Corporate Greed Case Study: DraftKings & Its Impact on California Consumers
TLDR: A class-action lawsuit alleges that the sports-betting giant DraftKings has been running a massive, illegal gambling operation in California for years. The company is accused of deliberately misleading its customers by aggressively marketing its “Daily Fantasy Sports” and “Pick6” contests as legal, when, according to the complaint, they violate more than a half-dozen of the state’s long-standing anti-gambling laws. By creating a sophisticated digital facade of legitimacy, DraftKings allegedly lured in hundreds of thousands of Californians, collecting millions of dollars in unlawful wagers while taking a significant cut for itself—a business model the lawsuit frames as predatory, illegal, and a direct betrayal of public trust.
This article delves into the specific claims laid out in the legal filings, exposing a corporate strategy that allegedly prioritizes profit over legal compliance and consumer welfare.
Read on to understand the mechanics of the alleged scheme, the regulatory failures that enabled it, and how this case serves as a distressing example of corporate misconduct in the digital age.
Introduction: The High-Stakes Bet on Deception
In the neon-lit world of online sports betting, DraftKings stands as a titan, a household name built on a torrent of advertising and the promise of turning sports knowledge into cash. DraftKings spends an estimated half-billion dollars a year to embed itself in the American consciousness, sponsoring everything from the NFL to the NBA and enlisting A-list celebrities to champion its games.
But behind the slick marketing and celebrity endorsements, a damning lawsuit alleges a far darker reality: a calculated, multibillion-dollar enterprise operating in open defiance of state law.
A class-action complaint filed in California accuses DraftKings of building a significant part of its empire on an illegal foundation.
For years, DraftKings has assured its California customers that its gambling products are perfectly legal, even as those products appear to be clear violations of the state’s century-old prohibitions on bookmaking, pool selling, and illegal games of chance.
This case is an examination of a business model that thrives in legal gray zones, one that leverages immense financial power to project an image of legitimacy while allegedly engaging in unlawful conduct. It is a story that reveals the deep-seated priorities of modern corporate capitalism, where the will of voters can be dismissed, regulatory bodies can be outpaced, and the law itself can be treated as just another obstacle to be managed in the relentless pursuit of profit.
Inside the Allegations: A System of Corporate Misconduct
The lawsuit against DraftKings outlines a series of damning allegations that paint a picture of a company fully aware of the legal lines it was crossing. The lawsuit’s plaintiffs, California residents who collectively lost thousands of dollars, claim the company’s entire California operation is built on a framework of deception, from its public-facing advertisements to the very mechanics of its games.
A Deliberate Deception: Marketing Illegal Gambling as Legal
At the heart of the complaint is the accusation of intentional misrepresentation. DraftKings launched an aggressive, public campaign to convince Californians of its legitimacy. On its website and mobile apps, DraftKings features a U.S. map that clearly marks California in green as a state where its “Daily Fantasy Sports” (DFS) contests are “live.” A similar map exists for its “Pick6” contests, again indicating that the product is available to play in California.
This was not a passive omission by any means! The company’s “How to Play” and “Where is DFS legal?” pages explicitly list California as a permissible jurisdiction.
One section of the website goes further, assuring customers that “DraftKings monitors new developments and acts quickly to ensure it is in compliance with the laws in any jurisdiction where it operates.” The plaintiffs in the case state they relied directly on these assurances. They saw the ads, visited the website, and, trusting DraftKings’ veneer of authority, believed they were participating in a lawful activity. They contend they never would have placed bets or deposited money had they known the contests were illegal.
The Mechanics of an Alleged Illegal Enterprise
According to the complaint, DraftKings’ flagship products are not innovative games of skill but are simply modern, digital versions of long-prohibited forms of gambling. The lawsuit breaks down how these contests allegedly violate multiple sections of the California Penal Code.
- Bookmaking and Pool Selling: In both DFS and Pick6, participants pay an entry fee to compete for a cash prize. The lawsuit argues this is classic “pool selling,” where all bets are collected into a single pool from which winners are paid. DraftKings, by receiving, holding, and recording these wagers and then paying out winners from the pot, is allegedly acting as an illegal “bookie.”
