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Targeting online gambling, Northeastern lawyer who fought Big Tobacco sues DraftKings

Law professor Richard Daynard warns of addiction problems for society.

The DraftKings logo on a smartphone.Tiffany Hagler-Geard/Bloomberg

Critics of online gambling have warned that its growing legalization, including in Massachusetts this year, could lead to an epidemic of addiction similar to prior waves of opioid and smoking abuse.

Now, a leader of the lawsuits against Big Tobacco has shifted his attention to online betting, targeting the offerings of local firm DraftKings. Northeastern law professor Richard Daynard, who helped uncover evidence in the 1980s that tobacco companies knew about the cancer risks of smoking, said he sees online gambling as another looming crisis for society.

“The problem we’re facing today and which we’ll be realizing over the next few years will be all the problems stemming from gambling addictions,” the 80-year-old academic said in an interview. “Of all addictions, gambling is the one that leads to the greatest number of suicide attempts. ... And there are other terrible things, less dramatic, that happen as a result of gambling addiction ― people losing jobs, stealing, and so on.”

On Friday, Daynard was part of a team that filed a class-action lawsuit against DraftKings in Middlesex Superior court alleging the Boston company’s “$1,000 bonus” promotion for new sign-ups was deceptive advertising inducing people to use “a known addictive product.”

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“I expect there will be other cases filed by us and by other people because, certainly, this DraftKings pitch is not the only misleading and deceptive pitch out there,” he said. “I’m sure in this state and other states, there are similarly misleading pitches.”

David Woods, an attorney at Hughes Hubbard & Reed LLP in Kansas City who has represented tobacco companies, said the case against DraftKings wasn’t precisely the same as the earlier litigation.

But, “the fact that it was brought by Richard Daynard and the Public Health Advocacy Institute, which has been very active in tobacco litigation, and that it raises the issue of addiction, could indicate a new wave of lawsuits similar to those brought against tobacco companies,” he said, pointing to recent cases against manufacturers of opioids, vaping products, and social media companies.

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Gambling addiction first got Daynard’s attention when Harry Levant, a gambling addiction counselor from Philadelphia, started studying the issue at Northeastern’s Public Health Advocacy Institute. A decade ago, while working as an attorney, Levant stole $2 million from his family and clients to fuel a compulsive gambling addiction. Since then, he’s counseled others and came to Northeastern about three years ago to work on policy solutions.

In Friday’s lawsuit against DraftKings, plaintiffs Shane Harris of New Bedford and Melissa Scanlon of Woburn said they opened accounts with the online betting company earlier this year, after Massachusetts legalized betting, expecting to benefit from a promotion touting a “$1,000 bonus” reward for signing up. (Online sports betting began in the state in March, with DraftKings leading the way among gambling-site operators.)

But buried in the fine print were terms requiring that customers make an initial deposit of $5,000 and place high-risk bets totaling $25,000 over 90 days in order to receive the full $1,000 of bonus money, the lawsuit stated. Harris and Scanlon did not understand they would have had to bet an average of $276 per day for three months to qualify, the lawsuit said.

Northeastern Professor Richard Daynard is the president of the Public Health Advocacy Institute, a nonprofit that files lawsuits to promote public health.Sean Proctor/Globe Staff

“DraftKings’ ‘$1,000 Bonus’ offer is both unfair and deceptive because ... plaintiffs and the members of the class were required to deposit and wager large sums of money in a manner designed by defendant to induce repeated exposure to a known addictive product,” the lawsuit stated.

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The offer was still available on DraftKings’ website on Friday, though it was worded differently: “New customers, get a play-through bonus up to $1000 in DK Dollars! Min. deposit of $5 Required.”

“DraftKings takes consumer protection and responsible gaming seriously,” the company said in an emailed statement. “DraftKings respectfully disagrees with the claims and allegations made by the Public Health Advocacy Institute. Regrettably, the Institute ignored our multiple attempts to engage in an in-person dialogue ... and, instead, filed suit. DraftKings intends to vigorously defend this lawsuit.”

The company had earlier responded in a nine-page letter to the plaintiffs before the lawsuit was filed, denying any wrongdoing. All of the terms of the offer were available to customers before opening an account, the company’s lawyers wrote.

“Far from being deceptive or unfair, those terms outlined the Promotion in straightforward language, provided examples of what the maximum promotional bonus would be in a particular situation,” the Nov. 17 letter said. “To the extent that Ms. Scanlon chose not to read these conditions (which appears unlikely because she successfully met the requirements), that does not show that DK has engaged in any deceptive trade practices.”

Shares of DraftKings, which have more than tripled so far this year, gained about 1 percent on Friday.

Deceptive advertising claims against big companies are common and can range from serious allegations to less substantial claims. In 2019, AT&T agreed to pay $60 million after it promoted “unlimited” mobile phone plans without disclosing it would slow download rates to a crawl after customers used certain amounts of data. This summer, a Taco Bell customer sued the fast food chain alleging its tacos had less filing than advertised.

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And DraftKings itself has been sued multiple times, agreeing to pay $8 million in 2021 to settle lawsuits that its ads contained misleading promotional offers for its daily fantasy betting games.

Updated with comments from DraftKings and David Woods.


Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.