Class Action Complaint and Jury Demand
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Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 1 of 273 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS _________________________________________ ) In re: DAILY FANTASY SPORTS LITIGATION ) MDL No. 16-02677-GAO ) This Document Relates to: ) JURY TRIAL DEMANDED ) All Cases ) ) ) CONSOLIDATED CONSUMER CLASS ACTION COMPLAINT AND JURY DEMAND i Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 2 of 273 TABLE OF CONTENTS INTRODUCTION…………………………………………………………………………… 1 JURISDICTION AND VENUE……………………………………………………………. 10 PARTIES…………………………………………………………………………………… 11 A. Plaintiffs………………………………………………………………………… 11 1. Alabama Plaintiffs …………………………………………………. 11 2. Arizona Plaintiffs ………………………………………………….. 12 3. Arkansas Plaintiffs …………………………………………………. 13 4. California Plaintiffs …………………………………………………14 5. Colorado Plaintiffs ………………………………………………… 18 6. Connecticut Plaintiffs ……………………………………………… 19 7. District of Columbia Plaintiffs …………………………………….. 21 8. Florida Plaintiffs……………………………………………………. 22 9. Georgia Plaintiffs…………………………………………………… 24 10. Illinois Plaintiffs …………………………………………………… 25 11. Kentucky Plaintiffs ………………………………………………… 27 12. Maryland Plaintiffs ………………………………………………… 29 13. Massachusetts Plaintiffs ……………………………………………. 30 14. Missouri Plaintiffs …………………………………………………..32 15. New Hampshire Plaintiffs…………………………………………... 33 16. New Jersey Plaintiffs ………………………………………………. 34 17. New Mexico Plaintiffs …………………………………………….. 36 18. New York Plaintiffs ……………………………………………….. 37 19. North Carolina Plaintiffs …………………………………………… 42 20. Ohio Plaintiffs ……………………………………………………… 44 21. Pennsylvania Plaintiffs …………………………………………….. 45 22. South Carolina Plaintiffs …………………………………………… 46 23. Tennessee Plaintiffs ……………………………………………….. 47 24. Texas Plaintiffs …………………………………………………….. 48 25. Utah Plaintiffs ……………………………………………………… 51 26. Wisconsin Plaintiffs ……………………………………………….. 52 27. Family Member Plaintiffs ………………………………………….. 53 B. DFS Defendants ………………………………………………………………... 57 1. DraftKings………………………………………………………….. 57 2. FanDuel…………………………………………………………….. 57 3. FanDuel Deposits, LLC…………………………………………….. 57 ii Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 3 of 273 C. Bank Defendants………………………………………………….…………….. 57 1. JP Morgan Chase & Company………………………………………57 2. Capital One Financial Corporation………………………………… .57 D. Facilitator Defendants …………………………………………………………. 58 1. VISA, INC. ………………………………………………………… 58 2. MasterCard Incorporated …………………………………………... 58 3. American Express Credit Corporation……………………………… 58 E. Payment Processor Defendants ………………………………………………… 59 1. AYSAFECARD.COM USA, Inc. …………………………………. 59 2. VANTIV, Inc. ……………………………………………………… 59 F. Non-Defendant Enterprise Investors …………………………………………... 59 1. National Basketball Association …………………………………… 59 2. Turner Sports ………………………………………………………. 60 3. Bullpen Capital ……………………………………………………. .60 4. Comcast Ventures, LLC, …………………………………………... 60 5. Google Capital, …………………………………………………….. 61 6. HDS Capital, LLC …………………………………………………. 61 7. Kohlberg Kravis Roberts LP ………………………………………. 61 8. NBC Sports Ventures LLC ………………………………………… 62 9. PENTECH Ventures LLP ………………………………………….. 62 10. Pitcon Capital LLP ………………………………………………… 62 11. LEK Consulting LLC ……………………………………………… 62 12. Scottish Investment Bank ………………………………………….. 63 13. Shamrock Capital Advisors LLC …………………………………... 63 14. Time Warner, Inc. …………………………………………………...64 15. Tusk Ventures ……………………………………………………… 64 16. 21st Century Fox …………………………………………………….64 17. Atlas Ventures Associates III, Inc. ………………………………….64 18. BDS Capital Management LLC …………………………………….65 19. MAIL.RU GROUP ………………………………………………… 65 20. Fox Sports Interactive Media LLC ………………………………… 65 21. GGV Capital ……………………………………………………….. 66 22. Jason Robins ……………………………………………………….. 66 23. Hub Angels Management LLC …………………………………….. 66 24. Jordan Mendell …………………………………………………….. 67 25. Kraft Group ………………………………………………………… 67 26. Legends Hospitality LLC …………………………………………..67 iii Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 4 of 273 27. MSG Sports & Entertainment LLC ………………………………... 67 28. Major League Baseball Ventures …………………………………... 68 29. Major League Soccer LLC ………………………………………… 68 30. M7 Tech Partners LLC …………………………………………….. 68 31. NHL Enterprises, Inc. ……………………………………………… 68 32. Redpoint Ventures LLC ……………………………………………. 69 33. The Raine Group LLC ……………………………………………... 69 34. Wellington Management Company LLP …………………………... 69 COMMON FACTUAL ALLEGATIONS………………………………………………….. 70 I. Daily Fantasy Sports ……………………………………………………….. 70 II. Representations Made By DraftKings and FanDuel……………………….. 70 A. DraftKings and FanDuel Each Engaged In Omnipresent National Advertising Campaigns Reaching Millions of Consumers With The Same Messages……………………………………………………………. 