PointsBet Falsely Promised ‘Risk-Free’ Bets, Refunds, Class Action Claims

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A proposed class action alleges PointsBet USA’s promotional promises of “risk-free” bets and “refunds” for unsuccessful wagers ring hollow given the online gambling company offers only limited-duration vouchers good for merely a second round of bets. 

According to the 43-page case out of Colorado, these vouchers cannot be exchanged for cash or withdrawn and expire after only 30 days. The suit says that a user can only recoup their initial losses should they win a second round of bets at “disfavored odds,” making PointsBet’s offer “anything but ‘risk-free.’” 

Filed against PointsBet USA and its New York, Indiana, Iowa, Michigan, New Jersey, Colorado, Illinois, West Virginia, Virginia and Pennsylvania subsidiaries, the lawsuit relays that the parent defendant enjoyed “meteoric growth” in the U.S. from 2019 through 2021—success bolstered by partnerships with CBS Sports and all four major national North American sports leagues. Per the case, PointsBet claims to be the fastest-growing sports betting company in the country despite an increasingly crowded market. 

This increased competition led PointsBet’s share of the total bets placed nationwide to take a dip in the third quarter of 2021, the complaint relays. After realizing that it was losing market share, PointsBet needed to not only draw in more customers but “needed a way to make they stay,” the lawsuit states. 

“PointsBet therefore had a problem: it needed to not only attract customers, but find a way to retain them on its platform so that they would not simply take advantage of its promotions and then leave to a competitor. It needed a plan to keep users tied to its platform.” 

To address this quandary, PointsBet embarked on an “aggressive” campaign centered on a promised promotional offer “specifically designed to force [customers] to stay on its platform and place additional bets, or else forfeit the promotion entirely,” the lawsuit says. Those who remained did not receive the benefit they were promised, and fell victim to a marketing strategy designed to “capitalize on the addictive nature of gambling” and the susceptibility of online sports bettors, the suit claims. 

Per the lawsuit, PointsBet, amid its marketing blitz, was well aware of research on the effects of misleading advertisements on the high-risk demographic of online sports bettors yet continued to tout its promotional offers as “risk-free”—and without clearly disclosed terms and conditions.

According to the case, the terms and conditions for PointsBets’s “risk-free” promotional offers appear “[i]n nearly microscopic print.” 

The truth about PointsBet’s “risk-free” and supposedly refundable promos, the lawsuit alleges, is that a user who signed up for one of these promotions and placed an unsuccessful bet would not receive a refund but instead “free bets”—which are subject to a number of restrictions, are non-transferable, expire after 30 days and cannot be redeemed for cash—for up to the amount they initially lost. 

Further, the complaint says that there are “significant differences” in the payouts for bets placed with free bet credits as opposed to ordinary bets. For an ordinary bet, for instance, a user who wins will receive back the amount of money they bet plus the payout for their winnings, the filing explains. The same is not true for bets placed with free bet credits, as a user receives only their amount in winnings, and not the initial amount wagered, the suit says.

“In other words, a user who places a bet for $500 on a bet that pays out $300 will receive $800 if he wins: $500 as reimbursement for the amount wagered, plus $300 in winnings. 

However, if a user were to place the same $500 bet using PointsBet’s free bet credits, and won, that user would receive back only the $300 in winnings.” 

At no point are PointsBet promo users informed prior to placing their initial bets that their “refunds” would come in the form of non-redeemable vouchers subject to a 30-day expiration limit, or that they would need to place a second round of bets in order to receive the promised “refunds,” the lawsuit alleges. 

“These were all material omissions, in that they significantly altered the perceived value of the offer PointsBet advertised,” the suit argues. 

The case looks to cover all persons who created a PointsBet account, whether via its website, mobile app or third-party platform, signed up for a PointsBet account and placed bets on the platform using codes for promotional offers. 

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