DraftKings Sued in Seven States Over Alleged Betting Limit Violations

DraftKings is facing a multi-state class-action lawsuit challenging whether its platform design complies with state gambling law. A Michigan-based plaintiff alleges that the platform allows users to instantly raise wagering limits, thereby bypassing day-long cooling-off periods designed to curb impulsive betting.

Updated on 9 January 2026

What Koester Is Alleging

Michael Koester filed the federal complaint on December 30 in Michigan’s Eastern District. He claims DraftKings violated player protection rules in Michigan and six other states: Colorado, Connecticut, Indiana, Iowa, Louisiana, and New York.

The lawsuit seeks to represent all DraftKings users in those states who were allowed to increase self-imposed betting limits without the required waiting period, potentially numbering in the hundreds.

Court records show that Koester opened his DraftKings account in late 2021. He set initial spending limits on December 31 that year. Over the next two years, he deposited more than $25,000 and repeatedly increased his self-imposed limits without any enforced delay between request and activation.

The complaint alleges that DraftKings accepted those deposits and wagers during periods when its platform was legally required to block them.

Koester’s legal team argues that the seven states use largely uniform regulatory language governing player limits. His motion for summary judgment argues that each jurisdiction has adopted consumer protection frameworks that require waiting periods before users can raise their betting caps.

Those statutes, the lawsuit argues, do not merely regulate platform conduct — they define when bets may legally be accepted at all.

The complaint links Koester’s increased gambling losses to the immediate limit changes. It argues that the financial harm would have been avoided if DraftKings had enforced a mandatory waiting period.

It also advances a more aggressive theory: that DraftKings’ acceptance of money during those periods constitutes statutory conversion and illegal electronic fund transfers under both state and federal law.

Competing Interpretations of Waiting Period Rules

The case turns on Michigan’s rule governing self-imposed betting restrictions. The regulation states that once they set limits, players may only “reduce the severity” of those restrictions after providing 24 hours’ notice. Koester argues that reducing severity includes loosening limits, meaning increases should also be subject to the waiting period.

DraftKings appears to interpret the rule differently. According to the motion, the platform enables users to raise limits immediately once a prior restriction period has expired. Under that approach, a player could set a daily cap, wait for it to lapse, then request and receive a higher limit without any cooling-off period.

The filing contrasts this with the practices of competitors. Screenshots show that FanDuel and BetMGM require three-day delays before limit increases take effect. Meanwhile, Michigan tribal casinos, such as Soaring Eagle, also enforce waiting periods.

Koester’s attorneys point to Michigan’s 2020 rulemaking process. Regulators evaluated Indiana’s stricter framework, which mandates delays for increases in limits. They also assessed New Jersey’s more permissive model that allows immediate changes after limits expire. Michigan adopted the Indiana approach, which the lawsuit argues reflects clear legislative intent.

Before filing suit, Koester raised the issue with DraftKings’ customer service team and the Michigan Gaming Control Board. The regulator opened an investigation but declined to take enforcement action.

Koester argues that the regulator’s inaction has no legal force and does not prevent private lawsuits. It asserts that Michigan law does not grant regulators exclusive authority over gambling law violations.

The complaint cites a 2025 Michigan Supreme Court ruling in Davis v. BetMGM as further support. It holds that the state’s internet gaming law does not bar traditional lawsuits and does not limit players to administrative remedies.

DraftKings’ Broader Legal Exposure

The lawsuit adds to mounting legal pressure on gambling operators. DraftKings is also defending an Iowa case in which a player is seeking $14 million in winnings voided after a weather-affected golf tournament.

Separately, the city of Baltimore sued DraftKings and FanDuel under municipal consumer protection laws. The operator has moved the case to federal court. Besides operator conduct challenges, DraftKings has faced regulatory and consumer disputes tied to its marketing and deposit practices.

In Massachusetts, the Gaming Commission fined DraftKings $450,000 for accepting credit card-funded wagers in violation of state law. The operator self-reported recurring compliance failures, but the regulator deemed it insufficient.

In Connecticut, DraftKings agreed to return over $3 million to thousands of consumers. That’s after regulators found that certain bonus offers did not comply with state gaming and advertising laws. Additionally, separate class actions alleging deceptive sign-up and “risk-free” bonus promotions have survived motions to dismiss.

In New Jersey, the New Jersey Division of Gaming Enforcement fined DraftKings $100,000 for inaccurately reporting sports betting data to the state. The regulator called the conduct “unacceptable” and cited “a weakness in the company’s business abilities.”

Additionally, California has emerged as a focal point for litigation surrounding daily fantasy sports. Multiple class actions allege that DFS platforms, including DraftKings, constitute unlicensed sports wagering under state law. Most of them rely on a legal opinion issued by the state’s attorney general, who declared DFS illegal under state law.

As DraftKings faces litigation over wagering limits, marketing disclosures, payment methods, and data integrity, the company is now confronting legal risk across nearly every major layer of its online betting operations.

Industry Implications

The case focuses on platform design rather than marketing. It questions whether DraftKings structured its limit-setting system in compliance with state consumer protection laws.

If Koester prevails, the ruling could retroactively render millions of wagers unlawful under state statutes. It would expose operators to refund claims, treble damages, and federal liability under electronic payment laws.

A ruling in Koester’s favor could require operators across multiple states to redesign their implementation of betting caps. The strategy is to resolve the legal question before class certification, meaning a single ruling on the statute could automatically determine liability for every affected DraftKings user.

Koester’s motion for summary judgment seeks a decision without trial. It argues that the underlying facts are not disputed and that the issue turns solely on statutory interpretation.

Because there’s only one plaintiff, the court can decide whether DraftKings violated the statutes without yet determining how many customers it would owe damages.

The outcome could shape DraftKings’ exposure across seven states and influence broader industry standards around betting limits and player protections. Beyond responsible gambling policy, the case threatens to redefine when sportsbooks can legally accept wagers.

The litigation reflects a growing focus on technical implementation, rather than promotional practices, in consumer protection cases involving gambling platforms.