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DraftKings is facing a class action lawsuit in Massachusetts that alleges its DraftKings Predictions product offered illegal sports betting under the label of prediction markets.
According to the complaint, filed in the U.S. District Court for the District of Massachusetts on behalf of California resident Michael Chan, users were allegedly misled into believing the product was lawful. The suit claims DraftKings’ sports “predictions” were actually sports bets presented as event contracts and that the app operated like an unlicensed sportsbook.
The filing also alleges that DraftKings Predictions offered sports bets identical to those available on the company’s regulated online betting platform. It further claims that 70% of the product’s sports event contracts came from U.S. states where sports betting is illegal, including California, Florida, Georgia, Alabama, Minnesota, and Texas.
The lawsuit seeks damages on behalf of players from multiple states. One of its central allegations is that DraftKings used “trading” language to make consumers think the activity was legal and safe.
DraftKings disputed the claims in a statement attributed to a spokesperson, saying: “DraftKings’ prediction markets offering operates in accordance with applicable law and the federal regulatory framework established under the Commodity Exchange Act. We remain confident in our legal position.”
For California readers, the case stands out because the named plaintiff is a California resident and California is among the states listed in the complaint. Still, the current development is a private civil lawsuit, not a reported enforcement action by a California regulator.
What happens next will likely center on procedural questions, including whether the court certifies the proposed class action and how the court assesses the product’s legal structure. The source report did not specify a damage amount or identify any separate regulator action beyond the lawsuit itself.
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Source: As reported by Alla Basentsyan.
