Why a Legal Battle Could Develop Between DraftKings and a Former Bachelor Contestant

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UPDATE: Sports Illustrated has learned that DraftKings player spclk36 has retained prominent attorney Alan Milstein for representation in the dispute discussed below. Milstein, who is a shareholder at Sherman Silverstein in New Jersey, has litigated on behalf of Allen Iverson, Carmelo Anthony, Maurice Clarett, Eddy Curry and other sports figures. The hiring of Milstein sends a clear message that spclk36 will contest the current order of prize winners.

Are Jade Roper Tolbert and DraftKings headed for a legal dispute over a $1 million prize?

The 33-year-old former contestant on both The Bachelor (Season 19) and The Bachelor in Paradise placed first in DraftKings’ “Millionaire Maker” challenge over the weekend. Her winning entry was one of the 150 entries she purchased for reportedly $25 each, for a total of $3,750. DraftKings caps the number of allowable entries per player to 150 in order to ensure that no player “games” the system by obtaining higher than acceptable odds.

Roper Tolbert’s winning entry amassed the most points of the 105,883 total entries purchased by players in the competition. Her 180.78 points edged out the entry of runner up spclk36, who scored 178.16 points. SPclk36 earned $100,000 for its second-place finish, while obiejake netted $40,000 for finishing in third place with a score of 177.12. Others who finished in the top tier gained the right to receive smaller winnings.

Roper Tolbert excelled at picking some of the highest performing players from this past weekend’s four wild-card games. Her winning lineup included Seattle Seahawks receiver DK Metcalf, who caught seven passes, one of which was a touchdown, in his team’s 17-9 victory on Sunday over the Philadelphia Eagles. It also included Houston Texans quarterback Deshaun Watson (247 yards, one touchdown pass) and New Orleans Saints running back Alvin Kamara (21 yards, one rushing touchdown).

Roper Tolbert’s victory has come under fire for possible collusion with her husband, Tanner Tolbert, whom Roper Tolbert met on The Bachelor in Paradise. Tanner, like his wife, purchased the maximum allowable number of entries.

Evidence of possible collusion

On the surface, the couple’s 300 total lineups suggest they coordinated their entries.

One particularly troubling factor: 298 of the 300 lineups were unique, a highly unlikely result if the two had submitted lineups without any prior coordination. Twitter user @huitcinqDFS identified this atypical prevalence of unique lineups to remark, “they cheated, end of story.” In addition, Roper Tolbert’s lineup featured quarterbacks who mostly played on Saturday while her husband’s lineup mostly contained quarterbacks who played on Sunday. This sparked Twitter user @williambierman to contrast the quarterback selections and contend “this is absolutely insanity and is the clearest collusion ever.”

If the two had, in fact, coordinated their combined 300 entries, they would have run afoul of DraftKings’s community guidelines. Those guidelines prohibit so-called “team-building complementary lineups” when two or more people “serve to work together AND execute a strategy that may create any unfair advantage over individual play.” To illustrate a prohibited strategy, DraftKings imagines that three friends coordinate the makeup of their lineups and then synchronize which contests they enter using those lineups.

DraftKings distinguishes lineup coordination from mere discussions and debates between family and friends about lineups. To that end, it is permissible for players to “discuss strategy around building lineups, statistics, and the quality of your picks publicly or privately.” Also, two friends can work closely and build a lineup together.

In other words, it would have been okay if Roper Tolbert and her husband had together purchased 150 entries and coordinated their 150 total entries. It would have also been okay if the couple had discussed the strategies and plusses and minuses of their picks and each went on to independently purchase 150 entries. To that end, Roper Tolbert’s now-controversial tweet that her husband discouraged her from playing Metcalf is not, in and of itself, proof of collusion. The discouragement could have been part of a married couple’s normal banter.

However, it would not have been okay if Roper Tolbert and Tolbert had executed a strategy to double their odds for winning by getting 300 chances instead of 150. That would have constituted textbook collusion: two competing players conspiring to game the system and cheat other players.

The limit of entries to 150 is also not a randomly selected number by DraftKings. As Dustin Gouker of Legal Sports Report details, state laws related to daily fantasy sports tend to use 150 as a sensible cap. Gouker highlights New York’s law which states:

Each Operator must restrict the number of entries submitted by a single authorized player for any contest to 150 entries per player per contest, or by a maximum of three percent of the total number of entries by all players for any contest, whichever is less, or as determined by the Commission. Operators must take reasonable steps to prevent authorized players from submitting more than the allowable number of entries per contest.

A potential legal battle would probably land in arbitration

A spokesperson for DraftKings has issued a statement saying the company will investigate Roper Tolbert’s entry to ensure compliance with company fairness and integrity requirements. The company does not pay out an award until it completes an investigation.

