Accusations of bypassing cooling-off period

DraftKings faces multi-state lawsuit over alleged breach of betting limit rules | Yogonet International

Accused of bypassing cooling-off period

DraftKings faces multi-state lawsuit over alleged breach of betting limit rules

DraftKings is the target of a federal class-action lawsuit filed in Michigan, accusing the sports betting operator of allowing users to instantly increase their betting limits in violation of responsible gambling laws in seven U.S. states.

Details of the Michigan lawsuit

Filed on December 30 in the U.S. District Court for the Eastern District of Michigan, the lawsuit centers on plaintiff Michael Koester, a Michigan resident who alleges that DraftKings permitted him to raise his deposit and wagering limits without observing the 24-hour “cooling-off” period required by law. The suit claims this failure led to gambling losses exceeding $25,000 between 2022 and 2023.

According to the complaint, Koester initially set spending limits on his DraftKings account in late 2021. Over the next two years, he increased those limits multiple times and deposited thousands of dollars, with the platform allowing those changes to take effect immediately.

He argues that, had DraftKings followed state regulations, the delay would have curbed his impulsive betting behavior and prevented significant financial harm.

Alleged violations across seven states

The lawsuit asserts that DraftKings’ conduct violated gambling regulations not only in Michigan, but also in Colorado, Connecticut, Indiana, Iowa, Louisiana, and New York. These states require a 24-hour waiting period before users can reduce the severity of self-imposed restrictions, a requirement that Koester says includes raising deposit or betting caps.

DraftKings’ interpretation of responsible gambling rules

DraftKings’ interpretation of the rule appears to differ. Court documents indicate that the company permits users to raise limits as soon as a prior restriction period expires, enabling immediate increases without any cooling-off period. The complaint disputes this reading, arguing that the intent of the rule is to delay increases regardless of the expiration of previous limits.

Comparison with other operators

The filing contrasts DraftKings’ approach with other major operators. It presents screenshots showing that platforms such as FanDuel and BetMGM enforce three-day delays before allowing limit increases. Similarly, Michigan tribal casinos, including Soaring Eagle, also impose waiting periods.

Regulatory background in Michigan

Koester’s attorneys refer to Michigan’s 2020 rulemaking process, where regulators evaluated different approaches. While New Jersey allowed immediate changes after limits expired, Indiana enforced delays before increases could take effect. Michigan adopted the Indiana model, which the complaint argues indicates a clear regulatory intent to include cooling-off periods for any reduction in restriction severity.

Regulator response and legal basis

Before initiating legal action, Koester contacted DraftKings’ customer service and the Michigan Gaming Control Board. Although the regulator opened an investigation, it declined to take enforcement action.

The lawsuit states that this decision does not limit Koester’s right to pursue civil litigation and cites a 2025 Michigan Supreme Court ruling in Davis v. BetMGM, which confirmed that private lawsuits are permitted under the state’s internet gambling laws.

Additional legal claims and class-action scope

Beyond regulatory violations, the complaint alleges that DraftKings’ acceptance of wagers during these periods amounts to statutory conversion and illegal electronic fund transfers under both state and federal law. It seeks class-action status on behalf of users across the seven states who may have been similarly affected, potentially numbering in the hundreds.

The plaintiff has filed a motion for summary judgment, asserting that the material facts are undisputed and that the case depends solely on statutory interpretation. A ruling in Koester’s favor could impose liability on DraftKings without the need for a full trial or class certification process.

Growing legal challenges for DraftKings

This case adds to DraftKings’ growing legal challenges. In Iowa, the company is being sued for over $14 million in unpaid winnings from a disputed golf tournament outcome. In Massachusetts, the Gaming Commission fined DraftKings $450,000 for accepting credit card wagers in violation of state law. The company has also faced regulatory actions in Connecticut and New Jersey over marketing practices and data reporting.