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Banks Can't Collect Credit Card Charges Made by Clients of FanDuel & DraftKings: Lawsuit
FanDuel & DraftKings Customers Don't Have to Pay Credit Card Charges: Federal Class Action Lawsuit
“New York has a long-standing policy against enforcing debt issued for illegal gambling,” said attorney Brittany Weiner, an attorney who is representing the plaintiff. “FanDuel and DraftKings are operating an illegal sports bookmaking business and any credit card charges made by individuals for their gambling schemes cannot be enforced,” Ms. Weiner added.
The complaint, filed today in New York Federal Court, Eastern District, alleges that both DraftKings and FanDuel openly violated federal and New York state law by accepting bets on athletes competing in NCAA and professional sporting events.
DraftKings and FanDuel initially claimed their sports betting scheme was made legal by an exemption within the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”). The UIGEA was enacted in 2006 and makes it a crime to lend money for illegal internet gambling. The UIGEA does not render any form of gambling legal, including the gambling schemes created by FanDuel and DraftKings.
“If a person actually reads the text of the UIGEA, it is clear the law does not make fantasy sports legal; it simply makes its criminal for a lender to loan money for certain transactions,”
The complaint was filed against several different entities that were involved in funding the Plaintiff’s FanDuel and DraftKings accounts, including Visa Inc. (NYSE: V), MasterCard Inc. (NYSE: MA) American Express Credit Corporation (NYSE: AXP), J.P. Morgan Chase & Co. (NYSE: JPM) and Capital One Bank (NYSE: COF).
The defendants that extended credit to individuals to bet on the schemes created by FanDuel and DraftKings cannot collect the debts, according to the complaint. Any money paid to the banks and processors was premised on illegal gambling contracts and should be refunded.
BANKS KNEW OR SHOULD HAVE KNOWN CHARGES WERE FOR ILLEGAL GAMBLING
The UIGEA prohibits banks from lending money for illegal gambling. FanDuel and DraftKings openly cited the alleged “exemption”
In order to be exempt, the UIGEA requires that the value of the prizes awarded in a “fantasy” contest cannot be related to the total value paid by the participants.
The value of the “prize” awarded by FanDuel and DraftKings for their gambling schemes is correlated directly to the amount of fees paid by the participants. The sports gambling schemes created by FanDuel and DraftKings violate both restrictions set forth in the UIGEA exemption.
Banks that issued credit cannot rely upon FanDuel and DraftKings’ representation that the UIGEA rendered their schemes legal because the schemes’ payouts are so obviously correlated with the amount of fees paid by the participants:
“Even if the UIGEA exempted the gambling schemes created by FanDuel and DraftKings, the schemes would still violate federal and New York State law,” Mr. Imbesi claimed. “Even the term ‘Daily Fantasy Sports’ is misleading because it could lead somebody, including investors, to believe that the schemes were somehow legal,” Mr. Imbesi added.
“Lenders risk criminal charges and not being paid for any money charged by bettors to gamble on the schemes created by FanDuel and DraftKings – banks cannot claim they lacked knowledge the schemes were illegal if they conduct even minimal due diligence,” Mr. Imbesi concluded.
FANDUEL AND DRAFTKINGS CONTINUE TO ALLOW BETTING ON COLLEGE ATHLETES
The complaint cites several examples of FanDuel’s continued use of college athletes in its gambling schemes, including the names and corresponding handicap spreads of hundreds of college students. FanDuel offers wagering on numerous student-athletes that play college football and basketball games, the complaint alleges and even uses pictures of college athletes on its website, the complaint alleges.
The law firms that filed the proposed class action complaint established www.fandueldispute.com and www.draftkingsdispute.com to provide individuals with additional information.
Media requests about the FanDuel lawsuit should be made to attorney Hunter Shkolnik of Napoli Law PLLC.
Napoli Law PLLC
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