Gamblers Increasingly Betting on Class Action Lawsuits Against Operators

The growth of the gambling industry is fueled by users losing money. While opponents of betting may claim that gambling companies exploit problem gamblers, operators claim that prohibition drives users to black market sites.

Regulators are torn between taxing the industry to reduce budget deficits while protecting consumers. In the midst of the industry, another phenomenon has emerged: law firms targeting losing gamblers, betting on payouts from the companies where they lost wagers.

Alternative forms of gambling provide new targets for class action lawsuits. Sweepstakes casinos have frequently been the subject of litigation in recent years, while prediction markets are now emerging as fair game.

A recent lawsuit filed in New York sought to recover losses on behalf of a group of “self-confessed gambling addicts.” One of the five gamblers named in the original lawsuit has since withdrawn, citing concerns that the filing misrepresented him as a problem gambler.

While wishing to remain anonymous, he told CasinoBeats he was just out to make a “quick buck.” He admitted to having previously joined class actions against Snapchat and Facebook, in which he received a payout.

Promised Payouts Attract Gamblers

The legal firm that brought the case, Kaplan Fox & Kilsheimer LLP, advertised the class action on Facebook. The ad urged users who had lost money at Kalshi to join the claim. When contacted for comment on the case, Kaplan Fox did not respond.

The filing claimed that the men who came forward had lost thousands of dollars, but the user who withdrew from the complaint informed CasinoBeats he had, in fact, made a profit while wagering on March Madness markets on the platform. He admitted losing some money overall from sports betting, but said it was a reasonable amount and has since stopped gambling.

The lawsuit highlighted Kalshi’s social media ads that also targeted individuals looking to make a “quick buck.” One TikTok ad shows a college-age girl behind the text, “POV: I was about to be unable to pay my rent, but I got two years of rent through Kalshi’s predictions. It’s amazing!”

Legal firms similarly promise gamblers financial gain if they join class actions. The practice is not limited to the US, either. A UK law firm promotes lawsuits against gambling companies with the tagline, “Get the jackpot outcome you deserve.”

Other websites list a series of different litigations users can join, including class actions against sweepstakes operators such as McLuck and WOW Vegas, DFS operators such as PrizePicks, and regulated sportsbooks, such as Caesars Sportsbook.

Risk Free, No Win, No Fee

In a similar vein to sportsbooks advertising “risk-free” bets if they sign up, attorneys offer “no-win, no-fee” deals for anyone who will join the lawsuits.

Several states have prohibited betting companies from using terms such as “risk-free” when users actually have to use their own funds to obtain bonuses, or when deposited cash is refunded only as free bet tokens. The regulation has led to class action lawsuits against operators, including two filed against DraftKings in Illinois and New Jersey.

Law firm Loevy and Loevy, which is leading the claims, notes, “Online sportsbooks and gaming apps light up the screen with ‘risk-free’ bets, sky-high bonus matches, and flashy odds boosts.”

The firm, which specializes in class actions against corporations, goes on to encourage gamblers to bet on winning a lawsuit, promising to “put winnings back where they belong, in the players’ pockets.” 

In addition to the lawsuits in Illinois and New Jersey, they have filed claims in Pennsylvania and New York.

Unlike sportsbooks, individuals signing up for lawsuits will not have to risk any of their own money. However, as the individual who signed up for the lawsuit against Kalshi discovered, joining litigation can lead to media exposure and the spread of personal details across the internet.

He said the experience had caused considerable stress, as people close to him discovered information he claimed was inaccurate. Judges will now rule on the case, as well as the growing list of lawsuits against prediction markets, adding to already existing filings targeting sweepstakes operators and sportsbooks.