Top Daily Fantasy Sports (DFS) operators DraftKings and FanDuel have agreed to pay over $2 million cumulatively as a part of a deal with the state of Massachusetts to settle charges regarding the violation of consumer protection laws in the state.
Massachusetts Attorney General Maura Healey initiated the probe in late 2015 when the DFS companies started coming under greater scrutiny. The settlement agreement covers the unethical practices followed by the companies before new consumer protections were rolled out in the state in 2016.
In a statement Healey said
I am glad to have reached these settlements to address various consumer issues that existed at the early stages of this new industry. We have since implemented a set of comprehensive regulations that provide consumers with broad-ranging protections and that have served as a model for many other states
Under the terms of the settlement, both the companies will pay $1.3 million each to address the allegations. The consumer protection regulations drafted by Healey went on to become the template for numerous states across the country looking to legalize and regulate the DFS industry. The two DFS operators had together paid out $12 million last year in a similar agreement with the state of New York.
Tim Parilla, general counsel for Boston-headquartered DraftKings said the company welcomed the deal. He noted that the Attorney General’s office had taken a lot of effort to understand the DFS industry and to create a responsible regulatory environment for the sector in Massachusetts.
A FanDuel spokesperson similarly said that the company had worked with the Attorney General’s office during the process to create robust consumer protection laws, which the company is complying with. The settlement did not detail the exact issues that led to the charges.
The New York settlement which follows the same template as used by Massachusetts reveals more information with regards to the charges against the two companies. A majority of the allegations involve the adoption of deceptive advertising practices.
The companies are alleged to have released advertising that gave customers a false view of the likelihood of winning. They also offered bonuses matching the deposits but failed to reveal details on its availability for redemption and also did not put in place enough safeguards against problem gambling.
According to industry observers, the possibility of more such settlements occurring is not very high since several state AGs across the countries have lost interest after banning the DFS industry. So far 16 states have cleared bills to legalize the DFS industry.
