The boom in online sports betting, fueled by platforms like DraftKings and FanDuel, has brought with it an uncomfortable shadow: a surge in reported gambling addiction and the resulting legal challenges. These companies, once celebrated as innovative disruptors, are now facing a growing wave of lawsuits that allege their apps are deliberately designed to be addictive and that their marketing is predatory.
Here is an overview of the key updates and developments in the ongoing legal battles.
The Core Allegations: Beyond Standard Gambling Risk
The lawsuits are not simply claiming that gambling is addictive; they are focused on the platform design and marketing practices of these online sportsbooks. The core allegations center on:
- Manipulative App Design: Claims that the platforms are engineered with gamification features, constant notifications, and psychological triggers that mimic addictive video games, effectively exploiting users’ vulnerabilities.
- Deceptive Promotions: Lawsuits frequently target “risk-free” bets, “bonus” offers, and “deposit matches” that allegedly contain misleading terms and require users to wager massive amounts of their own money before accessing any benefits. Ohio and Massachusetts regulators, for example, have already taken action and imposed fines on DraftKings over deceptive marketing and funding practices.
- Targeting Vulnerable Users: Plaintiffs and cities allege that the companies use proprietary data to identify and push high-frequency, losing bettors into VIP programs, where dedicated hosts encourage them to continue betting, often resulting in devastating financial loss.
- Failure of Responsible Gaming Tools: Allegations that features like self-exclusion lists are not properly enforced or that the companies’ own data analytics could be used to proactively protect problem gamblers but are instead used to encourage more wagering.
🏛️ Recent Litigation Developments
The legal landscape is rapidly changing, with major developments on several fronts:
1. The City of Baltimore Lawsuit (April 2025)
In a landmark action, the City of Baltimore filed a lawsuit against DraftKings and FanDuel, alleging that their practices violate the city’s consumer protection ordinances and constitute a public-health nuisance. This case is notable because it is one of the first major actions brought by an American public entity, framing the issue as a systematic harm to city residents and seeking injunctive relief to force the companies to change their business practices.
2. Mandatory Arbitration & The Class Action Hurdle
Many original class action lawsuits alleging deceptive practices have been slowed or halted by the companies’ Terms of Service, which include mandatory arbitration clauses. Recent rulings have upheld these clauses, forcing users to pursue their claims individually in arbitration rather than collectively in court. This creates a significant legal and financial hurdle for individual plaintiffs.
3. Individual and Mass Tort Claims
Despite the class action restrictions, a growing number of individual lawsuits and mass arbitrations are moving forward. These often involve plaintiffs who have suffered catastrophic financial losses (e.g., $\$10,000$ or more) and have a formal diagnosis of a gambling disorder. The cases are strengthened by evidence like communications from “VIP hosts” encouraging continued betting, even after obvious signs of addiction.
4. Regulatory Scrutiny
State gaming commissions are increasingly stepping in. In a recent example (July 2025), the Massachusetts Gaming Commission fined DraftKings and ordered refunds for accepting illegal credit card-funded wagers, signaling a zero-tolerance approach to compliance failures related to responsible gaming rules.
The Broader Impact
These lawsuits have amplified a national debate about the true cost of legalized sports betting. They are driving important conversations among regulators, lawmakers, and public health officials about:
- The need for stronger consumer protection laws specific to online gambling.
- Bans on highly deceptive promotional phrases like “risk-free” or “free bets.”
- The obligation of betting platforms to use their extensive user data to enforce responsible gaming rather than just maximize profit.
As the litigation against DraftKings, FanDuel, and other platforms builds momentum, the industry is under pressure to evolve its business models to prioritize consumer safety and ethical marketing.
Disclaimer: This blog post is for informational purposes only and is not legal advice. The legal landscape is constantly evolving, and readers who have been affected by gambling addiction should consult with legal counsel. Jason Ochs at Ochs Law always provides a free initial consult. Confidentially text us today from our homepage.
