DraftKings Dragged Into Prediction-Market Lawsuit Wave
It’s been hit with three lawsuits within the last week, including two proposed class actions, with the plaintiffs alleging that DraftKings Predictions is nothing but an illegal sportsbook masquerading as something else.
DraftKings got into prediction markets to compete with the likes of Kalshi and Polymarket. It has now found something else in common with that duo: lawsuits alleging its platform is an illegal sportsbook in disguise.
When the company launched DraftKings Predictions in December, its chief product officer, Corey Gottlieb, told Front Office Sports the plan was to build “something that’s scalable, responsible, and sustainable long-term.” Sports-event contracts were only made available in states where online sports betting is still illegal, like California, Texas, and Georgia.
While other prediction-market companies like Kalshi, Polymarket, Crypto.com, and Robinhood have faced numerous lawsuits claiming they offer sports betting by a different name, DraftKings has pushed deeper into the industry.
But now it’s been hit with three lawsuits within the last week, including two proposed class actions, with the plaintiffs alleging that DraftKings Predictions is nothing but an illegal sportsbook masquerading as something else. The suits come ahead of DraftKings’ earnings release on Thursday afternoon.
A DraftKings spokesperson tells FOS its prediction-market app “operates in accordance with applicable law and the federal regulatory framework established under the Commodity Exchange Act. We remain confident in our legal position.”
The new lawsuits echo many of the arguments already being made against companies like Kalshi and Polymarket, contending that the use of language like “event contracts” or “trading” does not change that what is fundamentally being offered is sports betting.
The first of the three suits, filed in Massachusetts federal court July 28, is a proposed class action that claims DraftKings “misleads consumers into believing the activity is lawful and safe. It is neither.” The lead plaintiff, Michael Chan, says he was “not informed by DraftKings that Predictions is an unlicensed sportsbook when he wagered and lost money on the app.”
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