reasonable consumers read promotion terms on a gambling app, court rules

De Leon v. DraftKings, Inc., 2025 WL 3551627, No. 25cv644 (DLC) (S.D.N.Y. Dec. 11, 2025)

The court rejects false advertising claims against gambling site DraftKings. “Three of the plaintiffs became addicted to online gambling and have suffered both financial and emotional harm from using the defendants’ app to gamble on sports.” Nonetheless, they didn’t identify deception that had caused this.

The plaintiffs challenged advertisements of “No Sweat” bets and a $1,000 deposit bonus, and “the use of VIP Hosts to urge users of the app to continue gambling even when they have lost sizeable sums of money.” Ads for the “No Sweat” promotion allegedly imply that users may place bets of up to $1,000 without the risk of losing that money, but a consumer who loses a bet cannot simply cash out a refund but must place a “Bonus Bet” in the refund amount. That “Bonus Bet” has no cash value, is non-transferrable, and has an expiration date. They can only win by placing a successful, in-the-money Bonus Bet, which might or might not happen. The key language:  “Get a bonus bet back in the amount of your original wager if your first bet doesn’t hit.” There’s an “information or i symbol” with a hyperlink to those terms, allegedly in “impractically small font size.”

Another TV ad announced that new customers can receive “a 100% deposit match up to $1,000”. Plaintiffs alleged that this is misleading because

DraftKings will only match 20% of a user’s deposit. To obtain the full benefit of the promotion, a user must deposit $5,000 and place bets with minimum odds of -300, risking at least $25,000, all within 90 days. Moreover, the bonus is not rewarded as withdrawable cash but rather as “DK Dollars”, which can only be used for further gambling.

The ad also said “Bonus funds are earned as you play,” and allowed users to select an amount.  After collecting payment information, the app described the terms of the offer in more detail:

A user’s first deposit (min. $5) qualifies the user to receive up to $1,000 in bonus funds in the form of site credits that can only be used on DraftKings. Bonus amount is equal to 20% of that deposit amount, not to exceed $1,000 (the user must deposit $5,000 to be eligible to receive the maximum bonus amount of $1,000). Bonus funds will be awarded to the user according to the following play-through requirement: for every $25 played on DraftKings in DFS/Sportsbook/Casino, the user will receive $1 in bonus funds released into their player account (e.g., a $5,000 deposit requires a user to play through a cumulative total of $25,000 in daily fantasy contests, sportsbook (-300 odds or longer), casino products, or any combination thereof to receive the maximum possible bonus amount of $1,000). The play-through requirement must be met 90 days from the date of first deposit to receive maximum bonus. 

[FWIW, I think most regulators would think that the initial offer needs to disclose that you don’t get withdrawable money but just site credit. That’s a really material qualification!]

As for the VIP Hosts, one plaintiff’s VIP Host contacted him after he had suffered a significant loss on the DraftKings platform and offered him a 100% deposit match of up to $500, contingent on the plaintiff making a new deposit that same day. “After the plaintiff informed his VIP Host that he was behind on bills, the VIP Host sent him another text about a new deposit promotion.” Another one reported that, on days of losses, the plaintiff’s VIP Host would deposit more credits and offers into his account. “When the plaintiff set temporary limits on his betting, the VIP Host promised to send him new promotions and credits once the limits expired.” [This seems unfair, even if not deceptive: again, regulators could intervene here without the limits on individual plaintiffs.]

DraftKings allegedly only asks yes/no questions such as “are you depositing expendable income that you can afford to possibly lose?” “When one of the plaintiffs lost over $100,000 in a single day, which was nearly five times what he earned at work in a year, DraftKings did not cut him off from gambling on its site or connect him with addiction resources.”

First, the court reasoned, the allegations that “All of the advertisements these Plaintiffs saw were materially similar” were insufficient to state a plausible claim of misleadingness. [I would think “contained the same deceptive promotion” should suffice.]

But also, there was no identified misleadingness. “Accurate and complete terms of each promotion were fully disclosed to users of the app.” While a reasonable consumer doesn’t have to consult the nutrition label on the side of a snack box to check information about product ingredients that is presented in large bold font on the front of the box, the court concluded that apps are different:

The plaintiffs do not assert that any information contained on the app was misleading. The terms of the promotions are readily available on the app and are presented to the user before and during the purchasing process. They are accessed through the very same pages that the consumer uses to place the promoted bet. A reasonable consumer of an online platform would be expected to look at the terms of promotion, which are readily accessible, before accessing the promotion.

And the court concludes, puzzlingly to me, that font size doesn’t matter on an app: “The FAC does not allege that the promotional terms were in unusually small font for a phone app or that the size of the font could not be expanded through operation of the phone and app.” My eyes don’t get better when I’m looking at an app! And a user who’s encouraged by design not to read tiny print still doesn’t get the material qualifications disclosed in the tiny print.

Unlike the FTC, the court also thinks the “(i)” symbol with a hyperlink was enough to put consumers on notice (the FTC’s position is that a symbol that doesn’t tell you what it’s about will not give consumers enough reason to click). And the full disclosure of the terms for the $1,000 Bonus was made “on the very page of the app where the user made that selection. A reasonable consumer acting reasonably under the circumstances would have read the terms.”

Unjust enrichment and product design liability claims also failed.

As for the VIP Host program, there weren’t plausible allegations that such statements or conduct were directed to consumers at large. “VIP Hosts engage in personalized and targeted outreach to unique consumers to encourage them to gamble.” The complaint alleged that VIP Hosts are trained to cultivate trust with individual users and to use the individual user’s data “to give them outreach and attention that feels personalized and fortuitous.” “In sum, the FAC describes personalized offers sent in response to an individual’s situation. It does not describe communications that were deceptive or misleading and that were directed to consumers at large or similarly situated consumers.” Comment: this language is very promising for entities seeking to avoid liability for whatever their AI comes up with!

Even though the complaint alleged that VIP Hosts’ solicitations “were substantially uniform in content, presentation, and impact upon consumers at large,” that was too conclusory.

Gross negligence and fiduciary duty claims also failed.