Under Pressure
Class action lawsuits and gambling go together like peas and carrots. The latest target is DraftKings, which is under fire for its promotions during its Massachusetts launch.
The Bulletin Board
NEWS: DraftKings is facing a class action lawsuit in Massachusetts over its $1,000 deposit bonus offer.
BEYOND the HEADLINE: Gambling is an easy target for class action lawsuits.
NEWS: The first batch of revenue numbers for ESPN Bet are promising.
VIEWS: Skill games scored a legal win in Pennsylvania that legal experts believe could impact other locales.
AROUND the WATERCOOLER: What can be done about cheating in poker?
STRAY THOUGHTS: Did the WSOP Paradise series rekindle the community’s love for poker in the Bahamas?
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DraftKings Facing Class Action Lawsuit Over Bonusing
DraftKings is staring down a class action lawsuit in Massachusetts that claims its $1,000 bonus offer is “unfair and deceptive.”
The lawsuit was filed with the Massachusetts Superior Court on Friday and lists two Massachusetts residents, Shane Harris, and Melissa Scanlon, as plaintiffs. The suit was filed “in response to an advertising promotion offering a bonus of up to $1,000 for new customers who opened accounts and deposited money with DraftKings.”
The group behind the lawsuit, the Public Health Advocacy Institute, issued a release accompanied by the lawsuit on Friday.
According to the Financial Times, PHAI is a Boston-based advocacy group chaired by Professor Richard Daynard. Daynard is a well-known person in the class action space having successfully sued the tobacco industry in the 1980s.
“DraftKings knowingly and unfairly designed its promotion to maximize the number of consumers that would sign up for its sports gambling platform, the number of bets that would be placed through the platform, and the amount of money that would be placed on bets through its platforms. This is a particularly unfair business practice because of the addictive nature of the underlying product offered by Defendant.”
DraftKings disagrees with the claims, telling SBC Americas it “takes consumer protection and responsible gaming seriously.”
“DraftKings respectfully disagrees with the claims and allegations made by the Public Health Advocacy Institute. Regrettably, the Institute ignored our multiple attempts to engage in an in-person dialogue to carefully examine their concerns and, instead, filed suit. DraftKings intends to vigorously defend this lawsuit.”
The suit highlights that to claim the full $1,000 bonus, a customer would need to deposit $5,000 and wager at least $25,0000 within 90 days, with the added stipulation that only bets with certain minimum odds (-300 or better, peer the lawsuit) would count. The suit also notes that the bonus is paid in site credits, which cannot be immediately withdrawn.
The lawsuit claims that as new bettors, “it would be unlikely to understand the cost and risk involved in qualifying for the $1,000 Bonus,” and that had the plaintiffs “understood the cost or the odds of winning the Bonus, they would not have acted upon the promotion.”
The lawsuit brings up a very good point about these types of deposit bonuses (with large playthrough amounts and other fine print):
“… in order to place bets for at least $25,000 over 90 days to qualify for the Bonus, they would have had to wager an average of more than $276 gambling on sports every day for three months.”
My Two Cents: That is not the type of behavior the industry should be encouraging, particularly through a heavily advertised bonus offer. Bonuses should be just that, bonuses. Deposit $25 and receive $50 in site credits immediately. Customers who deposit money, use your product, and slowly unlock credits is how rewards programs work.
Beyond the Headline: Gambling and Class Action Lawsuits
Just over a week ago, Chris Grove made a very prophetic tweet about class action lawsuits after a CTA for a class action lawsuit against Penn Entertainment for its parlay policy (a push is a loss).
There’s a funny lawyer billboard in Las Vegas that reads:
“Injured while searching for dead bodies at Lake Mead? Demand compensation!”
That’s a joke, but this is real. Class action against gaming and gambling sites is an established industry that just puts as many hooks in the water as possible due to the low cost of doing so.
These cases can go either way: tossed out as frivolous or awarding considerable settlements to the plaintiffs.
To give you a taste of how common class action suits are, here are some recent examples:
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ESPN Bet Off to a Strong Start
The first inklings of ESPN Bet’s market share are trickling out, and based on the early results, ESPN Bet is holding its own.
In Maryland, the combination of Barstool Sportsbook and ESPN Bet tallied $33 million in handle and $4 million in revenue in November. ESPN Bet launched on November 14.
For comparison, the Barstool Sportsbook tallied $9.6 million in handle in October. In September, its handle was $10.2 million.
