After securing a landmark ruling against social media companies, gambling companies are in the crosshairs of legal firms. The “addictive design” argument that proved successful against Google and Meta is also being used against betting operators.
I spoke with the law firm White & Case to understand how susceptible companies are to those arguments and how they can defend against a wave of litigation.
In March, a judge in California awarded a woman $6 million in damages after she (and her legal team) successfully argued that social media platforms were addictive by design. Not long after the ruling, some of the lawyers who had worked on the case filed a lawsuit against DraftKings and FanDuel using many of the same arguments.
And more litigation could follow as legal firms seek to show that gambling companies are similarly using features that intentionally make customers addicted to their products. The social media ruling is already being used in class actions and mass torts, according to Markus Funk and Michael Andolina, partners at White & Case.
“We see the social media verdicts as providing the plaintiffs’ bar with what it, for better or worse, vies as its first meaningful ‘proof of concept,'” Funk and Andolina told me this week. “Those verdicts are already appearing in claimant-recruitment materials; plaintiffs’ firms believe this is the time to move from ‘ones and twos’ lawsuits to class action and mass tort actions.”
Gambling Companies Targeted By Legal Firms
One of the major factors driving lawsuits against gambling companies is undoubtedly an attempt to secure a payday like in the social media case.
“The objective reality is that plaintiffs’ counsel here, as in other litigation waves, seek to monetize the gap between public sympathy and existing legal doctrine,” Funk and Andolina added. “There is therefore undoubtedly a commercial incentive for plaintiffs’ firms to pursue these cases at scale, and the mass tort model is designed to generate volume.”
Law firms have increasingly recruited losing gamblers to participate in lawsuits both in the US and the UK. Alternative forms of gambling also provide new targets for class actions. Sweepstakes casinos have frequently been the subject of litigation in recent years, while prediction markets are now emerging as a new target.
“Moreover, the growth of litigation funding, AI-driven claimant recruitment, and the ability to aggregate claims across jurisdictions are among the structural factors potentially accelerating this litigation,” said Funk and Andolina.
The Addictive Design Argument
Jennifer Hoekstra, a partner at the law firm Aylstock, Witkin, Kreis & Overholtz, brought a lawsuit against FanDuel and DraftKings earlier this year, using some of the same addictive-design arguments that secured the ruling against social media companies.
“They develop and personalize themselves to the individual user,” Hoekstra told ESPN. “When you log in, the algorithm knows who you are and what you’re interested in. It pops up, so it becomes more addictive for that person.“
The use of AI could be scrutinized by plaintiffs’ counsel, say Funk and Andolina, including tools such as personalized offers, algorithmic engagement optimization, and predictive modeling of user behavior.
They said that other arguments likely to appear in litigation against gambling companies include:
- Addictive design/defective product. The central claim is that features like variable rewards, frictionless transactions, personalized offers, and push notifications are not neutral mechanics but are “engineered drivers of harm.” Plaintiffs argue these features are calibrated to override user autonomy and maximize spending.
- Negligence/failure to warn. Plaintiffs allege that platforms knew or should have known about the addictive potential of their designs and failed to implement adequate safeguards or warnings.
- Internal knowledge. A recurring strategy is to use discovery to surface internal documents that can be framed as showing the company was aware of and exploited user vulnerability.
- Analogies to social media. Plaintiffs draw direct parallels to the social media cases, arguing that algorithmically curated engagement and behavioral manipulation are functionally identical across platforms.
- Targeting of underage users. Plaintiffs will allege predatory marketing and direct recruitment of minors, suggesting platforms actively target teens using influencer-driven marketing on social media.
- Foreign regulatory standards as benchmarks. Plaintiffs sometimes cite UK affordability checks or European deposit caps to argue that U.S. platforms fall short of international standards of care.
Citing standards in other countries could be persuasive to some juries as evidence that the gambling industry itself recognizes certain design features as harmful. However, Funk and Andolina stress that “foreign regulatory regimes are policy choices that are, formally speaking, not binding on U.S. causation analysis.”
