Lawsuit Over FanDuel, DraftKings Sports Betting Problems Returned to State Court

After the sports betting platforms previously removed the claim to the federal court system, a judge has determined Baltimore City can pursue its lawsuit against FanDuel and DraftKings for targeting underage users in Maryland.

A federal judge has returned a lawsuit filed by the City of Baltimore against the sports betting sites FanDuel and DraftKings back to state court, citing precedent for allowing state courts to have jurisdiction over cases that have state policy implications.

In April, Baltimore filed a lawsuit against FanDuel and DraftKings in the Circuit Court of Maryland, claiming that the online sports gambling sites used tracking algorithms and aggressive advertising to foster gambling addiction among consumers, causing significant harm to residents’ lives. The lawsuit names DraftKings Inc., based in Nevada, and Ireland-based Flutter Entertainment PLC, doing business as FanDuel Inc. as defendants.

The lawsuit accused the two companies of violating Baltimore’s Consumer Protection Ordinance by exploiting vulnerable users who they knew were showing signs of gambling addiction. In May, DraftKings and FanDuel had the lawsuit removed to federal court, based on the fact that neither are based in Maryland. However, now the City will have the opportunity to pursue the claims in the Maryland state court system.

Sports Betting Problems

In 2021, Maryland became one of numerous states who have legalized online sports gambling in recent years, allowing the two companies to promote their websites in that state. However, this has led to many Baltimore and Maryland residents developing harmful, socially and financially disrupting sports betting problems and gambling disorders, according to the lawsuit.

Since the approval of online sports betting, Maryland 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 complaint came as the platforms also face a growing number of sports betting problem lawsuits brought by individual gamblers nationwide, who say they developed gambling disorders due to exploitation by the websites. 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.

When FanDuel and DraftKings removed the Baltimore City lawsuit to federal court, they argued that the claim falls under federal jurisdiction because the parties are from different states, with DraftKings incorporated in Nevada and headquartered in Boston, and Flutter incorporated in Ireland with its principal office in Dublin. They also noted that the damages sought were in excess of $75,000, which also qualified it for removal to federal court.

However, on November 10 U.S. District Judge Stephanie A. Gallagher, of the District of Maryland, issued a memorandum opinion (PDF) remanding the case back to state court at the City’s request. The judge determined that the case does meet diversity requirements and would normally qualify for transfer to federal court. However, it is exempt under the Burford Abstention doctrine, which requires federal courts to step back when taking jurisdiction would show a lack of comity or interfere with a state’s efforts to address significant policy issues.

Judge Gallagher also noted that while the lawsuit seeks an enforcement action exceeding $75,000, it is not actually seeking damages, but is an enforcement action attempting to levy a fine along with injunctive relief.

She ruled that the lawsuit will be remanded to the Circuit Court for Baltimore City for further proceedings.

Two days later, on November 12, FanDuel and DraftKings filed an amended notice of appeal (PDF) with the U.S. Court of Appeals for the Fourth Circuit seeking to overturn the remand order.

Sports Betting Addiction Lawsuits

Regardless of the outcome of the appeal, sports betting addiction lawsuits brought by individual betters can continue to move forward in courts nationwide against the operators of apps like FanDuel, DraftKings, BetMGM and Caesars.

These claims focus on college age users who were encouraged to place high-frequency bets, even after showing signs of addiction. Some 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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