[Editor’s note: FanDuel is an advertiser of PFT and PFT Live on NBC Sports Radio. Also, NBC Sports has an equity stake in FanDuel.]
Any company with deep pockets that keep getting deeper by the day becomes a lightning rod for litigation. Throw in a real controversy, and the civil complaints will pile up, quickly.
Via Deadspin, a man named Adam Johnson has filed suit in Manhattan federal court against DraftKings and FanDuel, alleging causes of actions including negligence, fraud, misrepresentation, civil conspiracy, unjust enrichment, and violation of state consumer protection laws. As Kevin Draper of Deadspin notes, it’s the first lawsuit, but it’s hardly the last.
The gist of the complaint is this: Johnson wouldn’t have wagered money on daily fantasy football is he had known “defendants were working in concert to allow employees of DFS sites to play against them.”
Although Johnson didn’t lose big money (he alleges he spent at least $100), the kicker is the request that the case be certified as a class action, with the proposed class including “[a]ll persons in the United States who deposited money into a DraftKings account before Oct. 6, 2015 and competed in any contest where other entries were made by employees from DraftKings, FanDuel or any other DFS site.”
That’s the part where $100 in losses can mushroom, with DraftKings and FanDuel required to scour their contests for evidence of employee involvement and, if the claims are successful, refunding the money spent by customers — along with other potential damages that could make the amounts even bigger, including punitive damages aimed at punishing the violations of civil law and deterring future misconduct.
The smart move for DraftKings and FanDuel could be to take a page from the Pilot Flying J handbook and offer an immediate settlement that pays back all money spent by non-employees of DFS companies in DFS games involving DFS employees. That first would require crunching plenty of numbers and putting together what could be a very large pot of money. But with the industry, which grew too fast for internal or external regulation, immediately recognizing after its first scandal that employees of one DFS company should not be playing in contests offered by other DFS companies, the next logical step would be to work backward and refund money from any contests tainted by the presence of employees of DFS website.
While that may not be sufficient to constitute complete justice, it could be enough to get a nationwide class action quickly certified and settled, especially if it gives the lawyers representing the class a large pile of money for not doing very much work.
Which makes the attraction of class-action litigation a little like the allure of daily fantasy.