidly after a 2018 U.S. Supreme Court decision cleared the way for states to legalize and regulate sports wagering. Since then, consumers in many states have gained access to mobile platforms that allow them to bet on everything from game results and player performance to events occurring during live competition.

The expansion has also fueled concerns about rising rates of gambling addiction, particularly among young adults and college-age men. Researchers have noted that many individuals in this demographic are handling their own finances for the first time while being highly familiar with fast, app-based transactions.

Safety advocates also point to aggressive sportsbook marketing practices including individualized promotions, targeted advertising and in-game betting features that may encourage users to continue placing wagers. More recently, questions have emerged about gambling-related products being offered in states where conventional sportsbooks remain prohibited or require specific licenses.

Families and addiction specialists warn that repeated wagering can lead to substantial financial losses before signs of compulsive gambling are recognized. These concerns have contributed to a growing number of DraftKings lawsuits and FanDuel lawsuits alleging online betting companies use deceptive or unlawful practices that promote excessive gambling.

DraftKings Predictions Gambling Allegations

According to the lawsuit, DraftKings Predictions operates as a type of “prediction market,” allowing consumers to purchase contracts based on the outcomes of future events, including sports. The complaint alleges these markets have emerged as a way to offer wagering in jurisdictions where traditional sports betting is still prohibited or limited to licensed operators.

The filing contrasts Predictions with DraftKings’ traditional approach to sports betting, noting that the company obtained its first sportsbook license in New Jersey in 2018, and now operates regulated sportsbooks in 27 states and the District of Columbia.

However, Andrio alleges DraftKings markets Predictions using terms such as “event contracts” and “trading” rather than sports betting, giving consumers the impression that the platform is fundamentally different from, and more lawful than, a conventional sportsbook. The lawsuit argues that changing the terminology does not change the underlying transaction, which involves consumers risking money based on the outcome of sporting events.

Andrio indicates he opened a DraftKings Predictions account in California and lost money purchasing sports event contracts, which he claims he would not have bought had DraftKings accurately represented the nature and legality of the platform.

The complaint also alleges DraftKings leverages its reputation as a licensed sportsbook to promote Predictions to existing customers through in-app advertisements and pop-up banners. Andrio claims DraftKings, or its affiliates, may take positions against customers while the company profits from transactions, regardless of which side prevails.

Andrio maintains these similarities show DraftKings structured Predictions to circumvent state sports betting restrictions rather than obtain the licenses required to operate a traditional sportsbook. He also alleges Predictions lacks some of the responsible-gaming safeguards available through DraftKings’ sportsbook and permits individuals as young as 18 to participate.

“DraftKings deceives consumers by marketing Predictions as a legitimate ‘prediction market’ rather than a sports betting product, designing the platform to mimic a sportsbook while describing the activity as ‘trading’, failing to implement responsible-gaming safeguards, permitting users as young as eighteen to trade, and shifting all legal risk onto consumers through its Terms of Use, even while acknowledging active litigation and regulatory uncertainty surrounding event-contract legality.”

— Ricardo Andrio v. DraftKings Inc. et al.

Andrio looks to represent hundreds of California residents who spent money purchasing sports event contracts through the DraftKings Predictions mobile or web platforms. The complaint indicates aggregate class claims could exceed $5 million.

The lawsuit raises allegations of violations of California’s Unfair Competition Law and False Advertising Law. It is seeking restitution or disgorgement of money obtained from consumers, compensatory and statutory damages, injunctive relief, interest and attorneys’ fees.

Sports Betting Addiction Lawsuits

While this complaint seeks class action status, many other sports betting lawsuits have been filed by individuals who claim online gambling platforms contributed to compulsive betting and substantial financial losses. These claims often allege sportsbooks use detailed customer data, behavioral analytics and wagering histories to identify user habits and target consumers with personalized promotions intended to keep them betting.

Sports betting addiction attorneys are investigating potential claims for individuals who suffered substantial financial losses or psychological harm after developing problematic gambling behaviors allegedly encouraged by sportsbook promotions and incentives. Companies involved in these claims may include:

Individuals can request a free and confidential case review to learn whether they may have grounds to pursue a sports betting addiction lawsuit. Attorneys handle these claims on a contingency fee basis, with no upfront legal fees or expenses.

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