A class action lawsuit has been filed against DraftKings alleging it wrongfully closes user accounts and keeps their remaining balances.
A Texas resident has filed a class action lawsuit against DraftKings, alleging the online sports betting company wrongfully closes user accounts and keeps their remaining balances.
Filed in Massachusetts federal court yesterday (23 December) the lawsuit claims DraftKings creates a “catch-22” situation by first closing user accounts for alleged violations of its terms of service, then refusing to allow users to withdraw their remaining funds because their accounts are closed.
The complaint said: “Hiding behind unspecified ‘compliance’ requirements, DraftKings then denies those individuals the opportunity to withdraw their balances, telling users they cannot withdraw the funds because their accounts are closed.
“This results in a catch-22 for affected users: Users cannot withdraw funds from their DraftKings account because DraftKings has decided the users do not have a DraftKings account.”
DraftKings lawsuit highlights ‘catch-22’ practices
Eric Avila of Houston, the lead plaintiff, says DraftKings closed his account in September 2024 with approximately $100 remaining in his balance.
The complaint said when Avila inquired about the closure, customer service representatives told him his account was terminated for violating the terms of use but said they were “unable to specify which rule was violated.”
The lawsuit alleges DraftKings frequently cites suspicion of users creating multiple accounts as justification for closures, even when users have not done so.
The company’s terms of service prohibit users from maintaining more than one account.
The lawsuit seeks to represent all DraftKings users who have had their accounts terminated and been denied access to their balances.
It alleges breach of contract, fraud, unjust enrichment, and violations of Texas consumer protection laws.
The lawsuit claims the company has retained “millions of dollars properly belonging to users” through this practice.
The plaintiff is seeking disgorgement of profits, restitution of withheld funds, punitive damages, and attorney fees. DraftKings has not yet responded to the lawsuit in court.
The company typically maintains account balances through a subsidiary called DK Player Reserve LLC, which is also named as a defendant in the case.