71 B. DraftKings and FanDuel Advertised Their Products As 100% Legal………………………………………………………77 C. DraftKings and FanDuel Advertised Their Products As Easy, Simple Games of Skill That Anyone Could Win…………………………… 81 D. DraftKings and FanDuel Advertised Bonus Money When Plaintiffs And Consumers Made Deposits…………………………………………..95 E. The Reason DraftKings and FanDuel Made Material Misrepresentations and Omissions Is That They Had To Grow Their User Bases And Could Not Do So With The Truth About Their Products …………………118 III. DraftKings’ and FanDuel’s Representations Were False; DraftKings and FanDuel Knew These Representations Were False, And DraftKings and FanDuel Omitted Material Information From Plaintiffs and Consumers………………………125 A. Multiple States Have Determined DraftKings and FanDuel B. Are Not 100% Legal…………………………………………………128 C. DraftKings and FanDuel Helped Create An Unfair Playing Field, A Rigged Game, One That Was Not Simple and Easy To Win, And One In Which Only Few Players Won……………………………………………… .......................... 128 D. DraftKings and FanDuel Acted In Concert To Allow Their Employees To iv Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 5 of 273 Use Inside Information To Gain Unfair Advantage Over Plaintiffs and Consumers ………………………………………………………... 147 E. DraftKings’ and FanDuel’s Bonus Offer Was A Scam…………… 159 F. The Arbitration Provisions in DraftKings’ and FanDuel’s “Terms of Use” Are Invalid, Unenforceable and Unconscionable……………………………………………….. 161 IV. Family Members of DFS Players Were Harmed By Financial Losses…… 173 CLASS ACTION ALLEGATIONS………………………………………………………. 175 CAUSES OF ACTION……………………………………………………………………. 192 COUNT I: ..................................................................................................................... Violation of the New York Deceptive Acts and Practices Law……………192 COUNT II: Violation of the New York False Advertising Law………………………..194 COUNT III: Violation of the New York General Obligations Law…………………….. 195 COUNT IV: Violations of the Massachusetts Consumer Protection Act……………..... 196 COUNT V: Unfair/Deceptive Practices in Violation of State Consumer Protection Statutes………..……………………………………. 198 COUNT: VI: Deceptive Practices in Violation of State Consumer Protection Statutes………………………………………………………… 203 COUNT VII: Unconscionable Practices in Violation of State Consumer Protection Statutes... …………………………………………... 208 v Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 6 of 273 COUNT VIII: Violation of State Consumer Protection Statutes by Means of Violation of FTC Regulation Regarding Advertising “Free” Offers………………………… 213 COUNT IX: Negligent Misrepresentation……………………………………………… 214 COUNT X: Negligence …………………………….………………………………….. 216 COUNT XI: Fraud and Misrepresentation ……………………………………………... 217 COUNT XII: Unjust Enrichment ………………………………………………………... 219 COUNT XIII: Unjust Enrichment………………………………………………………… 223 COUNT XIV: Civil Conspiracy…………………………………………………………... 223 COUNT XV: Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing……………………………………………………………………. 224 COUNT XVI: Declaratory Relief Regarding DraftKings’ and FanDuel’s So Called “Terms Of Use”….………………………………….………………………………….226 COUNT XVII: Violation of Official Code of Georgia Annotated § 13-8-3………….…….229 vi Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 7 of 273 COUNT XVIII: Violation of Kentucky Revised Statutes § 528.010………………………..231 COUNT XIX: Violation of Tennessee Code Annotated § 29-19-104 & 5……………….. 235 COUNT XX: Violation of New Mexico Statutes Annotated 1978, §§ 30-19-2………….236 COUNT XXI: Suit By Person Other Than Loser For Recovery Of Losses South Carolina Code Ann. § 32-1-20………………………………………239 COUNT XXII: Violations of RICO, 18 U.S.C. §1962(c) ………………………………….241 COUNT XXIII: Violations of RICO, 18 U.S.C. §1962(d)…………………………………. 257 COUNT XXIV: Violation of Truth-In-Lending Consumer Contract, Warranty and Notice Act [TCCWNA], N.J.S.A. 56:12-14 ……………………………… 260 PRAYER FOR RELIEF…………………………………………………………………... 262 DEMAND FOR JURY TRIAL…………………………………………………………… 263 vii Case 1:16-md-02677-GAO Document 227 Filed 06/30/16 Page 8 of 273 INTRODUCTION 1. Defendants DraftKings, Inc. (“DraftKings”), and FanDuel, LLC, (“FanDuel”) (together “DFS Defendants”) engaged in sustained, ubiquitous, uniform, and multi-platform national advertising campaigns to mislead millions of American consumers about their products. DraftKings and FanDuel advertised their daily fantasy sports (“DFS”) products as 100% legal, easy, and games of skill that anyone could win. Further, the DFS Defendants advertised that they would give away free bonus money to match anyone’s initial deposit. As it turned out, none of those representations were true, and DraftKings and FanDuel knew these representations were not true. DraftKings and FanDuel also