Will the Gamble Pay Off? Class Action Targets Billion Dollar Fantasy Sports Industry

The Daily Fantasy Sports industry has been under siege over the past several months as several states’ Attorneys General seek to have online fantasy sports contests classified as “illegal gambling” and banned under state law. The two industry giants – FanDuel and DraftKings – are at the forefront of this ongoing battle. The fight over legitimacy, however, may prove to be only the tip of the iceberg of FanDuel’s and DraftKings’ legal issues.

On January 27, 2016, Akeem Daniel, a former college football player for Northern Illinois University, filed two proposed class actions against FanDuel and DraftKings in Illinois federal court. Daniel alleges that FanDuel and DraftKings knowingly exploited as many as 2,000 or more collegiate athletes whose names they “market and sell as ‘fantasy’ athletes available for sale to members of the general public.” According to Daniel, FanDuel and DraftKings “routinely use the names and likenesses of these college players to promote [their] commercial enterprise, amassing millions of dollars in revenue from entry fees, without the athletes’ authorization.” The complaints characterize FanDuel’s and DraftKings’ daily fantasy contests as a “virtual stock market” that rises and falls “in direct proportion with the [athletes]’ endeavors.” Both lawsuits assert claims for, among other things, violation of the Lanham Act and seek both treble damages under the statute, as well as an injunction prohibiting FanDuel and DraftKings from the future use of Daniel’s and the Class Member’s names and likenesses.

It is unclear whether other collegiate athletes will join Daniel or whether professional athletes will follow Daniel’s lead and file similar lawsuits. What is clear is that at least one athlete believes that these companies are improperly profiting from his athletic prowess. Considering both companies are valued at or close to $1 billion, expect more of these lawsuits to surface in the near future.