DraftKings sues Philadelphia over gambling probe

DraftKings has filed a federal lawsuit against the City of Philadelphia, seeking to block enforcement of a local consumer protection ordinance and stop an investigation into the sports betting operator’s activities. The complaint was submitted on Thursday, July 16, in the U.S. District Court for the Eastern District of Pennsylvania.

The Boston-based sports betting company argues that Philadelphia’s 2024 consumer protection ordinance conflicts with Pennsylvania state law governing gaming and consumer protection. DraftKings is asking the court to prevent the city from applying the ordinance to its licensed gambling operations and to end the related investigation.

DraftKings challenges Philadelphia’s authority to investigate licensed gaming activities under a local consumer protection law.

The dispute follows an April 24 subpoena issued by the Philadelphia Law Department, which requested information from DraftKings regarding areas including sports wagering activities, promotional credits and bonuses, VIP programs, and measures designed to address problem gambling. The company argues that the city does not have the authority to impose additional requirements on activities already regulated under Pennsylvania’s gaming framework.

In its complaint, DraftKings stated that Pennsylvania’s consumer protection and unfair trade practices laws prevent Philadelphia from creating a separate municipal enforcement system for licensed gambling operators. The company is seeking a court declaration that the ordinance is pre-empted by state law and cannot be enforced against its gaming activities.

Philadelphia’s ordinance was signed in June 2024 by Mayor Cherelle Parker. The measure established a local consumer protection enforcement framework, which the city later used as the basis for its inquiry into DraftKings’ sportsbook and casino operations. 

The investigation focuses on areas related to how DraftKings markets its services and interacts with customers, including promotional offers and responsible gambling policies. DraftKings has argued that allowing municipalities to regulate licensed operators separately from state authorities would create additional legal obligations beyond the existing state-level framework.

The lawsuit comes as regulators and consumer advocates in the U.S. continue to examine sports betting advertising practices, including promotional offers and bonus structures. DraftKings and other operators have faced scrutiny over marketing approaches, while the company has maintained that its operations comply with applicable regulations.

DraftKings is asking the federal court to block Philadelphia’s subpoena and prevent further enforcement actions under the ordinance while the legal dispute is considered.