In a substantial development in the world of daily fantasy sports law, a behemoth in the industry, FanDuel, has been named in a multi-state class action lawsuit involving its online sportsbook platform. The lawsuit alleges various state consumer protection law violations which, the plaintiff claims, resulted in sports bettors being induced into risky wagers that they would not otherwise have placed.
What were the alleged consumer protection violations contained in the daily fantasy sports law class action suit?
FanDuel has been a leading player in the online sports gaming industry for several years now, as both daily fantasy sports and legal sports betting has proliferated across the country. Through its mobile application, FanDuel users have access to real-time data related to ongoing sporting events. This data, such as a game’s score and the amount of time remaining in the game, are displayed next to that game’s betting odds and other lines that users can wager on while a game is underway, known as “live-wagering.” The lawsuit alleges that FanDuel alternatively understates how much time is remaining in a given sporting event or otherwise reports a game score that is materially different from the actual score in relation to the game time left as shown in the mobile application. The lawsuit further claims that these inaccuracies and/or misrepresentations were intended to, and had the effect of, inducing bettors to place bets on outcomes (such as game totals) which appeared to the user as far likelier than the actual game state would dictate. Consequently, the plaintiff in the subject lawsuit alleges that users in every state where FanDuel operates a regulated sportsbook were injured by placing wagers that they lost and would not have placed had FanDuel provided truthful and accurate data at the time of the subject bets, suffering damages reaching into the millions of dollars.
Remaining Compliant with Daily Fantasy Sports Law
While FanDuel may be reliant on a third-party contractor to provide its real-time data services, it nevertheless is now exposed to millions of dollars in liability as a result of alleged delays between the data that it provided to customers and the actual state of the game when the subject bets were placed. FanDuel is no stranger to legal complications. Although FanDuel has found itself in hot water again, this lawsuit offers valuable lessons concerning the importance of accurate representations for operators of both online sportsbooks and daily fantasy sports platforms. Daily fantasy sports and sports betting both exist in a space where state legislatures and gaming regulators have historically been chiefly concerned about contest integrity and consumer protection issues. These are markets that are still nascent, with a user base that is both engaged and eager to participate, but not always the most sophisticated or educated in decision-making processes. The need to be forthright and accurate when making representations to users is paramount. Even the most careful operators can slip up without proper guidance. Accordingly, in order to ensure compliance with applicable consumer protection laws and gaming regulations, it is critical that operators work closely with knowledgeable counsel to regularly review contest rules, as well as platform structure, prizes, and marketing representations.
If you are interested in learning more about fantasy sports law or pursuing a fantasy sports venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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