Monday, November 2, 2015 - Litigation related to the daily fantasy sports industry has reached the federal level, with a motion to transfer the lawsuits into multidistrict litigation filed before the Judicial Panel on Multidistrict Litigation in mid-October. The lawsuits claim that the daily fantasy sports sites are in fact illegal sports gambling hosts and not the proprietor of legal "skill games" as the two defendants Fanduel and DraftKings claim. Both sites have already been banned in numerous state around the country, including New York, Louisiana and Nevada, and have faced increasing suspicion in the legal community regarding their sizable existence in the sports world despite the offerings of services that some claim nearly mirror sports betting practices.
Daily fantasy sports sites such as Draftkings.com and Fanduel.com have been operating around the nation due to a clause that separates them from gambling establishments by claiming their games are contests of skill instead of luck. The daily fantasy games usually take place with a participant selected a team of sports players from a particular league and generating points based on that player‘s performance. The competitor makes a team of players, and with that team competes against other users of the website.
To compete in the daily fantasy games, users deposit money on the site and use that credit to enter paid contests that cover a number of major sports, including baseball, football, basketball and hockey. The companies that run the daily fantasy leagues then take a percentage of the money paid in, and based on the performance of the players selected pays out the rest to the best competitors that entered teams into the respective contests.
Sports gambling is illegal in most states in the U.S., and the lawsuits claim that although daily fantasy companies claim that their contests are games of skill, there is not enough evidence to separate the game s from actual sports gambling. This is part of the reason the title of the litigation is "Daily Fantasy Sports Deceptive Trade Practices Litigation." While there are other daily sports companies in operation, the two largest in the country, Fanduel and DraftKings, are the only two that the lawsuits are taking aim at for multidistrict litigation.
A total of 11 lawsuits are included in the motion to transfer, which are seeking consolidation in the Southern District of New York. The northeast venue is in demand in large part because of the headquarters of the two daily fantasy companies. Fanduel is based in New York City, while it‘s main competitor DraftKings is located in Boston. 7 of the 11 lawsuits filed that are included in the motion to transfer are also in the Southern District of New York. The plaintiffs have named U.S. District Judge George B. Daniels as their preferred judge to oversee the MDL proceedings.
The motion to transfer will not be heard at the JPML Hearing Session that is taking place on December 3. The next two possibilities for the motion to transfer to be heard before the JPML will be january 28 in Ft. Myers, Florida and March 31 in Santa Barbara, California.