ShareIn a recent development, DraftKings – the popular online sports book and gambling site – is facing a copyright infringement lawsuit from Colossus Bets, a London-based sports book. However, legal troubles are nothing new to DraftKings as of recently.
Stealing Intellectual Property
Colossus Bets is a B2B pool-betting platform. According to the lawsuit, Colossus Bets is claiming that DraftKings has been making use of a feature that they copyrighted since 2018. The feature in question is a cash-out feature.Cash-out betting allows players to cash out their bets early. For example, if you took the Lakers to win by 6 against the Bucks you can cash out your bet at any point the Lakers are up six. So, if it looks like the Bucks might be gearing up for a comeback, bettors can still profit on the game.
The feature also works for someone who thinks they are going to lose a bet. They are able to cash-out prior to the game’s completion and lose less than if they would’ve seen the game come to a close.
If the cash out feature is used, however, bettors will win less than if the full game was played out and the team you bet on won. Colossus Bets founder Bernard Marantelli was issued a patent for this feature by the US Patent and Trademark Office seven years ago in 2014.
The cash-out concept wasn’t invented by Colossus Bets, but rather by a different betting company called Betfair. It was Colossus Bets who created “technological improvements to technological problems” that “required novel and nonobvious solutions to problems and shortcomings in the art at the time,” according to the lawsuit.
Marantelli contacted DraftKings about the infringements when the company started using it in 2018 and has continued to issue notices, but has been met with nothing.
“We take our intellectual property very seriously,” said Marantelli in a statement. :This is the next step towards protecting our rights and income across the industry in the US.”
GNOG Acquisitions and Probe
This August, DraftKings agreed to purchase Golden Nugget Online Gaming for $1.56 billion. In the arrangement, GNOG shareholders were to receive .365 DraftKings shares per GNOG share they held.A New York mergers and acquisitions law firm is now probing into the junction. Monteverde & Associates is questioning whether GNOG officials were in violation of securities law and also questioning if a fair process was maintained during the acquisition.
Investor Alert: The M&A Firm is Announces an Investigation of the Merger of Golden Nugget Online Gaming, Inc. – GNOG https://t.co/KNjD0Ef7KV #StocksMarket #PressRelease
— Stock Market News (@Stock_Market_Pr) December 4, 2021
The law firm will also be investigating whether GNOG shares were properly valued during the exchange. Basically, GNOG shares were probably worth more than what DraftKings offered their shareholder during the acquisition.
Nothing New
Earlier this year DraftKings was also hit with a lawsuit from one of its shareholders. Jiahan Yu filed a lawsuit with the US District Court for the Southern District of New York accusing company executives of malfeasance and insider trading.One of DraftKings subsidiaries, SBTech, was found to be operating in areas of Asia where sports betting and gambling are illegal. Furthermore, SBTech could be linked to organized crimes based on DraftKings SEC filings and conversations with employees.
Furthermore, Yu’s lawsuit also accuses six company executives, among which lies president and co-founder Matt Kalish, of insider trading. Allegedly, these executives artificially inflated DraftKings stock, sold it, and profited more than $800 million in total.
Clearly, legal issues are nothing new for the online betting company. These legal battles will undoubtedly have negative effects on shareholders and public opinion.