Gambling Companies’ Defense
Funk and Andolina outlined various strategies that gambling companies may use to refute these arguments, including:
- Regulatory compliance and preemption. Gambling operators function within comprehensive licensing and compliance frameworks. Courts have been reluctant to impose additional common-law duties where a statutory scheme already governs. This, from the gambling company perspective, is considered a strategic differentiator between them and social media defendants.
- No-duty doctrine. Courts have held that the duties owed by licensed operators are defined by statute, not by expansive negligence theories. This reality could present opportunities for early dismissal.
- Causation challenges. Defendants argue that gambling behavior is multifactorial, involving personal psychology, life circumstances, and individual risk tolerance, and that plaintiffs cannot establish that platform design, rather than autonomous individual choice, caused the harm.
- Assumption of risk. Adult gamblers have always known that they are engaging in an activity with well-known risks. Therefore, each wager, especially with real-time loss information and access to self-exclusion tools, constitutes evidence of voluntary, informed participation.
- Alternative design challenge. Plaintiffs will have to identify a feasible alternative design that preserves the essential nature of gambling while eliminating losses. This is a significant doctrinal hurdle for the plaintiff to overcome.
- Offensive litigation. Affirmative countermeasures may include defamation claims, tortious interference claims, and unfair competition actions targeting fabricated medical assertions in claimant-recruitment advertising.
The White and Case lawyers add that it is key to use Daubert challenges to exclude generalized behavioral theories. A Daubert challenge is a special legal motion filed before a trial begins. It asks the judge to disqualify an opposing party’s expert witness (like a psychologist, data scientist, or addiction specialist) on the grounds that their methods are unreliable, unscientific, or just plain guesswork.
Personal Responsibility is Not a Product Defect
The crux of the argument centers on how responsible an operator is for a user developing a gambling problem. In March, a judge in Pennsylvania dismissed another lawsuit against DraftKings.
In the ruling, he wrote, “The Court finds that DraftKings has no duty of care to protect Plaintiffs from spending too much money or from developing or fueling a gambling addiction.”
Funk and Andolina emphasize that “personal responsibility is not a product defect.” They add, “This reality captures the fundamental tension in this litigation. The legal system is being asked to draw a line between legitimate product optimization and exploitative design, and between individual autonomy and corporate responsibility. Where that line is drawn will have implications far beyond gambling, potentially affecting how courts treat any product or service designed to maximize user engagement.”
In the Pennsylvania ruling, the judge noted that, “No Pennsylvania state court, nor any federal court applying Pennsylvania law, has found that casinos (or online sportsbooks) owe a duty of care to compulsive gamblers.”
In the UK, a judge also dismissed a lawsuit against Betfair that argued the company should have intervened to stop gambler Lee Gibson losing over $2 million on the platform.
In the ruling, Judge Nigel Bird wrote, “Mr Gibson was determined to gamble. If Betfair had stopped him gambling in 2015 or at any time I am quite satisfied that he would have gambled elsewhere and to the same extent.”
Best Practices For Gambling Companies
To mount a robust defense against litigation, gambling companies can take several steps to safeguard from the most damaging arguments against their products.
Document discipline is important, say Funk and Andolina. They explain that plaintiffs’ discovery efforts will seek to uncover internal communications, including Slack messages, emails, product memos, and A/B testing reports, that show the company is aware its product is harmful.
“Poorly framed internal discussions create the risk of transforming defensible cases into difficult ones,” say Funk and Andolina.
Additionally, companies can demonstrate their commitment to responsible gambling practices by offering “robust self-exclusion tools, real-time loss information, and clear terms of service.”
I talked with Tracy Schrans, CEO of Focal, this week, an organization that works with operators to identify users at risk of developing gambling problems. If companies can show they are implementing evidence-based practice and working with groups such as Focal, this will help in any legal challenges.
“Regulatory compliance is the strongest defense,” added Funk and Andolina. “Companies that go beyond minimum compliance by engaging with regulators, adopting best practices, and documenting their responsible gaming efforts will be in the best legal position.”
In the wake of the social media ruling, more countries are banning the products. The UK this week followed Australia in prohibiting under-16s from accessing platforms. Gambling, however, is already an age-restricted, heavily regulated product. The same arguments that worked against Google and Meta may therefore not prove successful against DraftKings and FanDuel. Nevertheless, companies would be well-advised to prepare for an increase in litigation.
