The wagering and betting powerhouse, DraftKings, has come under fire for its “risk-free” betting inducements in New York. A class action lawsuit lodged in the Southern District of New York on the 17th of April levels claims of misleading advertising against the operator.
The legal action was instigated by Samantha Guery, represented by the renowned law firm, Reese LLP, and was compiled by Richard Daynard, a respected law scholar at Northeastern University.
The filing party asserts that DraftKings’ endorsement of risk-free bets is misleading and dishonest.
To put into context, the operator’s incentive obliged punters to make a wager using their own funds. If the original bet lost, they were then presented with a complimentary bet that matched the value of their initial bet.
However, the plaintiffs identify that the additional wagers bestowed by DraftKings were not valued the same as the initial bet, since their value could not be redeemed until it had been played. Moreover, these bonus bets would yield lesser returns, if won, compared to bets waged with the customers’ own funds.
The lawsuit emphasizes that the value of the complimentary bet is less than half of the preceding bet. Consequently, the incentive cannot be accurately labeled as “risk-free” as DraftKings suggests.
Debating the Meaning of “Risk-Free”
The plaintiffs assert that the betting company’s incentive was misleading, thereby breaching Section 349 of the New York General Business Law. In essence, this section bars deceptive commercial practices.
In addition, the lawsuit made allegations that DraftKings’ incentive contravened Section 1363 of the Racing, Pari-Mutuel Wagering, and Breeding Law.
It’s worth noting that the American Gaming Association banned “risk-free” promotions in March 2023, due to worries about problem gambling. This adjustment proscribed all usage of the term in promotional materials, as the AGA made moves to safeguard consumers from exploitative practices and unlawful wagering.
This is not the first incident where the term risk-free has ignited contention. Journalist Rece Davis, from ESPN, recently employed the term to depict a betting proposal as a “risk-free investment.”
Eventually, Davis corrected his statement, and highlighted that all gambling ventures harbor risks. He urged individuals who engage in betting to exercise “prudence, care, caution, fiscal and personal responsibility and never over-extend”. He further suggested that his audience should acknowledge his comment as hyperbole.
