Baltimore has filed a lawsuit against DraftKings and FanDuel, marking the first time a U.S. city has directly sued gambling operators for their business practices.
The complaint, brought forth by Baltimore's legal department, accuses these companies of extensively violating the city's Consumer Protection Ordinance (CPO).
Among other complaints, it also accuses the sites of using deceptive and abusive tactics to exploit users, particularly those suffering from gambling disorders.
According to the 106-page complaint, DraftKings and FanDuel have employed manipulative promotional strategies and complex algorithms to maximize user engagement and profits at the expense of public health.
Baltimore argues that the business models of both companies are specifically designed to target individuals prone to gambling addiction.
The lawsuit accuses these companies of adopting aggressive enticements, such as "bonus bets" that must be used within a short timeframe.
This mirrors arguments that have led to lawsuits in New Jersey and other states.
It also accuses operators of using push notifications, personalized promotions, and VIP programs to retain registered users.
The lawsuit highlights that Maryland's online sports betting industry, legalized in 2021, has quickly grown into a multi-billion dollar industry.
In fiscal year 2024 alone, Maryland residents wagered over $5 billion, with bets in the first half of fiscal year 2025 already reaching $3.7 billion.
Baltimore, being the most populous city in the state, accounts for a significant portion of this activity. DraftKings and FanDuel dominate the market, collectively holding over 90% of Maryland's online betting volume by early 2025.
The city accuses these companies of not only providing gambling services but also actively designing their platforms to foster compulsive gambling behaviors.
Promotional Plans Under Scrutiny
According to the lawsuit, the promotional strategies of DraftKings and FanDuel are alleged to mislead users into underestimating the financial risks involved.
For example, a common offer is that new users can receive a $150 "reward bet" after betting $5, but the fine print requires the user to make six separate $25 bets within a week, a structure the city claims is designed to quickly solidify betting behavior.
Maryland has 11 licensed sports betting operators offering promotions and bonuses, but only DraftKings and FanDuel are named in the lawsuit.
Baltimore's complaint also emphasizes the use of behavioral data and predictive models, claiming these are used to identify users who may develop or already have gambling addictions.
According to the city, these users are targeted for personalized promotions and ongoing engagement strategies, such as customized push notifications and loyalty programs.
The metrics tracked by the platform include betting frequency, bet size, time spent on the app, and "chasing losses" behavior—factors known to be closely associated with gambling harm.
The VIP programs operated by the two companies are also under special scrutiny.
These programs include DraftKings' "Dynasty Rewards" and FanDuel's "Players Club," offering escalating rewards and personalized attention from account managers, with rewards directly linked to betting volume.
The lawsuit describes cases where VIP managers are alleged to encourage users to continue gambling, even when users express concerns about their behavior.
This includes instances where users disclosed financial difficulties or intentions to quit and were then offered cash incentives.
Baltimore claims that this practice is particularly harmful to young people, citing local health agency data showing an increasing number of college-aged males calling the problem gambling hotline.
Operators Fail to Achieve Responsible Gambling Goals
The complaint draws attention to the city's experiences with gambling-related public health crises and cites findings from the Maryland Center of Excellence on Problem Gambling.
According to the lawsuit, the organization's data shows that over 20% of online sports bettors exhibit signs of disordered gambling—nearly double the rate of traditional gamblers.
The lawsuit further accuses these companies of ignoring Maryland's public health warnings and regulations that prohibit sports betting behaviors considered harmful to the public or industry integrity.
Notably, it contrasts these companies' operations in the U.S. with their practices in the UK.
There, similar platforms (some operated by the same parent companies) have voluntarily implemented stricter responsible gambling safeguards, such as checks for financial vulnerability and age-related protections.
Baltimore seeks civil penalties for each unfair or deceptive act under the city's consumer protection laws in its relief requests.
It also seeks injunctive relief to stop what it considers targeted and exploitative practices towards individuals with gambling disorders and seeks to reform the platforms' promotional and user retention practices.
The lawsuit explicitly requests the court to implement restrictions similar to those already adopted in jurisdictions like the UK, where gambling operators have reduced VIP rewards and introduced mandatory safety checks.
Baltimore is represented by its legal department, led by City Solicitor Ebony Thompson, with private attorneys from DiCello Levitt LLP.
The document includes a demand for a jury trial and lists numerous examples and data points to support its allegations of systemic improper conduct by DraftKings and FanDuel.