- Percentage Games: Unlike a friendly fantasy league where all the money goes back to the participants, DraftKings functions as “the house.” It takes a percentage of the total entry fees, known as a “rake,” from every contest. The complaint provides startling examples of this practice.
| Contest Name (Paraphrased) | Wager per Entry | Total Pool Collected | Prize Pool Paid Out | DraftKings’ Rake | Rake Percentage |
| NBA Showdown Double Up | $5 | $1,145 | $1,000 | $145 | 12.7% |
| NBA Showdown Showtime | $100 | $33,400 | $30,100 | $3,300 | ~10% |
| NBA Showdown Shootaround | $20 | $588,220 | $500,000 | $88,220 | ~15% |
| Sample WNBA Pick6 Contest | $1 per entry slot | $1,667 per contest | $1,000 per contest | $667 per contest | 40% |
This business model ensures DraftKings profits regardless of which customer wins. The rake is the house’s cut, a defining feature of a “percentage game,” which has been illegal in California for over a century.
A Timeline of Alleged Wrongdoing
The legal complaint documents a history of actions that suggest a long-term strategy of ignoring California law.
| Date | Event |
| 1872 | California enacts Penal Code Section 330, broadly prohibiting commercial banking and percentage games. |
| c. 2012 | DraftKings begins operating in California. Plaintiff Brandon Moore creates an account in response to online ads. |
| c. 2019 | Plaintiff Jonathan Smith creates an account after seeing DraftKings ads on television. |
| Nov. 2022 | California voters overwhelmingly reject Proposition 26 (by 67%) and Proposition 27 (by 82%), which would have legalized sports betting. DraftKings was a major financial backer of Prop 27. |
| Oct. 2023 | California State Senator Scott Wilk formally requests that the state’s Attorney General investigate the legality of daily fantasy sports operations like DraftKings. |
| c. 2024 | Plaintiff ZhiCheng Zhen creates an account after seeing DraftKings ads online and during NBA games. |
| May 2025 | The plaintiffs claim they finally learned the true, allegedly unlawful nature of DraftKings’ operations in California. |
| June 1, 2025 | A class-action lawsuit is filed against DraftKings, Inc. in the U.S. District Court for the Northern District of California. |
Regulatory Capture & Loopholes: An Environment of Impunity
The story of DraftKings’ alleged misconduct in California is also a story of regulatory failure and the exploitation of a system that favors corporate interests. In an era of deregulated markets and under-resourced oversight bodies, companies with sufficient capital can operate with a level of impunity, treating laws not as rigid boundaries but as risks to be calculated.
Ignoring the Will of the People and the Law
The most glaring example of this is DraftKings’ response to the 2022 election. The online sports betting industry, including DraftKings, poured a reported $150 million into supporting Proposition 27, a ballot measure to legalize online sports betting. California voters rejected it in a historic landslide, with 82% voting “no.” A separate measure to allow in-person sports betting, Proposition 26, was also soundly defeated.
The message from the electorate was unambiguous. Yet, DraftKings continued its California operations without interruption. This behavior reflects a core tenet of neoliberal capitalism: when democratic processes conflict with profit motives, a corporation can simply ignore the outcome and continue its business, confident that the slow-moving wheels of justice will allow it to extract profits for years before any meaningful consequences materialize. DraftKings chose to interpret the law in its own favor, effectively superseding the clear mandate of California voters.
Operating in the Shadow of an Official Investigation
Further compounding this issue is the slow pace of regulatory enforcement. In October 2023, a California State Senator formally requested that the Attorney General’s office investigate whether daily fantasy sports platforms were operating illegally. The complaint notes that the Department of Justice is indeed reviewing the matter.
However, as of the filing of the lawsuit in June 2025, no official opinion had been issued. This delay creates a vacuum of authority that companies like DraftKings are uniquely positioned to exploit. While the state’s highest law enforcement body investigates, DraftKings continues to sign up new customers, accept wagers, and rake in revenue from the very activity under scrutiny.
