As one of the biggest non-football sports gambling weekend approaches in the form of the Final Four, both DraftKings and FanDuel find themselves at the center of a high profile lawsuit.
According to ESPN, the city of Baltimore is suing the two online sportsbooks over what it says are “misleading” tactics. The lawsuit also alleges that the companies use their analytics to specifically target problem gamblers with promotional tools such as bonus bets, which Baltimore says violates its Consumer Protection Ordinance.
“These companies are engaging in shady practices, and the people of our city are literally paying the price,” Baltimore Mayor Brandon Scott said in a release. “DraftKings and FanDuel have specifically targeted our most vulnerable residents — including those struggling with gambling disorders — and have caused significant harm as a result. This lawsuit is a critical step to hold them accountable and protect all Baltimoreans.”
At the center of Baltimore’s complaint is the use of bonus bets, which are monetary credits that are only available to be used at the sportsbooks for a limited period of time (typically seven days or less). While the credits may initially serve as a “free bet,” they also provide an entryway for the sportsbooks to encourage frequent betting while also obtaining data on customers that can be used to continue to target them.
“Defendants are not interested in people merely dipping their toes in the water: They want bettors to bet, in significant amounts, over and over,” the lawsuit reads. “Some get hooked, and that’s the point.”
Sports betting has been legal in Maryland since 2021, three years after the U.S. Supreme Court first struck down the federal ban. This past January, bettors in the Old Line State wagered more than $457 million on DraftKings and FanDuel, with the closest competitor (BetMGM) taking $51 million, a further sign of the emerging duopoly in the online sportsbook marketplace.
In addition to injunctive relief requiring DraftKings and FanDuel to stop such practices and reform their platforms, Baltimore’s lawsuit is seeking statutory penalties. Neither sportsbook has publicly responded to the lawsuit, while each has 30 days to so from a legal perspective.