DraftKings faces a federal class-action lawsuit in Michigan, alleging that the sports betting platform enables users to instantly raise their betting limits in breach of responsible gambling regulations across seven U.S. states.
Submitted on December 30 to the U.S. District Court for the Eastern District of Michigan, the lawsuit focuses on plaintiff Michael Koester, a Michigan native who contends that DraftKings allowed him to increase his deposit and betting limits without adhering to the mandatory 24-hour “cooling-off” period mandated by law. The lawsuit claims that this oversight resulted in losses exceeding $25,000 between 2022 and 2023.
The complaint states that Koester established spending limits on his DraftKings account in late 2021. Over the subsequent two years, he raised those limits multiple times and deposited considerable sums, with the platform enabling these adjustments to take effect immediately.
He maintains that, if DraftKings had complied with state laws, the required waiting period would have mitigated his impulsive gambling tendencies and shielded him from severe financial distress.
The lawsuit claims that DraftKings’ actions breached gambling regulations not just in Michigan, but also in Colorado, Connecticut, Indiana, Iowa, Louisiana, and New York. These jurisdictions stipulate a 24-hour waiting period before users can relax self-imposed restrictions, a regulation Koester argues includes increasing deposit or wagering limits.
DraftKings appears to interpret the regulation differently. Legal documents suggest that the company allows users to elevate limits as soon as a previous restriction period ends, facilitating immediate increases without any cooling-off period. The complaint contests this interpretation, asserting that the regulation’s intent is to mandate a delay in increases, irrespective of the expiration of previous limits.
Comparing DraftKings to other prominent operators, the filing highlights that platforms like FanDuel and BetMGM impose three-day delays before permitting limit increases. Likewise, Michigan tribal casinos, such as Soaring Eagle, also enforce waiting periods.
Koester’s legal representatives reference Michigan’s 2020 rulemaking process, during which officials analyzed different regulatory approaches. While New Jersey permitted immediate changes upon limit expiration, Indiana mandated waiting periods before increases could be enacted. Michigan adopted the Indiana model, which, according to the complaint, signifies a clear regulatory intent to incorporate cooling-off periods for any relaxation of restrictions.
Prior to pursuing legal action, Koester reached out to DraftKings’ customer service and the Michigan Gaming Control Board. The regulator launched an investigation but ultimately decided against taking enforcement steps.
The lawsuit asserts that this ruling does not impede Koester’s right to initiate civil action and cites a 2025 Michigan Supreme Court decision in Davis v. BetMGM, affirming that private lawsuits are permissible under the state’s internet gambling legislation.
Aside from regulatory infractions, the complaint suggests that DraftKings’ acceptance of bets during these intervals constitutes statutory conversion and illegal electronic funds transfers according to both state and federal law . The lawsuit seeks class-action status on behalf of users in the seven affected states, potentially numbering in the hundreds.
The plaintiff has submitted a motion for summary judgment, claiming that the pertinent facts are undisputed and that the case hinges solely on statutory interpretation. A ruling favoring Koester could hold DraftKings liable without necessitating a full trial or class certification.
This lawsuit adds to DraftKings’ escalating legal issues. In Iowa, the company is embroiled in litigation over more than $14 million in unpaid winnings related to a disputed golf tournament result. In Massachusetts, the Gaming Commission penalized DraftKings $450,000 for violating state laws on accepting credit card wagers. The company has also encountered regulatory inquiries in Connecticut and New Jersey regarding its marketing practices and data reporting.