DraftKings Faces Sue for Using Cash-Out

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: December 18, 2021

Recently, Colossus Betts has filed a patent violation lawsuit on DraftKings in a Delaware court. The sue is 53 pages long and includes 7 patent infringement cases regarding the use of DraftKings’ cash-out button for sports betting and gambling products. Colossus Bets mainly focuses on operating betting pools for customers and B2B allies but has a patent responsibility. Two British organizations are suing DraftKings for using their cash-out feature for sports betting and gambling.

British Colossus Bets is seeking compensation of a minimum of one million dollars. DraftKings has the same and pending patent litigations with Interactive Games LL and Arrow Gaming.

Fair Warning

The 2 British organizations say their patent applies to all United States bets as the Bradley Act or PASPA had repealed in 2018. The Bradley Act is a law prohibiting states in the United States from legal sports gambling, with a few differences. On May 14, 2018, the United States Supreme Court declared the law illegal.

As a result, as of August 2018, both claimed damages on all the American bets placed on DraftKings when using the withdrawal option. Diogenes holds the seven aforementioned patents, and Colossus has an exclusive license.

Colossus is now ready to demand the equivalent of US gross margin for used cash-out option rates. The lawsuit could exceed one billion dollars from DraftKings for alleged patent violation and any further transgression.

As long as Colossus can confirm that DraftKings knowingly and intentionally used their patents that figure may increase. British organizations demanded the Delaware courts stop any illegal usage of their devices.

Legal action is a natural step towards protecting your interests and income in the country’s gambling business. Colossus has transferred its cash-out license to bet365 and Esports Technologies.

Patents Problems for DraftKings

Colossus empowered DraftKings to fight patent infringement in 2018 when it announced the initial warning. The organization constantly sends numerous reports of crimes and offers them several possibilities to correct alleged violations.

The latest sue on DraftKings is Colossus’ first attempt to implement its patent at a bookmaker’s office in the United States. The firm appointed DLA Piper to control legal issues.

In July 2021, Engine Media sued DraftKings for similar infringements of 2 patents related to sports gambling technology. DraftKings stated in its regular statement under section 13 or 15 (d), it could not forecast with certainty the result of the related actions. The organization also said it was unable to identify the amount of possible liability. DraftKings is also involved in several pending patent infringement lawsuits with Arrow Gaming and Interactive Games LLC.

Possible Outcomes

It remains to be seen if any or all of that patent cases will conclude in a settlement. These agreements generally involve existing license agreements or one-time payments. The more dangerous option is to go to court, where a judge determines whether the patent is correct or not. If it had happened with the Colossus patents, the organization would likely have suffered significant losses.