New York Attorney General Eric Schneiderman said his office has reached separate $6 million settlements with Edinburgh and Manhattan-based fantasy sports operator FanDuel and its rival DraftKings.
Schneiderman said the settlements resolve lawsuits alleging false and deceptive advertising practices by the companies — and impose the highest New York penalty awards for deceptive advertising “in recent memory.”
The Attorney General’s statement said the agreements also require sweeping reforms to the companies’ marketing, “including clear disclosure of terms and conditions for marketing promotions, expected winnings, and expected performance in the online contests, as well as resources for players at risk for compulsive gaming disorders, including addiction.”
The companies will also be required to maintain a webpage that provides information about the rate of success of users in its contests, including the percentage of winnings captured by the top 1%, 5% and 10% of players.
Schneiderman said: “Today’s settlements make it clear that no company has a right to deceive New Yorkers for its own profit.
“DraftKings and FanDuel will now be required to operate with greater transparency and disclosure and to permanently end the misrepresentations they made to millions of consumers.
“These agreements will help ensure that both companies operate, honestly and lawfully in the future.”
The Attorney General’s statement said investigation found, among other violations, that the companies:
- Misled casual and novice players about the substantial advantages of high-volume and professional players, which included using automated computer “scripts” and sophisticated statistical and game theory strategies
- Gave false and misleading statistics in marketing and advertising about the likelihood that players will win cash prizes and earn a positive return on their entry fees (in fact, most players lost money over time)
- Deceptively promised to match a player’s initial deposit in marketing promotions, while providing a much less generous rebate on entry fees
- Marketed its contests as harmless fun, while failing to disclose the danger to populations at risk for compulsive gaming and addiction or provide responsible safeguards