This dynamic, where evil corporations profit from regulatory lag, is a feature, not a bug, of our late-stage capitalistic system where corporate agility far outpaces governmental oversight. Potential fines or legal judgments become a future “cost of doing business,” easily outweighed by the immediate profits earned in the interim.
Profit-Maximization at All Costs: Engineering an Extractive System
The allegations against DraftKings demonstrate a corporate culture where profit maximization appears to be the sole guiding principle, trumping legal and ethical considerations. This is evident not only in the decision to operate in a legally hostile environment but also in the very design of its products and marketing strategies, which are meticulously engineered to maximize user spending.
A Half-Billion Dollar Marketing Blitz
A company operating illegally might be expected to keep a low profile. Instead, DraftKings does the opposite, spending an estimated $500 to $600 million annually on advertising. This marketing blitz serves a dual purpose: it attracts new customers while simultaneously creating an overwhelming sense of legitimacy. By associating its brand with trusted institutions like the NFL and beloved celebrities, DraftKings normalizes its operations and builds a powerful, if illusory, shield of social proof.
The complaint details a multi-pronged marketing strategy that includes:
- Official Sports League Sponsorships: Partnering with the NFL, NBA, PGA TOUR, and others to become an “official” betting partner.
- Celebrity Endorsements: Running high-profile TV ads, such as a Super Bowl commercial featuring comedian Kevin Hart.
- Co-Branded Products: Expanding its reach into consumer goods, including an advertising partnership with Ruffles potato chips, a product available to consumers of all ages.
This level of spending is a strategic effort to manufacture consent and overwhelm any public or regulatory skepticism.
Designing a System for Maximum Extraction
The lawsuit also highlights how DraftKings’ user interface is designed to subtly encourage more betting and obscure unfavorable terms. For its Pick6 game, the interface defaults to a $10 bet, even though the company advertises that customers can play for as little as $1. A user who places that $10 bet might assume it is for a single entry.
However, the fine print, hidden in a section of the screen without a visible scroll bar, reveals that the $10 is automatically divided into ten separate $1 entries across multiple contests.
The user has no control over which contests their money is entered into, and as noted in one example, these contests can feature a staggering 40% rake for DraftKings.
This design choice serves no purpose for the user. Its only function is to induce higher initial bets and maximize DraftKings’ revenue from each transaction. It is a textbook example of how, under late-stage capitalism, even the digital architecture of a product can be weaponized to extract maximum value from the consumer, often without their full or informed consent.
The Economic Fallout: A Systematic Draining of Wealth
The financial consequences of DraftKings’ illegal enterprise represents a direct transfer of wealth from the pockets of ordinary Californians to the coffers of a multibillion-dollar corporation.
The lawsuit provides a window into this economic harm, detailing the personal losses of the named plaintiffs, who lost amounts ranging from approximately $1,000 to over $3,000. While these individual sums may seem modest, they are part of a much larger economic drain when multiplied across the state.
The complaint estimates that California residents contribute as much as 10% of the total entry fees for Daily Fantasy Sports contests nationwide. This activity translates into approximately
$200 million in entry fees being collected from Californians annually. Every dollar of this staggering sum, the lawsuit contends, was taken through an illegal transaction. This is the economic fallout of a system that allegedly operates outside the law, preying on consumers who were led to believe they were participating in a legitimate activity. The losses incurred by individuals are the direct fuel for DraftKings’ revenue, a business model built on the monetization of an allegedly unlawful enterprise.
Public Health Risks: The Hidden Cost of Addiction
Beyond the immediate financial losses, the lawsuit points toward a more insidious public health risk: the normalization and promotion of addictive behavior. The complaint directly cites the California legislature’s own findings on the matter: “Gambling can become addictive and is not an activity to be promoted or legitimized as entertainment for children and families”. DraftKings’ business model, which revolves around high-frequency, short-term contests, is designed to encourage repeat engagement, a structure that mirrors the mechanics of other addictive digital products.
