DraftKings Faces Multi-State Lawsuit Over Alleged Violations of Gambling Regulations
DraftKings is currently embroiled in a legal battle spanning seven states, with a class-action lawsuit questioning whether its platform’s design aligns with state gambling laws. The case centers around allegations that DraftKings allows users to bypass mandated waiting periods by instantly increasing their betting limits, a practice critics say undermines measures meant to curb impulsive gambling.
The lawsuit was filed on December 30 in Michigan’s Eastern District by Michael Koester, who claims that DraftKings has violated consumer protection laws in Michigan, Colorado, Connecticut, Indiana, Iowa, Louisiana, and New York. The core issue is whether the platform’s ability to instantly raise betting caps contravenes regulations that require a waiting period before such adjustments can be made.
Koester’s legal team contends that these regulations are quite similar across the involved states. They argue that the laws are not just about regulating platform conduct but also establish the legal conditions under which bets can be accepted. Koester’s account, created in late 2021, saw him deposit over $25,000 over two years, during which he increased his self-imposed limits multiple times without any enforced delay. The complaint alleges DraftKings processed wagers and deposits during periods when, under the law, activity should have been restricted.
A key point of contention is Michigan’s regulation that players can only “reduce the severity” of their betting limits after a 24-hour notice. Koester interprets this to mean that increasing limits should also be subject to a waiting period, while DraftKings maintains that limits can be raised immediately once the previous restriction lapses. The lawsuit highlights that competitors like FanDuel and BetMGM enforce waiting periods of three days for such changes, and tribal casinos in Michigan also adhere to similar restrictions.
The legal dispute hinges on interpreting Michigan’s rules and legislative intent. Koester’s attorneys point to the state’s 2020 rulemaking process, during which regulators considered stricter delay requirements from other states, such as Indiana, and more permissive models like New Jersey’s. The lawsuit claims Michigan adopted the Indiana approach, which explicitly requires delays for increasing limits.
Prior to filing the suit, Koester raised concerns with DraftKings customer support and the Michigan Gaming Control Board. While the regulator launched an investigation, it ultimately decided against enforcement action. Koester argues that this inaction does not prevent private lawsuits and references a 2025 Michigan Supreme Court ruling that clarified state internet gaming laws do not restrict players to administrative remedies.
The broader implications of this case extend beyond Michigan, as DraftKings faces other legal challenges. In Iowa, a player is seeking $14 million in winnings after a golf tournament was affected by weather, and Baltimore has filed a suit against DraftKings and FanDuel for alleged consumer protection violations. The company has also come under scrutiny in Massachusetts, where regulators fined it $450,000 for accepting credit card wagers that violated state law, and in Connecticut, where it agreed to return over $3 million following regulatory findings of non-compliance related to bonus offers.
Additional legal issues in New Jersey involve allegations of inaccurate sports betting data reporting, resulting in a $100,000 fine. California has also become a battleground, with multiple class actions claiming that daily fantasy sports platforms like DraftKings operate as illegal sports wagering under state law, citing a legal opinion from the attorney general.
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The lawsuit’s focus on platform design rather than marketing practices underscores a shifting legal landscape. If Koester wins, it could set a precedent that invalidates millions of wagers and compels operators across multiple states to overhaul their limit-setting systems. A court ruling in this case might be decided without a full trial, based solely on statutory interpretation, and could influence industry standards around responsible gambling and the legality of wager acceptance.
This case signals a growing emphasis on the technical architecture of gambling platforms in legal disputes, highlighting that how operators implement features like betting limits can have profound regulatory implications. The outcome may redefine the boundaries of lawful sportsbook operations and reshape industry practices for responsible gaming safeguards. Draftkings lawsuit
