DraftKings Required to Refund New York Customers' Money for Accepting Illegal Sports Bets: Lawsuit

NEW YORK - Oct. 19, 2015 - PRLog -- A New York resident filed a proposed class action complaint against DraftKings, Inc. (“DraftKings”) alleging that the company is operating an illegal online sports bookmaking operation. The lawsuit alleges that DraftKings’ daily gambling contests violate New York’s criminal law which prohibits accepting wagers in the capacity of a bookmaker.

Contest of Chance

The complaint alleges that DraftKings defines its sports betting scheme as Daily Fantasy Sports (“DFS”) in a feeble attempt to circumvent New York Penal Law (“NYPL”) which expressly prohibits profiting from “any contest, game [or] gaming scheme…in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.”

According to the complaint, DraftKings’ gambling scheme is a game of chance because an individual athlete’s performance will always be affected by material elements of chance that affect scoring and winning outcomes including variables such as player injury, fumbles, weather conditions, controversial officiating, suspension, or other off field circumstances.

Bettors have no control over all of the variables that affect the performance of the college and professional athletes, rending the DraftKings scheme a game of chance.

Unlike traditional fantasy sports, for each college and professional game, DraftKings establishes a handicap, similar to a point spread, for a limited group of players and teams (for example, a football team’s entire defense can be selected). Bettors select the individuals and teams based upon the spread, eliminating almost all element of skill, the complaint alleges.

DraftsKings’ CEO: “[DraftKings] Concept is Almost Identical to a Casino”

The Nevada Attorney general released a 16-page memo on their research process into the legal designation of daily fantasy, which they concluded was gambling. A large part of their argument hinged on language that DraftKings CEO Jason Robins used in describing the site:

This conclusion - that daily fantasy sports are gambling - is consistent with how operators of certain daily fantasy sports describe themselves. For example, Jason Robins (the owner, co-founder, and CEO of DraftKings) stated that the concept for DraftKings.com was "almost identical to a casino."

Robins also used the word “betting” to describe the financial machinations of the site, which certainly indicates gambling is afoot, rather than a simple monetization of a game:

The DraftKings CEO also states that DraftKings’ "concept is a mashup between poker and fantasy sports. Basically, you pick a team, deposit your wager, and if your team wins, you get the pot." Additionally, the DraftKings CEO repeatedly refers to the payments on his sites as "wagers" and "bets," and the activity as "betting."

The Gaming Division of Nevada Office of the Attorney General uncovered that DraftKings complied with basic UK gambling regulations by obtaining a license for “pool betting” and “gambling software.”

Unlawful Internet Gambling Enforcement Act of 2006

DraftKings claims on its website that the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) legalized fantasy sports, making its sports betting scheme legal. The complaint contradicts DraftKings’ legality claim by citing the differences between traditional fantasy sports and DraftKings’ gambling scheme.

The complaint also quotes former U.S. congressman Jim Leach, who was one of the drafters of UIGEA. Former Congressman Leach said it is “sheer chutzpah” for the daily fantasy sites to pretend the [UIGEA] makes them legal.

BETTING ON COLLEGE ATHLETES

The complaint cites several examples of DraftKings’ use of college athletes in its gambling contests, including the names and corresponding handicaps of hundreds of college students. DraftKings offers wagering on numerous college football and basketball games and even uses pictures of college athletes on its website, the complaint alleges.

REFUND LOSING WAGERS

The complaint cites a New York law that allows individuals to recover gambling losses from illegal gambling. The law was enacted to discourage individuals from engaging in illegal gambling in the State of New York.

The law firms representing the Plaintiffs, Imbesi Law P.C. and Napoli Shkolnik PLLC, established www.DraftKingsdispute.com to provide DraftKings customers with additional information.

Media requests about the DraftKings lawsuit should be made to attorney Hunter Shkolnik of Napoli Shkolnik PLLC.

Napoli Shkolnik PLLC
hunter@napolilaw.com
212-397-1000

Imbesi Law P.C. 450 Seventh Avenue, 14^th Floor, New York, NY 10123 Attorney Advertising, Napoli Shkolnik PLLC 1301 Avenue of the Americas, New York, NY 10019

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Napoli Shkolnik PLLC
Imbesi Law P.C.