Lawsuit Claims FanDuel, DraftKings Caused Compulsive Gambling, Addiction and Financial Losses

Sportsbooks gambling lawsuit claims algorithms are designed to exploit signs of addiction rather than warning consumers that they are following a self-destructive path.

A sports betting lawsuit filed by a New Jersey man indicates even FanDuel employees are vulnerable to tactics and algorithms online sportsbooks allegedly use to create gambling addiction in U.S. consumers.

The complaint (PDF) was brought by Philip Sylvester in New Jersey Superior Court on July 20. It names DraftKings Inc., Resorts Digital Gaming LLC, Crown NJ Gaming Inc., Flutter Entertainment PLC, Betfair Interactive US LLC, Golden Nugget Atlantic City LLC and Meadowlands Racetrack as the defendants.

Sylvester alleges he lost tens of thousands of dollars after developing an addiction to online sports gambling, despite previously working for FanDuel. His compulsion was allegedly driven by the companies’ aggressive marketing and promotional practices. He contends the sportsbooks knowingly exploit the addictive nature of their platforms to increase profits while disregarding the financial and mental health of consumers.

Sportsbook Compulsive Gambling Addiction

A 2018 U.S. Supreme Court decision gave states the authority to legalize sports betting, leading many to do so and fueling the rapid growth and profitability of platforms like DraftKings, FanDuel and BetMGM.

However, the expansion of online sportsbooks has been accompanied by mounting concerns about gambling addiction, particularly among young adults and college-age men. Many of these consumers are living away from home and managing their finances independently for the first time. In addition, their familiarity with instant online transactions may make it easier for them to place impulsive bets.

Critics allege the apps take advantage of these facts through aggressive and deceptive promotions, algorithms and illegal marketing tactics, resulting in young men being disproportionately affected by sports betting addiction. As a result, their losses often escalate quickly before parents, schools or others realize there is a problem.

In light of these concerns, a series of DraftKings lawsuits and FanDuel lawsuits have been filed by individuals nationwide. Many of these claims allege the sportsbooks intentionally foster gambling addiction to increase their companies’ bottom lines.

Online Gambling Addiction Allegations

According to the lawsuit, Sylvester began using both DraftKings and FanDuel in 2018 and was hired as a FanDuel employee in 2021, which prohibited him from gambling on either platform.

Before he was hired by FanDuel, Sylvester estimates he placed $105,000 in wagers on DraftKings, and almost $320,000 on FanDuel. After he stopped working for FanDuel, he resumed gambling, losing an additional $34,000 on FanDuel and $6,300 on DraftKings.

Sylvester indicates the algorithms detected he was developing an “unmanageable, daily addiction” to the sports betting platforms, and then exploited him.

“Their gambling apps track every user interaction including wagers placed, time spent on the app, and even moments of hesitation to create hyper-personalized algorithms. Utilizing this data, they bombard gamblers, including gamblers that Defendants know or should know are problem gamblers, with targeted notifications and advertisements precisely when they’re most susceptible, like late at night or after a big loss.”

– Philip Sylvester v. DraftKings Inc. et al.

The lawsuit states that as Sylvester’s addiction worsened, DraftKings and FanDuel noticed. Instead of warning him or doing anything to prevent gambling addiction damages they provided him with personalized offers, bonus bets and exclusive promotions.

Sylvester presents claims of defective design, failure to warn, breach of warranty, intentional misrepresentation, unjust enrichment and violation of the New Jersey Consumer Fraud Act. He seeks damages for financial losses, gambling addiction, pain and suffering and lost earnings.

Compulsive Gambling Addiction Lawsuits

The lawsuit comes as the number of sports betting lawsuits continues to increase, claiming online sportsbooks use sophisticated data analytics and behavioral algorithms to monitor users’ betting habits and deliver personalized promotions intended to encourage more frequent wagering and larger bets.

Sports betting addiction lawyers are in the process of reviewing claims for individuals nationwide who experienced substantial financial damages linked to the sportsbooks’ marketing practices, promotional incentives and engagement features.

Lawsuits are being investigated involving a number of online wagering platforms, including:

Individuals who suspect they developed a gambling addiction or suffered significant financial harm due to the action of these platforms can request a free case evaluation to determine whether they may be eligible to pursue a sports betting lawsuit. Attorneys handling these cases work on a contingency fee basis, meaning there are no upfront legal fees and compensation is owed only if a gambling addiction settlement is recovered.

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