The fantasy sports business is once again under fire. DraftKings is facing a $4.16 million lawsuit brought in the U.S. District Court for the Southern District of New York. Damages include alleged unpaid invoices and benefits that the defendant may have received through a special agreement.
The plaintiffs in the suit are Anthem Sports & Entertainment Corp. and Fantasy Sports Network Inc., the latter is a New York business, the former Toronto-based. Also involved is a Fantasy Sports Network subsidiary, RotoExperts, LLC.
The complaint, which was filed on Friday (Sept. 23), starts with a $575,000 amount in alleged unpaid invoices, which are the product of five invoices submitted to DraftKings delivered by the plaintiffs.
The story goes back a ways though, according to Forbes.
DraftKings signed a commercial deal back in June of last year, which required DraftKings to shell out $1.5 million annually for three years, with monthly terms. The defendant wanted Fantasy Sports Network to oversee and operate a New York television studio that produced and distributed DraftKings ads, which would also run on DailyRoto.
Simultaneously, according to the plaintiffs, DraftKings tried to acquire Fantasy Sports Network from Anthem Sports & Entertainment.
The initial deal included some nonbinding provisions, which later became a concern for the plaintiffs, and they subsequently requested that DraftKings tweak the original agreement.
Via text message on Aug. 25, 2015, someone from DraftKings sent: “Let’s get working in good faith.” The person who sent that was the same person who executed the above television deal on behalf of DraftKings.
Programming designed deliberately to favor DraftKings started airing in Sept. 2015. At this time, the plaintiffs were not providing advertising space on DailyRoto, and most payments began to reduce to $115,000 from $125,000.
Three invoices to DraftKings from the plaintiffs were fulfilled in full. However, after that, nothing.
Conversations between the parties continued. In fact, after four unpaid invoices were outstanding, DraftKings responded that they would be paid.
But then, that same exact day, DraftKings Chief Financial Officer Janet Holian requested that the plaintiffs cease producing the programming. A few days later, Holian said no more payments would be made.
The complaint now includes the claim that the plaintiffs are entitled to damages stemming from that initial promise and deal, including the expenses incurred because of those promises.
DraftKings has not responded much, if at all:
“DraftKings has not been properly served the complaint,” said Jason Alderman of DraftKings. “If and when that happens, we will vigorously defend ourselves from these meritless allegations.”