This concern is magnified by the company’s marketing strategies. The decision to place DraftKings branding on bags of Ruffles potato chips—a common snack food found in grocery stores and family pantries—is particularly alarming.
This tactic moves the promotion of gambling out of adult-oriented spaces and into the mainstream consumer environment, desensitizing the public, including children and teenagers, to an activity with known addictive potential. Under a system of profit-first capitalism, public health warnings become secondary to market penetration, and the potential for creating lifelong addiction issues is treated as an acceptable externality in the quest for revenue growth.
The PR Machine: Corporate Spin as a Business Strategy
DraftKings’ most powerful tool is not its technology, but its sophisticated public relations and marketing machine. The company’s half-billion-dollar annual advertising budget is deployed with surgical precision to construct a narrative of legitimacy and trustworthiness, a narrative that the lawsuit alleges is entirely false. This is a systemic campaign to manufacture a social license to operate where a legal one is absent.
The methods are comprehensive. Official partnerships with the NFL, NBA, and other major sports leagues lend DraftKings an invaluable air of authority and endorsement. High-production-value commercials featuring famous and trusted celebrities create a feeling of mainstream acceptance. On its own platforms, the company speaks with the confidence of a fully regulated entity, using maps and lists to declare its operations “legal” in California while assuring users that it “acts quickly to ensure it is in compliance with the laws”. This immense propaganda effort is designed to make the company’s presence feel inevitable and normal, drowning out legal realities with the sheer volume of its marketing spend.
Wealth Disparity & Corporate Greed: A One-Way Flow of Capital
At its core, the business model described in the lawsuit is a powerful engine for exacerbating wealth disparity. It functions as a system that siphons money from a broad base of working- and middle-class consumers and concentrates it in the hands of corporate shareholders and executives. The “rake”—the 10% to 40% cut that DraftKings takes from every contest pool—is the mechanism that drives this one-way flow of capital.
This is not a system that creates broad economic value. It is an extractive model where the house always wins, and it wins by taking a piece of every bet made in what the lawsuit claims is an illegal marketplace. When a company can generate an estimated $200 million in annual fees from a single state through allegedly unlawful means, it underscores a fundamental imbalance in the modern economy. This is corporate greed in its most direct form: the pursuit of profit so relentless that it operates in defiance of state law, democratic will, and the financial well-being of its own customers.
Corporate Accountability Fails the Public
The DraftKings scandal is a chilling illustration of how corporate accountability mechanisms in our neoliberal system often fail the public. The primary responsibility for enforcing the law lies with the state, yet the complaint highlights a significant lag in regulatory action. Despite a formal request for an investigation from a state senator in 2023, the California Attorney General’s office had not issued a public opinion on the legality of daily fantasy sports by the time the lawsuit was filed in mid-2025.
This regulatory inertia creates a space where corporations can operate with perceived impunity. In the absence of decisive government action, the burden of holding a massive corporation accountable falls to private citizens. The class-action lawsuit filed by Brandon Moore, ZhiCheng Zhen, and Jonathan Smith is a direct response to this failure. It is an attempt by consumers to enforce the law when public institutions have been too slow to act. This reactive, citizen-led approach to enforcement, while necessary, is a symptom of a system where corporate power and influence often outmatch the resources and will of public oversight bodies.
Pathways for Reform & Consumer Advocacy
While the lawsuit exposes systemic failures, it also charts a course toward reform and demonstrates the power of consumer advocacy. The legal action itself is a tool for change, seeking not just to compensate victims but to fundamentally alter corporate behavior. The plaintiffs are asking the court for clear, decisive remedies that would reassert the rule of law over corporate impunity.
The primary forms of relief sought include:
- Injunctive Relief: An order from the court to force DraftKings to halt its allegedly illegal gambling operations in California. This would be a direct enforcement of the state’s laws and the will of its voters.
- Restitution and Disgorgement: Forcing DraftKings to return all the money it unlawfully collected from California residents. This would reverse the economic harm and remove the financial incentive for DraftKings’ corporate misconduct.