Some back-of-the-envelope math has ESPN Bet generating about $25 million in handle over 16 days. That would put its full-month revenue in the neighborhood of $45 million (around a 10% market share). That is ahead of BetMGM but well behind DraftKings and FanDuel.
The numbers need to be placed in the context of a much-hyped launch. As I said on social media, the numbers indicate a lot of interest in the ESPN Bet brand. Still, the question is, does the interest remain after initial curiosity evaporates along with the deposit bonuses?
There were also positive comments coming out of the 11th Annual Truist Securities GLLR Summit, where Barry Jonas wrote, “Early data suggests PENN is growing the market, including an encouraging number of female players (speaking to the power of the ESPN brand).”
You can find more on the summit from CDC Gaming Reports.
Will Skill Games Victory in PA Slow Down Other Efforts?
I’ve already written about the recently decided skill game case in Pennsylvania, but I wanted to revisit the ruling as it relates to the grander scheme of gray gambling with a bit of expert commentary.
In an excellent summary article by Law360, Matthew Santoni wrote [bold mine]:
“Thursday’s precedential Commonwealth Court opinion said the machines made by Georgia-based Pace-O-Matic were neither slot machines under the conventional definition of the word, nor were they illegal gambling machines that state gambling regulators and the Pennsylvania State Police Bureau of Liquor Control Enforcement could seize from the bars, clubs and storefronts where they have been installed.”
Skill games are just one of the gray areas of gambling law that are coming under increasing scrutiny, and the Pennsylvania decision could slow down efforts in other locales.
“One of the things you may see is enforcers not rushing to court quite as much because they see they’re at risk,” Ketan Bhirud of Cozen O’Connor told Law360. “They’re not going to want to have bad precedent.”
Opponents of the games will point out that anyone using them would have difficulty distinguishing them from slot machines. Alexander Denton of Robbins Alloy Belinfante Littlefield LLC (and one of my go-to people for gaming law knowledge) highlighted the need for precision:
“When courts evaluate the legality of skill-gaming activities, whether under a predominant factor test, as the Pennsylvania court applied here, or some other rubric, it is important to focus on the precise statutory language at issue.
“That is what Judge Dumas did in yesterday’s opinion, using traditional tools of statutory construction in determining that the skill games in question were not prohibited slot machines.”
In effect, with the precedent of this ruling, further efforts to restrict “skill games” will likely require changes to the statutory definition of slot machines.
“… getting a different result in a Pennsylvania court in the next seizure case will likely depend on legislation to define the term ‘slot machine’ as used in the gambling code. Or at least a very different approach to the expert analysis of these games,” William Gantz, the lead attorney for the gaming industry in the case, said. “This decision is really unfortunate for our regulated gambling industry and does not bode well for a petition to appeal further...”
As I often say, with legal issues… to be continued.
Around the Watercooler
Social media conversations, rumors, and gossip.
Two days of poker in a row!
Cheating has been a hot topic on Poker Twitter and on the 2+2 forums, where one of the accused has opened up a lengthy thread following the recent accusations of cheating in high-stakes home games have opened the floodgates for other players to share their own experiences.
As I’ve mentioned recently, cheating (and scoundrel stories) is part of the game’s charm and mystique. If you read poker history books, you’ll discover that high-level cheating was seen as a skill back in the day. Low-level cheating was always frowned upon.
David “Viffer” Peat, a former high-stakes player, touched on this in a tweet that sparked a ton of conversation:
Norman Chad sees it differently:
Stray Thoughts
And a little more poker.
The Bahamas was the site of some of the biggest poker tournaments in the early Boom years (WPT, PokerStars, and Ultimate Bet events*), but it has become a problematic destination for major poker tournaments over the last ten years or so.
Beginning in 2011, attendance dwindled due to the high cost, lack of satellite tournaments for North American players, and the dangers of traveling abroad with lots of money. But the WSOP Paradise series seems to be turning that around.
The 15-event series has put up some impressive numbers and attracted the biggest names in poker. It also benefitted from the feel-good story of Erik Seidel capturing his 10th WSOP Bracelet.
The $1000,000 Ultra High roller had 111 entries.
The $50k Super High Roller (won by Seidel) had 137 entries.
The $25k High Roller had 533 entries.
The $1,500 Millionaire Maker fell just shy of 3,500 entries (3,496).
The $5,000 Main Event is at more than 2,700 entries, with another flight still to be played.
*Minor correction: The first Ultimate Bets events were in Aruba.