DraftKings is defending a multi-state class-action lawsuit that questions whether its platform complies with state-mandated cooling-off periods for betting limit increases. The complaint, filed December 30 in Michigan’s Eastern District Court, alleges the operator enabled users to raise wagering caps immediately, bypassing mandatory delay periods designed to protect against impulsive gambling behavior.
The Central Allegations
Michigan resident Michael Koester filed the federal complaint naming DraftKings as defendant across seven states: Michigan, Colorado, Connecticut, Indiana, Iowa, Louisiana, and New York. Koester claims the operator violated player protection regulations by permitting immediate increases to self-imposed betting limits without enforcing required waiting periods.
According to court filings, Koester opened his DraftKings account in late 2021 and established initial spending restrictions on December 31 of that year. Over the following two years, he deposited more than $25,000 and repeatedly raised his betting limits without any enforced delay between request and implementation.
The complaint asserts that DraftKings accepted deposits and wagers during periods when state law required the platform to block such transactions. Koester’s legal team argues the seven states employ substantially similar regulatory language governing player limit modifications, each requiring waiting periods before users can increase their betting caps.
The lawsuit advances the theory that these requirements are not merely regulatory guidelines but statutory conditions that determine when wagers may be legally accepted. The filing contends that DraftKings’ acceptance of funds during prohibited periods constitutes statutory conversion and illegal electronic fund transfers under state and federal law.
The Regulatory Interpretation Dispute
The case centers on Michigan’s regulation governing self-imposed betting restrictions. The rule states that once players establish limits, they may only “reduce the severity” of those restrictions after providing 24 hours’ notice. Koester’s interpretation holds that reducing severity encompasses loosening limits, meaning increases should trigger the mandatory waiting period.
DraftKings appears to interpret the regulation differently. According to the motion, the platform allows users to raise limits immediately once a previous restriction period expires. Under this reading, a player could set a daily cap, wait for it to lapse, then request and receive a higher limit without any cooling-off period.
The complaint contrasts DraftKings’ approach with competitor practices. Court filings include screenshots showing FanDuel and BetMGM require three-day delays before limit increases take effect. Michigan tribal casino operators, including Soaring Eagle, similarly enforce waiting periods for limit modifications.
Koester’s attorneys reference Michigan’s 2020 rulemaking process, noting that regulators evaluated Indiana’s stricter framework requiring delays for limit increases alongside New Jersey’s more permissive model allowing immediate changes after limits expire. The lawsuit argues Michigan adopted Indiana’s approach, reflecting clear legislative intent to mandate cooling-off periods.
Before filing suit, Koester contacted DraftKings’ customer service and the Michigan Gaming Control Board. While the regulator opened an investigation, it declined enforcement action. The complaint asserts that regulatory inaction carries no legal force and does not preclude private lawsuits, citing that Michigan law does not grant regulators exclusive authority over gambling law violations.
The filing references the 2025 Michigan Supreme Court ruling in Davis v. BetMGM, which held that the state’s internet gaming law does not bar traditional lawsuits or limit players to administrative remedies.
Broader Legal Challenges
This lawsuit adds to mounting legal pressure facing the operator. DraftKings is simultaneously defending an Iowa case where a player seeks $14 million in winnings voided following a weather-affected golf tournament. The city of Baltimore has also sued DraftKings and FanDuel under municipal consumer protection laws, with DraftKings moving the case to federal court.
In Massachusetts, the Gaming Commission imposed a $450,000 fine on DraftKings for accepting credit card-funded wagers in violation of state law. The operator self-reported the compliance failures, but regulators determined the response insufficient.
Connecticut regulators required DraftKings to return over $3 million to thousands of consumers after determining certain bonus offers failed to comply with state gaming and advertising laws. Separate class actions alleging deceptive sign-up and “risk-free” bonus promotions have survived motions to dismiss.
The New Jersey Division of Gaming Enforcement fined DraftKings $100,000 for inaccurately reporting sports betting data, with the regulator citing “a weakness in the company’s business abilities.”
California has emerged as litigation focal point for daily fantasy sports. Multiple class actions allege DFS platforms, including DraftKings, constitute unlicensed sports wagering under state law, relying on a legal opinion from the state attorney general declaring DFS illegal.
Potential Industry Impact
The Michigan case differs from typical operator litigation by focusing on platform design rather than marketing practices. It questions whether DraftKings structured its limit-setting system in compliance with state consumer protection statutes.
Should Koester prevail, the ruling could retroactively render millions of wagers unlawful under state law, exposing operators to refund claims, treble damages, and federal liability under electronic payment regulations. A favorable decision could require operators across multiple states to redesign their implementation of betting caps and responsible gambling tools.
Koester’s motion for summary judgment seeks a decision without trial, arguing the underlying facts are undisputed and the issue turns solely on statutory interpretation. The strategy aims to resolve the legal question before class certification, meaning a single ruling on the statute could automatically determine liability for every affected DraftKings user in the seven states.
The litigation reflects growing legal scrutiny of technical implementation rather than promotional practices in consumer protection cases involving gambling platforms. The outcome could influence industry standards around betting limits and player protections, potentially redefining when sportsbooks can legally accept wagers under state responsible gambling frameworks.
Source: Michigan Eastern District Court
