DraftKings is facing another proposed class action lawsuit in New Jersey. The complaint accuses the operator of presenting its promotions in a misleading way to manipulate consumers.
In Youngs v. DraftKings, the plaintiff’s complaints center on the operator’s advertisement of “no-sweat” and “bonus” bets. DraftKings and other operators adopted the “no-sweat” terminology after a series of lawsuits over the earlier use of “risk-free” to describe similar promotions. Some state regulators also moved to ban the use of “risk-free” in that context.
Such promotions reward losing bets with a free bet of equal face value. However, since that free bet can still lose and does not return the original stake when it wins, customers complained that the offer isn’t truly “risk-free.”
Matthew Youngs, the lead plaintiff in the case, claims that the “no-sweat” descriptor still encourages players to believe that there is no risk in participating in the promotion.
His complaint also mentions DraftKings’ Instant Deposit Match bonuses for the casino vertical. The accusations on that front center around the fact that player winnings become locked when they opt in to the promotion and are subject to forfeiture if the player fails to complete the play-through requirements.
DraftKings did not respond to PlayNJ‘s request for comment on the lawsuit or the terms of its casino bonuses. However, PlayNJ found that some language has been added to its terms and conditions within the past two months, clarifying certain aspects of the Instant Deposit Match.
‘No-Sweat’ Bets and Instant Deposit Matches
The complaint filed in New Jersey by Matthew Youngs is 73 pages long. It first lays out a case for false advertising by DraftKings of its “no-sweat” and “bonus” bets. A separate section of the complaint focuses on DraftKings casino deposit match promotion.
The plaintiff describes the promotion as a “deceptive scheme” with “nearly-impossible-to-satisfy terms.” It also describes the language of the advertisement as “nontransparent.”
A review of DraftKings’ and a few of its top competitors by PlayNJ discovered that most casino deposit match bonuses function similarly to DraftKings’, although there’s considerable variation in how those conditions are explained.
The complaint argues that a player’s perception of the promotions, after exposure to the advertising, doesn’t match the reality:
“DraftKings advertisements for the Casino Deposit Match Promotion use large print and clear language to promise users free money if they make a deposit and try out the online casino.
“In reality, this promotion ends up only one of two ways: users either lose their initial deposit because they are unable or unwilling to satisfy the unreasonable play-through requirements that are only revealed to users after they have begun the promotion, or they make far more bets than they initially intended and risk developing a dangerous gambling addiction.”
Youngs claims that he and other customers have forfeited or lost all of their deposited money by accident because of what he describes as “egregious playthrough requirements.”
Youngs claims that the requirements were set at 10x or 15x of the combined amount of the deposit and bonus funds. DraftKings and other operators change the terms of their promotions from time to time, but it is common for playthrough requirements to vary widely, from a single “1x” playthrough up to requirements of 30x or more.
How does DraftKings’ Instant Casino Deposit Match work?
DraftKings displays an overview of the Instant Casino Deposit Match promotion on its website. Here is how the company describes it:
“An Instant Casino Deposit Match is a promotional offer in which DraftKings will match a percentage of your deposit in bonus funds, such as Casino Credits, DK Dollars, Crowns, Tier Credits, or Casino Bonus Funds.
“Instant Casino Deposit Matches require a 1x playthrough of the original deposit and bonus funds before the funds can be withdrawn. For complete eligibility requirements and offer details review the Terms and Conditions of the deposit match offer you have received.”
Not all of DraftKings’ casino games count toward the promotion’s playthrough requirements. Most slots count fully. However, some slots and many table games (e.g. blackjack) contribute only 20% of the bet amount to the playthrough, meaning the effective requirement would be five times higher when playing these games. Some other table games (e.g. craps) and video poker don’t count at all.
What Youngs’ complaint appears to reference is the fact that winnings from games played using bonus funds become “associated with the bonus.”
Any funds associated with the bonus are unavailable for withdrawal until the player has met the playthrough requirements. In the case of a promotion with a time limit, failure to complete the requirements can, Youngs claims, result in those funds being forfeited along with the bonus credit.
Gambling with the deposit vs. gambling with bonus funds
Based on PlayNJ’s reading of DraftKings’ terms & conditions, they don’t allow for the operator to seize the original deposit. However, scenarios can arise in which it might appear to the user that this has happened.
That because, once the player has lost their initial deposit and dipped into the bonus funds, any subsequent winnings are attached to the promotion. That continues to be the case even if the player wins back all the money they lost.
For instance, a user who deposits $500 to receive a $500 bonus and loses $510 would thereafter be gambling with bonus funds. Even if they make it back to a $1000 balance, their initial deposit was gone the moment they were down $500. At that point, the entire balance is bonus money, which they stand to lose if they fail to complete the promotion. Conversely, a player who never lost enough to need the bonus money would only stand to forfeit the $500 bonus credit when it expires.
Terms updated to clarify that they apply even to non-contributing games
DraftKings did not respond to a request for clarification on this point. However, at some point after Nov. 16 (the last archived version), the promotion’s overview page was updated to include the following note:
“Any games with a 0% contribution rate will not contribute toward the play-through requirement for any casino bonus. Please be aware that any winnings earned from a 0% contribution rate game would be considered locked winnings until the play-through requirement is met.”
This appears to confirm that winnings become locked during the promotion while clarifying that this applies even to winnings from games that don’t help the player complete the promotional requirements.
The company is facing similar suits in Kentucky and Illinois.