DraftKings Sued By Fantasy Sports Content Provider For Over $4 Million

DraftKings has been sued in the U.S. District Court for the Southern District of New York, with the plaintiffs seeking no less than $4.16 million in damages. The stated damages include $575,000 in alleged unpaid invoices as well as benefits that DraftKings is claimed to have received from an agreement that DraftKings entered into.

The plaintiffs in a lawsuit against DraftKings claim that CEO Jason Robins (pictured) promised to make payments and then defaulted on same. Photographer: Victor J. Blue/Bloomberg

The plaintiffs in a lawsuit against DraftKings claim that CEO Jason Robins (pictured) promised to make payments and then defaulted on same. Photographer: Victor J. Blue/Bloomberg

Toronto-based Anthem Sports & Entertainment Corp. and New York City-based Fantasy Sports Network Inc. are the plaintiffs in the lawsuit. Anthem owns and operates television channels, including its subsidiary Fantasy Sports Network. The subsidiary owns RotoExperts, LLC.

According to the Complaint, filed on September 23, the plaintiffs and DraftKings signed a Commercial Deal in June 2015, which required DraftKings to pay $1.5 million per year, in monthly installments, for a total of three years. DraftKings allegedly wanted Fantasy Sports Network to operate a television studio in New York and desired to advertise in and sponsor television programs on the plaintiffs’ various media platforms. The deal also provided DraftKings with advertising space on DailyRoto.

The plaintiffs claim that DraftKings was concurrently seeking to acquire Fantasy Sports Network from Anthem Sports & Entertainment.

Apparently, the original deal included a variety of non-binding provisions, which served to be a concern for the plaintiffs. As such, they continuously asked DraftKings to modify the original agreement so that the plaintiffs felt more comfortable proceeding with development of a studio and new programming. A text message from an individual at DraftKings dated August 25, 2015 states, “let’s get working in good faith.” That same individual executed the June 2015 Commercial Deal on behalf of DraftKings.

The programming crafted specifically to favor DraftKings began being aired in September 2015. At that time, the plaintiffs were not providing advertising space on DailyRoto; thus, an agreement was reached to reduce monthly payments under the contract from $125,000 to $115,000.

“Plaintiffs’ writers and producers and DraftKings’ content and operations teams had regular communications regarding the content and games that would be featured on DraftKings and how it could be incorporated into the DK Programming,” states the Complaint.

The first three invoices submitted by the plaintiffs to DraftKings were paid in full, according to the Complaint. Payment ceased thereafter. Meanwhile, communications between the plaintiffs’ writers and producers and DraftKings’ content and operations teams continued for the purpose of creating content on the plaintiffs’ platforms that was approved by DraftKings.

On April 4, 2016, after four invoices were past due, the plaintiffs allegedly contacted Robins via text and Robins responded ensuring that payments would be made. That same day, DraftKings Chief Financial Officer Janet Holian asked the plaintiffs to stop producing the DraftKings-related programming. A week later, Holian said that DraftKings would not be making any further payments.

The aforesaid $575,000 amount in alleged unpaid invoices comes from a total of five invoices submitted to DraftKings after it paid off the first three invoices delivered by the plaintiffs.

The plaintiffs claim that they are entitled to additional damages based on DraftKings’ promise that it would execute a contract reflecting the totality of the deal terms as well as the expenses that the plaintiffs incurred (well over $1 million, per the Complaint) due to DraftKings’ promises. Additionally, the plaintiffs allege that DraftKings was enriched at the plaintiffs’ expense.

“DraftKings has not been properly served the complaint,” says Jason Alderman of DraftKings. “If and when that happens we will vigorously defend ourselves from these meritless allegations.”

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