Less than a week after the inaugural DraftKings Sports Betting National Championship ended under a cloud of controversy, pro poker player Christopher Leong filed the first lawsuit against the daily fantasy sports (DFS) company.

The suit – filed by gaming industry attorney Mac VerStandig and William Pillsbury – raises objections to DraftKings’ operation of the sports betting competition, which sparked an uproar based on widespread player complaints regarding how the endgame was handled.

$10,000 Entry Fee for Sports Betting National Championship

The DraftKings Sports Betting National Championship – offered in New Jersey via the company’s land-based and online sportsbook – cost $10,000 to enter and guaranteed a total prize pool of $2.5 million. Local poker dealer Randy Lee was the eventual champion, earning $1 million for his efforts, but his triumph was quickly obscured by objections from several challengers.

Professional sports bettor and third-place ($330,000) finisher Rufus Peabody, along with several other participants, cried foul when their wagers weren’t processed quickly enough to allow for one final bet.

Leong wasn’t among the top-24 players to make the money, but he did manage to beat Peabody to court with his filing, which offers the following complaints against DraftKings:

“Plaintiff asserts that the Defendant’s negligent, arbitrary, and capricious operation of the SBNC, while continually marketing to a national and large audience of participants, was, among other things, an unconscionable commercial practice that denied Plaintiff and the Class of the fundamental benefit underlying the opportunity to participate in the SBNC.

Defendant’s conduct has rendered the initial entry fee entirely or substantially worthless.”

Leong Cites DraftKings Exec’s Tweets on Betting Limits

In a class action civil complaint filed with the Superior Court of New Jersey’s Atlantic Division, Leong’s legal team names Resorts Digital Gaming – the digital arm of Resorts AC casino, which holds the online gaming licensee DraftKings Sportsbook operates under – as the defendant.

Alleging that DraftKings’ operation of the contest violated the New Jersey Consumer Fraud Act, Leong lists several objections, including Peabody’s allegation that bets placed via mobile means weren’t “graded” quickly enough to facilitate wagering in the contest’s final game:

“The Defendant’s arbitrary and capricious acceptance of some wagers, and rejection of other similar wagers;

Prompter grading of wagers for persons physically present in Jersey City;

(And) crediting some SBNC participants with winning funds from a given sporting contest upon which bets had been placed, before crediting other SBNC participants with winnings funds from the same contests on which bets had been placed.”

Leong also pointed to a tweet issued ahead of the January 11-13 contest by DraftKings senior product manager Jonathan Aguiar, who seemed to announce that wager size limits would not be applied:

“Limits are complicated to answer in 280 but they shouldn’t really come into play in major sports.

We don’t really have a market by market limit, it’s a function of market size, odds, time ‘til start, etc.”

As Leong’s attorneys framed their argument, Aguiar’s tweet doesn’t align with the reality contest participants faced while placing last-ditch wagers which were rejected:

“The Defendant’s advertisement, through its agent Mr. Aguiar, that betting limits in the SBNC ‘shouldn’t really come into play in major sports,’ coupled with the Defendant’s rejection of myriad wagers on major sports, on apparent account of the commensurate bet sizes, constitutes an unconscionable commercial practice, a deception, a false pretense, a false promise, and a misrepresentation in connection with the Defendant’s sale of merchandise, in contravention of (New Jersey law.)”

Peabody Declines to Join Leong Just Yet; DraftKings Stands Behind Rulebook

Despite being the first contest participant to voice their objections publicly, Peabody isn’t involved with Leong’s lawsuit at the moment.

In a tweet sent on January 17, Peabody responded to a query about Leong’s lawsuit by stating that he’s biding his time for now:

“There has been no resolution between me and DK at this point.

I’m still considering all my options, including but not limited to being a part of this.”

For its part DraftKings isn’t responding publicly to ongoing litigation, but the company did issue the following statement shortly after the Sports Betting National Championship controversy emerged:

“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.

We will learn from this experience and improve upon the rules and experience for future events.”

Jonathan Zaun

One of Gamble Online's first dedicated reporters, Jonathan has spent well over a decade reporting on the gaming industry. While breaking legal news is his main area of expertise, Jonathan is an avid blackjack player & strategist who follows professional poker closely.

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