In addition, DraftKings possesses the authority under its terms and conditions to require that a player submit an affidavit—meaning a sworn statement that could give grounds for a perjury criminal charge if the affiant knowingly lies—to attest that he or she is “in compliance” with DraftKings rules.

If DraftKings ultimately refuses to pay Roper Tolbert, she might consider suing DraftKings for breach of contract, consumer fraud, invasion of privacy and other possible claims.

She could, for instance, deny that collusion took place and stress that her odds of winning were higher than most players since she purchased—at her own expense—150 entries. Roper Tolbert could thus portray the criticism as sour grapes from jealous people. Likewise, she could assert that there is no evidence of collusion, only a theory of it from various people on Twitter; historically, collusion requires actual evidence, including a paper trail. It’s unclear how DraftKings would uncover evidence of texts or emails between a married couple unless the company took legal action against them (which is unlikely, as discussed below, and could also run afoul of spousal testimonial privileges)

Roper Tolbert could further insist that a married couple has a privacy right to discuss decisions that have financial implications for the family—including the family checkbook or credit card used to pay DraftKings. From that lens, denial of payment by DraftKings might constitute an invasion of privacy. She might also contend that DraftKings is treating her differently, and more harshly, because of the public backlash over her victory.

Obviously, DraftKings would disagree with all of these points. The company would argue, among other things, that in the context of rule compliance and the “Millionaire Maker” challenge, Roper Tolbert and Tolbert were not husband and wife—they were competing players. If they colluded, the fact that they were married when they colluded is irrelevant.

Also, one major hurdle for Roper Tolbert in any legal action would be DraftKings’ terms and conditions. Those terms require that players accept arbitration to resolve any legal disputes stemming from their contractual agreements and commercial transactions with DraftKings, including potential claims for breach.

Specifically, Tolbert and DraftKings would be compelled to raise their arguments before a single arbitrator appointed by the American Arbitration Association. The arbitration proceeding must also be conducted in accordance with the Federal Arbitration Act, which largely insulates arbitration awards (arbitration rulings) from review by federal judges. The arbitration hearing would be held in Suffolk County, Massachusetts. This is the county for Boston, where DraftKings is headquartered. Roper Tolbert’s Twitter account indicates she lives in Kansas City and Los Angeles, meaning she would need to travel to take on DraftKings.

Under DraftKings’ terms and conditions, the arbitrator would also be limited in the financial award that he or she could assign. Punitive damages—meaning damages to punish, rather than to merely compensate—would be prohibited.

An arbitration hearing is also conducted in private, unlike a trial which is held in public. Furthermore, records generated from arbitrations are confidential, unlike those from a trial which are published.

Like many companies, DraftKings, which intends to go public in 2020 with a $3.3 billion valuation and which has grown in scope as more states legalize sports wagering, likely does not want to litigate matters with players. Litigation involves pretrial discovery, where parties are compelled to share sensitive records and where company executives can be forced to answer questions under oath. Litigation also produces records that can be accessed by media and lead to news stories that impact valuations of companies and their stocks. Such records could also be reviewed by state lawmakers and regulators who are dubious of daily fantasy sports and sports wagering-related activities.

By agreeing to play DraftKings, Roper Tolbert further waives all rights to a trial by jury “for any claim.” To the extent she and her attorneys could succeed in getting a court to hear a claim, only a judge would decide it. DraftKings also insulates itself from potential legal exposure through a series of warranties. The warranties make clear the company’s website and software are not viable grounds for legal actions.

DraftKings might pay Roper Tolbert even if company officials believe she and her husband colluded

Regardless of DraftKings’ investigatory findings, the company might be tempted to pay Roper Tolbert. A legal fight with Roper Tolbert would attract headlines and DraftKings could risk being portrayed as a bully. Also, a legal fight would likely require DraftKings to hire attorneys. Meanwhile, such a legal battle with Roper Tolbert could motivate Wall Street investors—who will soon have a chance to buy DraftKings stock—and state regulators to take a closer and more scrutinizing look at the company. Stated differently, by not paying Roper Tolbert, DraftKings could lose more than the $1 million it would need to pay her.

On the other hand, DraftKings has wisely insulated itself from the threat of a trial by mandating that players use arbitration for most types of disputes. And, as discussed above, arbitration is private and confidential. That type of environment would diminish the public—and media—interest in a dispute.

Also, if DraftKings pays Roper Tolbert despite concluding that she colluded, two groups might question the merits of that choice.

First are the runner-up players, including sPclk36 and obiejake, who netted less money because Roper Tolbert won. If they believe that DraftKings is not upholding the terms and conditions to play and that DraftKings’ failure has cost them deserved winnings, they could consider bringing a legal action (but, as detailed above, it would go to arbitration).

Second are lawmakers and regulators who might question whether DraftKings is willing to enforce rules that, in some instances, states require.

Sports Illustrated will keep you updated on developments.

Michael McCann is SI’s Legal Analyst. He is also an attorney and Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.