March 4, 2021 Sports Betting, Legal, Online

DraftKings reaches proposed settlement of multidistrict lawsuit

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Operator agrees to pay $720,000 in cash, give more than $7m in site credits.

DraftKings has agreed to a proposed settlement of a multidistrict lawsuit for a combination of cash and site credits.

The settlement still must be approved by US District Judge George A. O'Toole.

In the original complaint, both DraftKings and FanDuel were accused of operating an illegal gambling enterprise. Specifically, the operators were said to be using the funds from new customers to pay established ones.

The proposed settlement only covers the parts of the complaint between DraftKings and its customers, as FanDuel has pursued its own options.

If the court approves, DraftKings would establish an account in the amount of $720,000. The monies would be distributed to those who made their first deposit on DraftKings prior to Jan. 1, 2018, and have since closed their account. One important caveat: the claimants must show they had a net loss during their time playing on the site.

For claimants who still have active accounts on DraftKings, the company said it will offer site credits in the equivalent of $7.28m.

DraftKings also agreed to address complaints made against the company over the years, including a well-publicized incident when an employee of the site won $35,000 in a public contest, and accusations that it contributes to problem gambling.

Among other provisions, DraftKings said employees may not enter contests that include an entry fee, and highly experienced contest players will be noted. Clients will only be allowed to open a single account, and those who lose money will be directed to gambling addiction assistance.

Finally, DraftKings will post numbers showing what percentage of its clients win, lose or break even each month.

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