As it now stands, DraftKings and FanDuel — daily fantasy sports gambling websites (DFS)— face over a half-dozen civil lawsuits in federal district courts since the insider trading scandal emerged in late September 2015. The most recent action was filed in a Florida federal court on October 15, 2015.
Like the lawsuits filed against DraftKings and FanDuel in states such as New York and Louisiana, the Florida lawsuit seeks certification for a class action. Under the complaint, the proposed plaintiff classes are “all individuals and entities who entered into a User Agreement” with the DFS companies and made wagers within the last three years, in addition to separate classes designated for Florida residents.
It is now relatively well-known that DraftKings and FanDuel allegedly permitted their employees to gamble on DFS sites using insider trading information. The Florida complaint, however, adds new allegations to the mix.
According to the complaint, DraftKings and FanDuel allow users—known as “apex predators” or “shark bettors”—to play their daily games using complex computer programs and algorithms. The technology allows these users to run “elaborate statistical modeling and automated tools that can manage hundreds of entries at once and identify the weakest opponents.” Therefore, as the complaint alleges, the shark bettors have an unfair advantage over the typical user, which is evidenced by the fact that “nearly all of the prize money flows to a tiny elite . . . .”
The DFS companies allow the “elite” class of gamblers to run their programs only upon obtaining express permission. The Florida complaint alleged, however, that DraftKings and FanDuel did not adequately warn the common user of (1) the fact that the predator programs existed, or (2) when an individual was competing against a shark bettor utilizing a predator program. Therefore, the complaint claims that the companies are liable for negligently permitting unfair advantages. It also alleges that the companies breached their respective user agreements, which are signed by every user of the two websites; DraftKings and FanDuel allegedly breached the inherent duty of good faith and fair dealing in failing to prevent the utilization of predator software, and in failing to warn the common patron of such programs and the existence of the shark bettors.