Jake Granese – Since 2018, online sports betting has taken over the United States. Sportsbook advertisements appear to have infiltrated every form of media, and no sporting event is complete without an onslaught of these ads. Specifically, sportsbooks love to promote the illusion of guaranteed success through “risk-free” offers, “no-sweat” bets, deposit matching, and “no-regret” safety nets. However, these offers are anything but safe, and the city of Baltimore has had enough.
In early April, the city of Baltimore sued two major players in the sports betting industry, DraftKings and FanDuel, accusing the sportsbooks of engaging in deceptive and unfair practices, including targeting and exploiting vulnerable gamblers. Although the nationwide sports betting ban was lifted in 2018 in Murphy v. Nat’l Collegiate Athletic Ass’n, the decision left it up to each state to determine whether to legalize sports betting. Baltimore’s lawsuit comes only three years after Maryland chose to legalize sports gambling within the state. In the complaint, Baltimore accused DraftKings and FanDuel of using algorithms to keep problem gamblers betting. The city also accused them of running misleading promotions that highlighted “bonus bets” and “no-sweat bets,” creating compulsive gambling behavior. Baltimore’s mayor, Brandon Scott, addressed the basis of the lawsuit, stating that “DraftKings and FanDuel have specifically targeted our most vulnerable residents–including those struggling with gambling disorders–and have caused significant harm as a result. This lawsuit is a critical step to hold them accountable and protect all Baltimoreans.”
Lawsuits alleging predatory practices have been emerging more and more as sports betting continues to sweep the nation. In Florida, resident Brandon Montgomery filed a class-action lawsuit against the Seminole Tribe and its Hard Rock Sportsbook betting app in May 2024. The lawsuit alleged that Hard Rock’s “No Regret First Bet” promotion was misleading and in violation of consumer protection laws, as “the Bonus Bet marketing and sign-up process misrepresents and omits several key facts about the service,” including that “a user cannot simply cash out a refund if they lose the bet, but instead must place another bet.” Users cannot withdraw the reimbursed bonus bet and convert it to currency; instead, bonus bets must be wagered again. Also, a “typical bet made with $100 at even odds recovers the initial $100 plus the $100 winnings minus the Defendant’s agreed upon cut of 9% (‘vig’ or ‘juice’), which results in a payment of approximately $191. By contrast, a winning Bonus Bet of $100 at even odds recovers $100 minus the vig or juice, resulting in a payment of only $91.”
The same allegations regarding bonus bets are included in Baltimore’s lawsuit, as users are significantly disadvantaged after engaging with these offers. Since the lawsuit in Florida, sportsbook advertisement language claiming “risk-free” offers has largely been altered. However, just as the city of Baltimore alleges, switching the verbiage to “no-sweat” is just as harmful, and targeting individuals who have been shown to be susceptible to such advertisements remains a predatory practice. The complaint also alleges that as users start betting, companies collect data on individuals and use it to identify those most likely to gamble more. The complaint elaborates that FanDuel’s parent company tracks “at least 186 attributes for each bettor, including their propensity to gamble and susceptibility to marketing,” where exclusive offers are used to exploit players, keeping them engaged and betting as much as possible.
As sportsbooks continue to grow, scrutiny has increased. In September 2024, two federal lawmakers from New York and Connecticut introduced legislation that would implement federal regulations on sportsbooks. The “Supporting Affordability and Fairness with Every Bet” bill, dubbed the “SAFE Bet Act,” seeks to regulate sportsbooks by addressing three key problematic areas. First, the bill would ban the use of AI to monitor gambling behaviors of players and targeting players with personalized promotions. Second, the bill would limit both the amount and frequency of customer deposits within a 24-hour period. Finally, the bill would modify permitted advertising methods, including prohibiting sportsbooks from running advertisements meant to induce gambling during live sporting events. Richard Daynard, a law professor at Northeastern and president of the Public Health Advocacy Group, contends that “the gambling industry is following a playbook developed by the tobacco industry and is a direct threat to public health.”
Baltimore’s lawsuit also highlighted certain protections that sportsbooks are required to implement in the United Kingdom but that are not in place in the United States, such as financial vulnerability checks, restrictions for bettors under 25 years old, and limits on personalized promotions. Not only does the difference between operations in the United Kingdom and the United States highlight how sportsbooks could reduce harm, the lawsuit states, but given the volume of data sportsbooks collect, DraftKings and FanDuel could be leveraging that data to identify and help problem gamblers combat their addiction instead of targeting them.
Baltimore’s lawsuit is the first of its kind, marking the first case brought by an American public entity against an online sportsbook. Although individuals have made similar allegations in lawsuits in recent years, such as the lawsuit in Florida, a city like Baltimore has an advantage in bringing forward a suit compared to individual bettors. Adam Levitt, founding partner at DiCello Levitt, the law firm representing the mayor and city council of Baltimore, explains that individuals agree to an arbitration clause when signing up for sportsbook apps. These clauses essentially prevent individuals from participating in a class-action lawsuit, whereas public entities are not subject to such agreements.
The growth of the sports betting industry has shown no signs of slowing. In fact, more states continue to legalize sports betting, and the number of individuals signing up for sportsbooks continues to increase. Online sports betting is still a relatively new phenomenon, and as its long-term consequences become more apparent, new regulations–such as the proposed “SAFE Bet Act”–are likely to emerge. Depending on how the case unfolds, we may one day look back at Baltimore’s lawsuit as one of the early catalysts for nationwide regulation and reform.
