'Negligent' DraftKings sued over betting championship

18 January 2019

A class action lawsuit has been filed against DraftKings over its inaugural Sports Betting National Championship, which took place last weekend.

The suit was submitted to the New Jersey Superior Court on Thursday by New York resident Christopher Leong, who wants damages of more than $300,000 due to DraftKings' “negligence” in its organisation of the event, which offered a top prize of $1m and total purse of $2.5m.

The suit accuses the operator of violating the state's Consumer Fraud Act, with claims including a failure to administer consistent rules on the acceptance of wagers and the settling of bets from competitors. Among his criticisms, Leong said bettors who visited DraftKings’ headquarters in Jersey City were able to get bets settled quicker than those who relied on their online accounts.

Leong, who is represented by The VerStandig Law Firm, is seeking the return of the $10,000 entry fee, treble damages under the New Jersey consumer protection statute, attorneys' fees and punitive damages potentially in the range of $334,000.

Attorney Maurice VerStandig told iGamingBusiness.com that he expects others who also paid the $10,000 entry fee to join the class action.

“We are disheartened to see the gaming community lost so much time, energy and money on an event that was seeming operated in an arbitrary and capricious manner from the open of wagering through the placement of the final bet,” he said.

“We look forward to pursuing our case on behalf of the event’s participants and have faith the legal system will deliver the justice to which they are entitled.”

A DraftKings statement released to iGamingBusiness.com simply said: “DraftKings does not comment on pending litigation.”

The operator issued an apology earlier this week after controversy dogged the finale of the Sports Betting National Championship on Sunday.

All entrants had paid a $4,700 entry fee, a $300 administration fee, and added $5,000 to a kitty with which to bet on sporting events from Friday to Sunday. However, the leading competitor, Rufus Peabody, was not able to place bets on the final National Football League (NFL) playoff game of the weekend after his previous wagers had not been processed, causing him to miss out on a chance of winning the $1m top prize. Peabody said in a tweet yesterday that he is "still considering all his options, including but not limited to being a part of [the class action]."

Eventual winner Randy Lee, of New Jersey, finished with winnings of $101,472, having accrued $81,892 of the total in the Patriots-Chargers game.

While much focus was on Peabody’s misfortune, Leong’s lawsuit alleges a series of issues experienced by him and other entrants.

The papers detail how one contestant had a wager on the PGA Tour Sony Open arbitrarily rejected, yet similar bets from the same bettor were accepted soon after.

Leong himself claimed a winning NFL bet was not settled for two hours, which prevented him from placing further wagers.

The suit alleges that over $4m was wagered during the three-day period, with DraftKings collecting at least $334,000 in net losses by participants. The suit claims there were 192 entrants, which is far fewer than the 260 competitors claimed earlier this week.

Speaking earlier this week DraftKings said the competition had been a success but admitted the competition rules were flawed and would be revisited before future events.

“The first-ever Sports Betting National Championship was an incredibly thrilling event,” said James Chisholm, director of public affairs for DraftKings, in a statement.

“We recognise that in the rules the scheduled end of betting coincided very closely to the finish of the Patriots-Chargers game," Chisholm explained. “While we must follow our contest rules, we sincerely apologise for the experience several customers had where their bets were not graded in time to allow wagering on the Saints-Eagles game.

"We will learn from this experience and improve upon the rules and experience for future events.”