DraftKings has decided to settle a lawsuit against the online gambling company for a total of $100,000. The company was accused of mismanaging a tournament in 2019.
That tournament the Sports Betting National Championship was the first-ever three-day-long event for DraftKings. Just to play, bettors had to agree to a $10,000 buy-in to the event.
The winner of the event got $1 million, and an additional $1.5 million was spread around to the other top members of the leader board.
The event came crashing down on the third day. That's when some people couldn't access their money and place any bets on the final game of the event. That meant that they could not go up the leader board and missed out on their chances of winning. At least one player said he experienced the same problem on the second day of the event as well.
DraftKings placed much of the blame on its partner, Kambi. The lawsuit does not mean that anyone got rich.
One of the plaintiffs got $7,000 of his buy-in back. Nearly all other players got $150 each in DraftKings vouchers to bet on future events. The lawyers for the people who sued, however, were paid more than $66,000 – making them the big winners by far out of everyone involved.
If DraftKings ever runs an event similar to this one, it will have to have a lot more oversight over how the event is run. It's possible to survive one lawsuit but if others prop up in the future it could hurt the DraftKings brand image.
Tournaments like this are becoming more and more popular in America. As their popularity grows the companies are going to have to have better software to keep track of them. In this case, having software that did not allow people to make bets quickly enough clearly cost DraftKings a lot of money.
In the future, we expect that online betting companies will test out their games in-house before releasing them to the public to make sure incidents like this do not happen again.