DraftKings Settles Class Action Lawsuit Over 2019 Sports Betting National Championship

DraftKings has agreed to a $102,000 settlement to end a class-action lawsuit over its handling of the 2019 Sports Betting National Championship, a weekend-long tournament in New Jersey which left many contestants frustrated.

Bettor Christopher Leong filed the lawsuit soon after the January 2019 event on behalf of nearly 200 contestants in the tournament.

Sports Betting National Championship Ended in Controversy

Leong will take home $7,000 from the settlement. DraftKings will give $150 in credit to everyone else in the class-action. Meanwhile, Leong’s lawyers will take up to $66,000, earning the bulk of the settlement.

The 2019 Sports Betting National Championship was a $10,000 buy-in event that followed a format similar to handicapping tournaments in horse racing. Entrants placed $5,000 into the prize pool and kept $5,000 as a bankroll for the three-day tournament. The rules set minimum bet amounts for each day, including on NFL playoff action taking place that weekend. At the end of the tournament, all players kept their bankrolls, with the top finishers (based on ending bankroll size) also taking home prize money.

Leong and many other players alleged that DraftKings failed to run the tournament fairly, however. The lawsuit claimed that DraftKings settled some bets earlier than others, giving certain players an advantage over others. This proved decisive, as one of the leaders – Rufus Peabody – found himself unable to make a bet on the weekend’s final playoff game between the Philadelphia Eagles and New Orleans Saints.

With bets for the tournament closing at the start of that game, Peabody could only watch as Randy Lee won a $47,500 bet on the Eagles +8.5, vaulting Lee into first place and securing him the $1 million top prize.

DraftKings Offered Apology, Bettors Took Legal Action

At the time, DraftKings apologized for the situation, but didn’t indicate that it would change the standings.

“We recognize that in the rules, the scheduled end of betting coincided very closely to the finish of the Patriots-Chargers game,” DraftKings spokesperson James Chisholm said in a statement released after the end of the Sports Betting National Championship. “While we must follow our contest rules, we sincerely apologize for the experience several customers had where their bets were not graded in time to allow wagering on the Saints-Eagles game.”

Leong expressed surprise about the settlement.

“The last time I spoke to [lawyer Mac VerStandig] before three days ago was last summer, and he essentially told me that we’re screwed,” Leong told NJ Online Gambling. “Fast-forward to three days ago and he’s sending me a settlement to sign. [I have] no idea what happened in between all that, but I’m happy to receive anything given we thought we were already done for.”

Peabody wasn’t a member of the class-action suit. On Twitter, he noted that he had unsuccessfully pursued his own legal action, and had turned down an offer from DraftKings.

Unsuccessfully, I should add. Turned down an offer in the range of what Leong got.

— Rufus (@RufusPeabody) April 21, 2020

DraftKings planned to hold a Sports Betting Spring Championship in 2020 from March 19-22, the first weekend of March Madness. However, DraftKings canceled the event due to the COVID-19 pandemic, which brought the sports world – including the NCAA Basketball Tournament – to a halt.