DraftKings Accused of Using Promotions to Deceive N.J. Gamblers

Online sports betting company DraftKings Inc. is violating New Jersey consumer laws by using deceptive promotions to manipulate gamblers and lure them into developing addictions, a class action suit filed Tuesday alleges.

DraftKings uses “misleading” advertising tactics to attract customers that are “most likely to lose a lot of money sports betting. In other words, marks,” according to plaintiff Matthew Youngs’ suit filed Tuesday at the US District Court for the District of New Jersey.

“DraftKings is tricking users into irrevocably committing themselves to make a Hobson’s choice” between gambling so much they’re likely to develop an addiction—while losing a significant amount of money—or walk away from all the money they already deposited, Youngs says.

“No user could reasonably expect this would happen to them,” the complaint says, “even if they carefully read the terms” associated with DraftKings’ promotion. Many customers have gambled and lost more money than they intended as a result of DraftKing’s deceptive practices, and some of them have developed gambling addictions, it says.

This comes after DraftKings was hit by an additional suit in late December with accusations it fraudulently closes users’ accounts and steals their remaining balances.

DraftKings deceived customers by promising new users that if they sign up, their first bet would “at no risk to them,” the complaint here says. But the promotion requires customers to deposit funds and place a bet with their own money, says Youngs, who began using DraftKings for its daily fantasy sports in 2016.

Customers don’t return to their original position if they lose the bet. Instead, the customer accounts are credited with an expiring “Bonus Bet” rather than the amount the customer initially wagered in US dollars, Youngs says.

The complaint also says that successful wagers made with “Bonus Bets” don’t pay customers as much as winning bets made with US dollars.

The Bonus Bets’ worth is significantly less than the initial bet, which means the money a customer was induced to deposit wasn’t risk-free as advertised, the complaint says. And Bonus Bets can’t be withdrawn for cash—"they must be both wagered and won before they have any cash value.”

The consumer is induced into placing tens of thousands of dollars in high-risk bets, the complaint says.

The 7-count complaint says DraftKings violated the New Jersey Consumer Fraud Act, made intentional misrepresentations, breached a duty of care to customers, was unjustly enriched, and improperly retained money customers won from wagers, among other claims.

Youngs seeks class certification; declaratory and injunctive relief; actual and/or compensatory, multiple, punitive, and statutory damages; pre- and post-judgment interest; attorneys’ fees and costs. He also demands a jury trial.

Neither DraftKings, nor defendants Resorts Atlantic City and DGMB Casino LLC, immediately responded to requests for comment.

Law Office of Elvin Esteves LLC represents the plaintiff.

The case is Youngs v. DraftKings Inc., D.N.J., No. 2-25-cv-179, complaint 1/7/25.