A Florida federal class action has been the most recent lawsuit to join the blitz against daily fantasy sports (DFS) websites, FanDuel and DraftKings. Specifically, the Florida case, originally filed on October 15, 2015, alleged that the DFS sites permitted certain users, known as “shark bettors,” to unfairly run complex computer programs and algorithms, which utilize “elaborate statistical modeling and automated tools that can manage hundreds of entries at once and identify the weakest opponents.”
On October 16, 2015, the plaintiffs amended the original complaint to add additional allegations to the initial claims, which contended, for example, that DraftKings and FanDuel are liable for negligence and breach of contract (breach of “good faith and fair dealing”). The new claims in the amended complaint allege that the companies are participating in illegal gambling, citing the Nevada Gaming Control Board’s recent ruling that DFS entities cannot operate in the state without a gaming license.
In sum, the purpose for the amendment is to add to the complaint’s initial attack on the validity of the companies’ user agreements. Each paying user is required to sign a user agreement, which contains a provision precluding class actions—an obvious problem for plaintiffs seeking to certify a class action. If the agreements can be proven as legally invalid—for example, by being voidable due to fraud, unconscionableness, or illegality—the provision will be nullified and the class actions can continue. Therefore, to show that their class action is “actionable,” the Florida plaintiffs’ amended complaint seeks to prove the user agreement as void pursuant to Nevada’s rendering of daily fantasy sports gambling as illegal.