Lawsuits Claim Sports-Betting Apps Exploit Gambling Disorder

Roughly 80 state-level lawsuits allege that popular sports-betting apps were designed to exploit people with gambling disorders and ask courts to treat those apps as defective products under product liability law. Major operators named in complaints include FanDuel and DraftKings. Plaintiffs identify features such as in-game micro-betting, personalized algorithms, targeted push notifications and bonus offers as mechanisms that keep vulnerable users wagering.

The suits are brought by individuals and public health groups, including the mass tort arm of Drugwatch and the Public Health Advocacy Institute. Most complaints seek monetary damages and internal company records rather than a ban on legal sports betting. In Pennsylvania, plaintiffs in Sage and Thompson v. FanDuel, DraftKings, the NFL and data provider Genius Sports allege about $2 million in combined losses tied to micro-bets. In Massachusetts, a plaintiff named Daniel Arroyo says he lost roughly $180,000 across FanDuel and DraftKings and alleges the apps mined user behavior and sent targeted messages at vulnerable times, such as late at night or after large losses.

Attorneys in the cases are advancing a product liability theory that treats the apps as products with defective designs. Whitney Ray Di Bona, an attorney with Drugwatch, called the approach a new way to frame gambling litigation. She noted that past suits based on general negligence often failed when courts found no legal duty to prevent compulsive gambling; plaintiffs now seek to shift that analysis by focusing on app design.

Litigation is at an early stage and could take years to produce definitive rulings. A recent jury verdict in New Mexico against a major technology company, which included a $375 million penalty under state consumer protection law, produced extensive discovery about internal design decisions. Lawyers expect similar discovery in sportsbook cases that could reveal how products and algorithms were built and deployed.

Most plaintiffs are adults, reflecting that legal sports betting is restricted to people 21 and older in most U.S. jurisdictions. Concerns about youth exposure persist, and some questionnaires and investigations have found cases of minors accessing betting apps, though the current wave of litigation focuses mainly on adult addiction. Lance Oliver, a lawyer who worked on the New Mexico case, warned that products that foster addictive behavior can have long-term consequences for young people.

Defendants have argued in some courts that betting platforms are services, not products, and therefore fall outside product liability rules; courts have reached different conclusions so far. FanDuel and DraftKings together control an estimated 80% of the U.S. legal sports-betting market, and plaintiffs say design choices made to reduce friction, increase engagement and add social features are central to the claims.

None of the complaints asks courts to outlaw legal betting. The suits aim to hold companies financially accountable and to obtain internal records that could show whether operators knowingly targeted vulnerable users. If courts accept the product liability framing, judges or juries could order changes to app features or award damages that affect industry practices. Observers say discovery and trial developments will be closely watched for documents and testimony about how algorithms and notification systems were developed and used.