Will the Gamble Pay Off? Class Action Targets Billion Dollar Fantasy Sports Industry
The Daily Fantasy Sports industry has been under siege over the past several months as several states’ Attorneys General seek to have online fantasy sports contests classified as “illegal gambling” and banned under state law. The two industry giants – FanDuel and DraftKings – are at the forefront of this ongoing battle. The fight over legitimacy, however, may prove to be only the tip of the iceberg of FanDuel’s and DraftKings’ legal issues.
On January 27, 2016, Akeem Daniel, a former college football player for Northern Illinois University, filed two proposed class actions against FanDuel and DraftKings in Illinois federal court. Daniel alleges that FanDuel and DraftKings knowingly exploited as many as 2,000 or more collegiate athletes whose names they “market and sell as ‘fantasy’ athletes available for sale to members of the general public.” According to Daniel, FanDuel and DraftKings “routinely use the names and likenesses of these college players to promote [their] commercial enterprise, amassing millions of dollars in revenue from entry fees, without the athletes’ authorization.” The complaints characterize FanDuel’s and DraftKings’ daily fantasy contests as a “virtual stock market” that rises and falls “in direct proportion with the [athletes]’ endeavors.” Both lawsuits assert claims for, among other things, violation of the Lanham Act and seek both treble damages under the statute, as well as an injunction prohibiting FanDuel and DraftKings from the future use of Daniel’s and the Class Member’s names and likenesses.
It is unclear whether other collegiate athletes will join Daniel or whether professional athletes will follow Daniel’s lead and file similar lawsuits. What is clear is that at least one athlete believes that these companies are improperly profiting from his athletic prowess. Considering both companies are valued at or close to $1 billion, expect more of these lawsuits to surface in the near future.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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