DraftKings is facing a proposed nationwide class action accusing the company of running an illegal online sports betting business through its DraftKings Predictions platform in states where traditional online sportsbooks are still prohibited.
The complaint, filed July 28 in the U.S. District Court for the District of Massachusetts and reviewed by ReadWrite, names DraftKings Inc. and subsidiary GUS III LLC, which operates as DraftKings Predictions. Plaintiffs argue the company presented sports wagers as federally regulated event contracts to sidestep state gambling laws while leading customers to believe the product was legally distinct from conventional sportsbooks.
California resident Michael Chan brought the lawsuit on behalf of himself and a proposed class of consumers who allegedly lost money using DraftKings Predictions. According to the complaint, Chan registered for the platform while in California and “was not informed by DraftKings that Predictions is an unlicensed sportsbook when he wagered and lost money on the app.”
The filing argues DraftKings relies on its established sportsbook brand, technology and customer base to market what plaintiffs describe as the functional equivalent of sports betting in states that have not approved online sportsbooks.
“DraftKings has found another way in: it deploys Predictions to evade those states’ gambling laws, regulations, and prohibitions, and sells consumers sports bets that are functionally identical to the wagers in its regulated sportsbook,” the complaint states.
Plaintiffs seek to represent consumers from Alabama, California, Florida, Georgia, Minnesota, New Mexico, South Carolina and Texas. The lawsuit says thousands of consumers may qualify, with alleged damages exceeding $5 million under the Class Action Fairness Act.
DraftKings Prediction strategy faces test with class action lawsuit
A major part of the complaint relies on statements attributed to DraftKings executives during earnings calls and investor presentations. It repeatedly references Chief Executive Officer Jason Robins, including his comment that “customers don’t really even understand the difference” between DraftKings Sportsbook and DraftKings Predictions. The filing also quotes Robins saying the products “serve the same customers in the same live moments and leverage shared underlying infrastructure.”
Plaintiffs contend those remarks support their claim that Predictions extends DraftKings’ sportsbook into markets where licensed online betting remains unavailable. The complaint also cites Robins’ statement that “Some of the biggest states in the country like California, Texas, Florida, we were not present in with [online sports betting], and we have Predictions there now.”
DraftKings launched the standalone DraftKings Predictions app across 38 states in late 2025 under Commodity Futures Trading Commission oversight, describing it as a platform for trading event contracts rather than placing sportsbook wagers. The company later announced plans to expand by launching a market-making business and, in May 2026, advanced its strategy after Railbird Exchange submitted sports event contract certifications to the CFTC, including templates resembling moneyline, point-spread and player performance markets.
The complaint says DraftKings has been unjustly enriched through an unlicensed sportsbook and, for California consumers, violated the state’s Unfair Competition Law. Plaintiffs seek restitution, disgorgement, attorneys’ fees, costs and recovery of alleged wagering losses. DraftKings had not responded to the allegations at the time the lawsuit was filed.
Featured image: DraftKings
DraftKings faces nationwide class action over Predictions platform legality dispute intensifies ReadWrite.
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