Daily fantasy and sportsbook operator DraftKings has settled its part of a multidistrict lawsuit around its daily fantasy sport operations, agreeing to pay $720,000 plus more than $7m in site credit, while taking steps to curb compulsive play.
The suit was filed by players who accused the platform of running an illegal gambling enterprise. It accused DraftKings and fellow daily fantasy operator FanDuel of using money deposited by new players to fund awards for experienced, high-volume players.
After arbitration in November 2019, the players and DraftKings decided to attempt to settle the case without FanDuel’s involvement. FanDuel’s part of the case therefore remains open.
Under the agreement reached, which still needs to be approved by US District Judge George A. O’Toole, DraftKings will create two settlement funds, one consisting of $7.28m in “DK dollars”, or site credit, for class members with open DraftKings accounts.
For players who closed their accounts, a $720,000 fund will be disbursed among anyone who made a first-time deposit on the site before January 1 2018 and is not a lifetime net winner with the operator.
In addition to the monetary settlements, DraftKings has agreed to implement a number of changes to its site for two years, including limiting players to one account, preventing prohibited platform employees from entering any public contest with an entry fee, and flagging all highly experienced players with a symbol attached to their usernames.
The operator also agreed to make available statistics showing how many players are net winners, breaking even or losing money over the prior 30 days, and to include links to resources for players with compulsive gambling habits.
The proposed settlement indicates that DraftKings will not oppose an attorney fee request of $1.9 million in fees and reimbursement for $100,000 in expenses.
The Judicial Panel on Multidistrict Litigation pulled together dozens of proposed consumer class actions filed against DraftKings and FanDuel, and consolidated the suits into a nationwide multidistrict case in Massachusetts federal court in February 2016.
The players are represented by Hunter J. Shkolnik and Salvatore C. Badala of Napoli Shkolnik PLLC, Jasper D. Ward IV and Alexander C. Davis of Jones Ward PLC, Melissa R. Emert of Kantrowitz Goldhamer & Graifman PC and Christopher Weld of Todd & Weld LLP.
DraftKings is represented by Damien Marshall and Leigh M. Nathanson of King & Spalding LLP.