Class Action Alleges MLB’s Sign Stealing Scandal Had ‘Disastrous Effect’ on DraftKings, FanDuel Daily Fantasy Contests

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Major League Baseball, MLB Advanced Media and the Houston Astros and Boston Red Sox face another proposed class action over the sign stealing scandal that’s cost three managers and one general manager their jobs and, according to the lawsuit, DraftKings and FanDuel daily fantasy baseball players a significant amount of money.

Echoing a case filed last month, the lawsuit alleges that while it appears on the surface that justice has been served by the league in punishing a number of “bad actors” linked to what’s become known as the Astros’ “Trash Can Scheme,” MLB’s tract of “ignoring” for years the fraudulent conduct of certain teams and players has had “a disastrous effect” on the “cash cow called daily fantasy sports.” The case claims that wagering fans and the general public had no idea that MLB “failed to enforce its rules prohibiting . . . electronic sign-stealing” despite being aware of the problem. The cheating alleged in the lawsuit to have pervaded through the game in recent seasons has “changed the outcome of DraftKings’ MLB [daily fantasy sports] wagering contests, not to mention game outcomes, given the link between sign-stealing and player statistics,” the plaintiff argues.

Whereas MLB traditionally held a staunch stance against gambling for much of its history, the league, through co-defendant MLB Advanced Media, “quietly” invested in daily fantasy sports operator DraftKings in 2013, the case says. Two years later, the league allegedly made a more robust investment in the platform, purportedly as a means to “reap meaningful benefit from the rise of daily fantasy” games for which players build their own teams and compete against others using real-life statistics.

MLB began to aggressively promote DraftKings’ daily fantasy baseball wagering contests across its media properties, during games and in ballparks nationwide, the suit continues. The marriage proved so fruitful that MLB in 2019 struck a deal with FanDuel, another major player in the daily fantasy sports arena, the case says. With both feet firmly planted on the side of daily fantasy sports betting, MLB, as the lawsuit tells it, has been “complicit in persuading fans to participate” in daily wagering competitions. 

The crux of the lawsuit is the allegation that fans, in particular DraftKings players, who participated in wagering “at the encouragement” of Major League Baseball were unaware that the league had “abandoned its commitment to preserving the honesty and integrity” of the sport by failing to thoroughly police electronic sign stealing. According to the complaint, MLB “was aware of but chose not to disclose” that illegal electronic sign stealing had compromised the on-field play and therefore the statistics used for daily fantasy competitions. At great issue, the plaintiff says, is a “lack of accountability” on the part of Major League Baseball and its constituent teams.

“While luring fans to participate in these fantasy games,” the complaint reads, “MLB member teams were engaging in secret corrupt and fraudulent conduct, in obvious violation of MLB Official rules and other regulations.”

The lawsuit looks to cover a class of all individuals who paid an entry fee for, entered a lineup into and participated in MLB daily fantasy sports contents held by DraftKings and/or FanDuel between April 2, 2017 and October 30, 2019.

ClassAction.org’s previous coverage of litigation filed over the MLB’s sign-stealing scandal, including a recap of how we got here and the Astros’ and Red Sox’s roles in the controversy, can be read here.