Court Greenlights Settlement in Online Fantasy Sports Multidistrict Litigation

According to its Tuesday order, the District of Massachusetts court presiding over a fantasy sports multidistrict litigation case preliminarily approved a settlement and conditionally certified the settlement class after five years of litigation. The proposed settlement, comprising both a DraftKings 7,280,000 (DK Dollars) fund and a $720,000 fund, will release claims against DraftKings, but not co-defendant FanDuel Inc.

The plaintiffs’ June 2016 class action complaint alleged that the defendants used advertising campaigns that misrepresented the difficulty of daily fantasy sports (DFS) contests and the terms of some promotional offers. In November 2019, the court granted the defendants’ motion to compel arbitration as to two of the three plaintiff groups involved.

The parties’ joint motion for approval noted that they engaged in settlement negotiations throughout the litigation informally and before mediators. After the court compelled arbitration, DraftKings continued negotiations without FanDuel, ultimately culminating in the instant settlement.

Under the terms of the agreement, class members can access the DK Dollars fund if they have an open DraftKings account, while the U.S. dollars fund is for those whose account has been closed. Both funds will be allocated to claimants according to an eight tier system, based upon the amount of the first deposit made into the user’s account.

The joint motion also claimed that the settlement offers the class “significant injunctive relief” by instituting changes to DraftKings’ online platform for two years. These include allowing players to “exclude themselves from certain contests, set limits on the amount of funds deposited and the number of entries played each week, identify highly experienced players in any contest, and permanently close their account at any time for any reason.” In addition, the measures will require DraftKings to promote fair play and deter, detect, and prevent cheating.

This week’s order found the settlement to be fair, reasonable, and adequate. The court scheduled a fairness hearing for Oct. 6, following several class notice, comment, opt-out and other deadlines.

DraftKings is represented by King & Spalding LLP. Class counsel includes Todd & Weld LLP, Napoli Shkolnik, Morgan & Morgan Complex Litigation Group, The Gori Law Firm P.C., Hannon Law Firm LLC, Jones Ward PLC, Kantrowitz, Goldhamer & Graifman P.C., Law Offices Of Jennifer Duffy APC, Heninger, Garrison & Davis LLC, Lockridge Grindal Nauen P.L.L.P., Cuneo Gilbert & Laduca, LLP,  Law Office of Richard S. Cornfeld, and Sherman, Silverstein, Kohl,  Rose & Podolsky P.A.