DraftKings Faces Trial Over Deceptive 'Risk-Free Bet' Ads in Pennsylvania
A Pennsylvania judge ruled claims about DraftKings' 'risk-free bet' ads can proceed to trial.
Why it matters: Ambiguous gambling ads now face stronger legal risk, increasing compliance pressure. Legal, compliance, and marketing teams must scrutinize customer promotions to avoid similar litigation and regulatory penalties.
- Class action filed in Eastern District of Pennsylvania July 27, 2023, alleges 'risk-free bets' misled users.
- Plaintiffs say losing bets returned only restricted credits, not cash refunds, requiring more betting.
- Judge Linda Marquez's July 25, 2023, ruling kept core deceptive advertising claims alive.
- DraftKings faces similar lawsuits filed in New Jersey and Illinois earlier in 2023.
The U.S. District Court for the Eastern District of Pennsylvania ruled on July 25, 2023, that a class action lawsuit accusing DraftKings of misleading 'risk-free bet' advertising can move forward. Plaintiffs, who brought the suit on July 27, 2023, allege DraftKings' promotions implied that losing bets would be refunded in cash, but users were reimbursed with betting credits instead.
- Plaintiffs say these credits, labeled 'bonus bets,' required placing new wagers—they couldn’t be withdrawn as cash, unlike what the ads allegedly suggested. In simple terms, the compensation took the form of site credits with restrictions, not direct refunds.
- Two named plaintiffs claim they lost more than $50,000 each within months after repeatedly engaging with these offers. (Boston Globe)
- DraftKings tried to dismiss the case, arguing all terms and conditions were clearly disclosed. But U.S. District Judge Linda Marquez said it’s for a jury to decide whether the advertisements' wording could reasonably mislead a customer, regardless of the fine print. (Courthouse News)
Attorney Isaac Green, representing the plaintiffs, said the decision highlights how courts are demanding transparency in gambling promotions. Legal experts interviewed by Courthouse News stressed these lawsuits expose gambling firms to reputational harm and regulatory intervention.
- DraftKings is also facing similar suits in New Jersey and Illinois, both filed earlier in 2023, that challenge the difference between cash refunds and restricted promotional credits. (Claim Depot case details)
DraftKings declined to comment. Legal and compliance leaders should track these developments as regulators intensify oversight of customer-facing gambling incentives.
By the numbers:
- $50,000+ — Individual plaintiff losses cited in the Pennsylvania complaint
- July 27, 2023 — Date the Pennsylvania class action was filed
- 3 — States including Pennsylvania, New Jersey, Illinois with ongoing similar lawsuits
Yes, but: DraftKings maintains that all terms were clearly disclosed in its advertising and terms of use.
What's next: A jury trial in the Pennsylvania federal court will determine whether DraftKings' ads were misleading.