FanDuel Facing Consumer Fraud Lawsuit Over Unreturned Deposits

Posted on: April 6, 2022, 04:19h. 

Last updated on: April 7, 2022, 10:38h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

A New Jersey man claims FanDuel has violated his state’s Consumer Fraud Act, breached its contract with him, and engaged in a civil conspiracy by not giving him back $300.

FanDuel lawsuit
FanDuel has a policy that deposits must be “played through” before being withdrawn. Is it part of the fight against money laundering or a self-serving strategy? (Image: Flutter Entertainment)

Paul Manganaro wants to initiate a class action suit against the operator. On behalf of all New Jersey residents who have come up against a FanDuel rule that prevents customers from withdrawing deposits, they no longer wish to gamble.

In a lawsuit filed in the Superior Court of New Jersey in late March, Managrano argues FanDuel’s advertising is “fraudulent, misleading, and incorrect” in relation to withdrawals.

On February 11, 2022, Manganaro says he deposited $500 onto the FanDuel Sportsbook. He did not enter into any of the site’s promotions.

Then, on February 12, he placed $200 on the Los Angeles Rams to cover the spread at Super Bowl LVI the following day. The Rams won the game but failed to cover the spread.

‘You Can Only Withdraw Winnings’

The disappointment turned Manganaro off sports betting. He initiated a withdrawal request for the remaining $300 on February 17. But the next day, he received an email from the operator informing him the request had been rejected because “you can only withdraw winnings or eligible promotions.”

He was told he would have to “play through,” or wager, his remaining balance before withdrawing it.

FanDuel’s terms and conditions state:

The withdrawal process is intended only for winnings. If you would like a refund on one of your recent deposits, please contact our support team via chat or email below.

The operator says this is part of its anti-money laundering protocols, although it also happens to be a very convenient policy for a sportsbook that is financially interested in keeping its customer’s money in play.

Not in the Regs

New Jersey’s gaming regulator, the Division of Gaming Enforcement (DGE), does not require its licensees to process withdrawals immediately. It allows an unspecified amount of time for an operator to conduct necessary anti-fraud and money laundering checks. But it does not mandate a play-through policy as part of its sports betting regulations.

The US Department of the Treasury, in its National Money Laundering Risk Assessment report, published in February, does state that “minimal gaming” should be a red flag. This is where a customer gambles with just a portion of their deposit before withdrawing the full balance.

But the report also says this red flag should apply to large deposits, and Mangarano’s $500 barely scratches the surface.

Additionally, live casinos, where real cash can be converted into chips and a check, are a much greater risk for this kind of activity than online sportsbooks.

‘Easy Deposits’

Manganaro’s suit argues that FanDuel’s own terms and conditions are contradictory.

 They state:

We also may conduct checks for Terms compliance, including anti-fraud checks on playing patterns and deposits prior to processing a withdrawal, and we may request additional information before permitting a withdrawal. Subject to such checks, you may close your account and withdraw your deposits and/or winnings at any time and for any reason.”

Meanwhile, FanDuel’s advertising promises “easy deposits and fast payouts” and “lightning fast” cash-outs, with “convenience, safety, and security.”

“Defendant intended for Plaintiff and members of the Class to be misled,” the lawsuit asserts. “It is also aware that the longer they hold class members monies and/or make it difficult for class members to receive a refund of their deposited monies, the more likely that it is that these monies will be subsequently gambled and lost.”

The suit seeks restitution of all unused player balances, compensatory damages, injunctive relief requiring FanDuel to amend its terms and conditions, legal costs, and any other relief the court deems appropriate.

FanDuel declined to comment, citing ongoing litigation.