Class Claims Against DraftKings Dismissed

I wanted to cheer on the little guy in this one, but no. I don’t blame the plaintiff for his choosing to believe an offer that was too good to be true. I have some questions for the attorneys who brought a class action claim alleging misrepresentations and deceptive business practices when the inducements in question were not deceptive if one bothered to read them with any attention.

Plaintiff alleged that DraftKings promised new users a $1000 deposit bonus for signing up for the platform. In fact, according to the Court in Aminov v. DraftKings, Inc., DraftKings’ Promotion had three requirements for a new user to qualify for the $1,000 deposit bonus. The new user had to (1) “immediately deposit at least $5,000 in cash with DraftKings;” (2) “wager at least $25,000 with DraftKings within 90 days;” and (3) the wagers had to be on “daily fantasy contests, sportsbook bets with -300 odds or longer, and/or casino products.”

Here is the allegedly misleading ad.

On first reading, it’s not entirely clear what any of this means, but I see that it clearly says “up to 1000.” If the user scrolls down the screen, they get the full terms, which look like this:

This replicates the terms as characterized by the Court above. Mr. Aminov signed up for DraftKings and made an initial $500 deposit, for which he received a deposit bonus of $100. He claims he and other members of his purported class are owed another $900 and that he never would have signed up had he not been mislead. Mr. Aminov alleges that he never scrolled down the screen to see these terms and that there was no requirement that he do so. Rather, he saw ads that led him to believe that he would get a $1000 bonus deposit just for opening an account.

The Court first rejected Mr. Aminov’s statutory claims for deceptive business practices because DraftKings conspicuously disclosed the requirements to be eligible for the full value of the promotion. A reasonable consumer would have seen those terms before signing up for DraftKings’ services.

That ended the inquiry as to deceptive business practices, and so the Court did not reach the question of whether Mr. Aminov was injured by the alleged deception.Arguably, he was not. He deposited $500 and he received a $100 bonus. He expected a $1000 bonus, but he was not harmed because he could have withdrawn his money at any point. I suppose his expectation was not met, and if there were a contract between him and Draftkings under which the latter was obligated to give him $1000 in exchange for $500, he would be entitled to his expectation, but what a world that would be!

The Court dismissed Mr. Aminov’s unjust enrichment claim because it was duplicative of his statutory claim. Plaintiffs’ other claims were also dismissed because he failed to respond to the portions of DraftKings’ motion to dismiss that related to those claims.

It is interesting to compare this case with Izadi v. Machado (Gus) Ford, Inc., a case I teach every year, even though I think it is wrongly decided. The plaintiff there claimed that an ad (below) was misleading because it offered in large letters $3000 off any new Ford vehicle in exchange for a trade-in of “any vehicle.” But with respect to the vehicle that plaintiff wanted to buy, it clearly said that the dealer would subtract from the sale price “any trade worth $3000.”

To the Florida court that decided this case, this ad was an unambiguous offer entitling Mr. Izadi to $3000 off any Ford with a trade-in of “any vehicle,” regardless of the value of that vehicle. That’s simply not a plausible reading of the ad, and it seems unlikely that a reasonable consumer interpreted the ad that way because Mr. Izadi did not bring his claim as a class action. If you are the only person who demands $3000 off a new car in exchange for a beat-up skateboard, you likely are not being reasonable. The Florida court also gave a second reason for treating the ad as an offer: People ought not to be allowed to take advantage of consumers with intentionally misleading ads.  But I don’t think the ad in Izadi was misleading, at least not in the way Mr. Izadi claimed, and the same holds true for the DraftKings promotion.