Lawsuit Between City of Baltimore, DraftKings, and FanDuel Takes New Turn

As the top mobile betting apps, DraftKings and FanDuel are most prone to lawsuits. That comes with the territory. However, getting hit with a suit from the city of Baltimore, now that was shocking to us, and the rest of the legal sports betting industry.

Now the same suit has taken another surprising turn, it’s heading to federal court. In May, the two sportsbooks officially filed a Notice of Removal, pulling the case out of the Circuit Court for Baltimore City and into the U.S. District Court for the District of Maryland.

Why is that important? Instead of a local jury pool — made up of the very residents the city says were harmed — the case now moves to a broader federal stage. That might not seem like much, but in a high-stakes industry fight like this, it’s a strategic shift that could “level the playing field” per se. Before we get into the details of the shift, let’s cover how we got here in the first place.

Why Baltimore Sued Sportsbook Operators

Let’s rewind back to April. Mayor Brandon Scott and the Baltimore City Council filed the bombshell lawsuit, accusing DraftKings and FanDuel of deceptive business practices and violating the city’s Consumer Protection Ordinance. Per the officials, the two companies targeted vulnerable residents — especially those struggling with gambling addiction — and used data-driven tactics to push them deeper into betting.

“These companies are engaging in shady practices, and the people of our city are literally paying the price,” Scott. “They’ve targeted our most vulnerable, and they’ve done real damage.”

The suit calls out what it describes as a “two-pronged scheme” — using misleading promotions to lure new users, while quietly leveraging user data to re-target individuals most at risk of problem gambling. Some might call that savvy marketing, but according to City Solicitor Ebony Thompson, it’s “corporate greed.”

Why the Case Moved to Federal Court

So why take it federal? The operators invoked a specific rule: 28 U.S.C. § 1332. That allows civil cases to be transferred to federal court when two conditions are met — the parties are from different states, and the damages exceed $75,000.

Both apply here. DraftKings is based in Nevada and headquartered in Boston. FanDuel’s parent company, Flutter, is based in Ireland. And as for damages? Baltimore wants civil penalties for every single alleged violation — easily pushing the total into the millions.

But here’s the real point of the move: protecting DraftKings and FanDuel from a hostile local environment. The jury pool won’t be made of Baltimore and Maryland locals, not at the federal level. That may turn out to be a deciding factor of the case.

DraftKings Says You Sued the Wrong Entity

Tucked into the removal notice is another clue at what’s coming next. DraftKings says it may not even be the right defendant. “We don’t concede the proper entity has been named,” the company wrote.

FanDuel is doing something similar. Either way, this is what you call a defensive front. Before even addressing the substance of Baltimore’s claims, both companies are setting the stage to get it thrown out based on legal technicalities. You got to love the American system, eh?

Aside from that, the sportsbooks will argue that everything they’ve done complies with Maryland’s state regulations on legal sports betting, as outlined in COMAR Title 36. Those rules govern promotional conduct, ad targeting, and operational behavior. The state gave them licenses — and by that logic, the city shouldn’t be able to override those permissions.

But on the other hand, the state’s own regulations leave little wiggle room. They prohibit promotions that violate federal, state, or local laws — and specifically ban conduct that could “adversely impact the public.” Baltimore is banking on those broad terms to prove its case has legs.

And remember: courts are required to interpret the complaint in the city’s favor at this stage. The goal isn’t to prove the case — just to show there’s enough to justify moving forward.

What’s Really At Stake?

This lawsuit is way bigger than Baltimore. It’s way bigger than Maryland’s sports betting industry. If it survives the dismissal stage, it could set off a chain reaction. Other cities and counties — especially those with rising concerns around addiction and overly aggressive sportsbook marketing — could start following Baltimore’s lead.

For DraftKings and FanDuel, that’s a nightmare scenario. Both companies have invested heavily in market expansion, particularly in states like Maryland where mobile betting is relatively new still. A successful city-level lawsuit — even one that results in a settlement — could open the floodgates nationwide. Uh oh.

This is also a public relations test. As the industry matures, it’s starting to draw the same scrutiny once reserved for Big Tech or Big Tobacco. Gambling is the new whipping boy for all of society’s evils. And how the big players operate is now fair game for legal and political pushback.

For now, the lawsuit is alive and officially in federal court. It’s not clear who has the upper hand yet — but one thing’s for sure: everyone in the sports betting world is watching. Closely.