- Punitive Damages: The lawsuit leaves the door open to seeking punitive damages under the California Consumer Legal Remedies Act, which would serve as a punishment and a deterrent to prevent DraftKings and other companies from engaging in similar behavior in the future.
Ultimately, this case argues that meaningful reform requires more than just a slap on the wrist. It demands that corporations be made to follow the same rules as everyone else and that the profits of illegal activity be returned to those from whom they were taken.
Conclusion: A Case Study in Modern Corporate Overreach
The class-action complaint against DraftKings is a powerful case study of corporate power in the 21st century. It alleges a reality where a multibillion-dollar company can build a lucrative enterprise on what is claimed to be a foundation of illegality, all while spending hundreds of millions of dollars to project an image of wholesomeness and compliance. It paints a picture of a system where the democratic will of the people, expressed clearly at the ballot box, is ignored, and where regulatory bodies struggle to keep pace with a fast-moving and aggressive corporate actor.
The human cost of this corporate misconduct is measured in the millions of dollars lost by ordinary people who trusted a brand that projected authority and legitimacy.
The societal cost is measured in the normalization of potentially addictive behaviors and the erosion of the principle that all entities, no matter how wealthy or powerful, are subject to the rule of law. This lawsuit is a challenge not only to DraftKings’ business practices but to the broader economic and political system that allows such brazen overreach to occur. It poses a fundamental question: in an era of digital capitalism, do the laws and the will of the people still matter, or has corporate power become a law unto itself?
Frivolous or Serious Lawsuit? An Assessment
Based on the detailed and specific evidence presented in the legal complaint, this lawsuit appears to be a serious and substantial legal challenge. It is far from frivolous. The complaint meticulously connects DraftKings’ business practices to specific sections of the California Penal Code, explaining in plain language how the company’s DFS and Pick6 contests allegedly constitute illegal bookmaking, pool selling, and operating a percentage game.
Furthermore, the lawsuit is grounded in concrete, verifiable evidence, including screenshots of DraftKings’ own websites and apps explicitly marketing its services as legal in California.
It provides specific financial examples of DraftKings’s “rake,” demonstrating the extractive nature of the business model. The plaintiffs have clear standing, having suffered direct financial losses, which they quantify.
Given the depth of the evidence, the clarity of the legal arguments, and the scale of the alleged wrongdoing, this lawsuit represents a significant and legitimate effort to hold a major corporation accountable for its actions.
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NOTE:
This website is facing massive amounts of headwind trying to procure the lawsuits relating to corporate misconduct. We are being pimp-slapped by a quadruple whammy:
- The Trump regime's reversal of the laws & regulations meant to protect us is making it so victims are no longer filing lawsuits for shit which was previously illegal.
- Donald Trump's defunding of regulatory agencies led to the frequency of enforcement actions severely decreasing. What's more, the quality of the enforcement actions has also plummeted.
- The GOP's insistence on cutting the healthcare funding for millions of Americans in order to give their billionaire donors additional tax cuts has recently shut the government down. This government shut down has also impacted the aforementioned defunded agencies capabilities to crack down on evil-doers. Donald Trump has since threatened to make these agency shutdowns permanent on account of them being "democrat agencies".
- My access to the LexisNexis legal research platform got revoked. This isn't related to Trump or anything, but it still hurt as I'm being forced to scrounge around public sources to find legal documents now. Sadge.
All four of these factors are severely limiting my ability to access stories of corporate misconduct.
Due to this, I have temporarily decreased the amount of articles published everyday from 5 down to 3, and I will also be publishing articles from previous years as I was fortunate enough to download a butt load of EPA documents back in 2022 and 2023 to make YouTube videos with.... This also means that you'll be seeing many more environmental violation stories going forward :3
Thank you for your attention to this matter,
Aleeia (owner and publisher of www.evilcorporations.com)
Also, can we talk about how ICE has a $170 billion annual budget, while the EPA-- which protects the air we breathe and water we drink-- barely clocks $4 billion? Just something to think about....
