Fantasy Sports Sites Face 40 Class Actions

Popular online fantasy sports sites FanDuel Inc. and DraftKings Inc. are facing around 40 class action lawsuits in 13 different states. Plaintiffs are accusing the sites of false advertising and consumer fraud, and in some cases, consumers are seeking to be reimbursed for losses incurred on the site.

Participants on the sites create fantasy sports teams, mainly football, and hope to win enough points to be awarded prize money based on the real-life performances of the athletes on their fantasy team. Both FanDuel and DraftKings came under fire after the New York Attorney General’s Office began investigating them for allegedly promoting illegal gambling. On November 10, 2015, Attorney General Eric Schneiderman ordered FanDuel and DraftKings to cease operations. Both companies have since filed suit to block the order, maintaining that the sites are skills-based contests and therefore do not violate the U.S. Unlawful Internet Gambling Enforcement Act of 2006.

In addition to claims of false advertising and consumer fraud, many plaintiffs are accusing the companies of insider trading. Plaintiffs claim that employees were competing on the sites with non-public information and had they known, they would not have participated in the contests. Recently, it was revealed that a DraftKings employee won $350,000 on FanDuel by using NFL information that was not released to the public.

Attorneys for both sides of the suit are petitioning for the class actions to be consolidated into a multidistrict litigation. The U.S. Judicial Panel on Multidistrict Litigation will likely decide on the matter at its January 28, 2016 hearing.

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