DraftKings Inc. will pay $8 million to resolve class action claims that it engaged in advertising campaigns that misrepresented the difficulty of daily fantasy sports contests and the terms of promotional offers, under the terms of a proposed settlement filed in the District of Massachusetts.
The agreement, which settles the claims of approximately 3.15 million people, leaves unresolved claims against FanDuel Inc. in the consolidated multidistrict litigation.
The settlement class includes all people in the U.S. who made a first-time deposit into their DraftKings Daily Fantasy Sports account before Jan. 1, 2018, and who have taken a net loss on DraftKings.
DraftKings agreed to created two settlement funds. The first will consist of $7.28 million in “DK Dollars"—cash equivalent site credits players can use to play contests on the DraftKings DFS platform—payable to class members with an open account.
The second fund will consist of $720,000 subject to claims by class members whose DraftKings account has been closed.
The proposed settlement, filed Wednesday, also provides that DraftKings won’t oppose an application by class counsel for a fee in the amount of $1.9 million, and for reimbursement of expenses in the amount of $100,000.
Dozens of class action lawsuits against DraftKings and FanDuel Inc., the two leading daily fantasy sports companies, were consolidated and transferred to the federal court in Boston in February 2016.
The plaintiffs alleged that the companies violated state gambling laws, allowed employees with access to insider data on contests to use that information to compete on each other’s sites, and fraudulently advertised they would match customers’ initial deposits while concealing restrictions on their matching programs.
The plaintiffs include players who assert claims against DraftKings, FanDuel or both, “crossover plaintiffs,” who have accounts with only one of the companies but allege a civil conspiracy claim against both defendants, and family member plaintiffs who assert claims against the defendants under the loss recovery acts of Georgia, Kentucky, Tennessee, New Mexico, and South Carolina.
Judge George A. O’Toole Jr. is overseeing the litigation.
Todd & Weld LLP is plaintiffs’ liason counsel. Napoli Shkolnik PLLC, Jones Ward PLC and Kantrowitz, Goldhamer & Graifman PC are plaintiffs’ co-lead counsel.
King & Spalding LLP represents DraftKings.
The case is In re Daily Fantasy Sports Litig., D. Mass., No. 16-md-02677, 3/3/21.