BUSINESS

DraftKings faces $4.16M lawsuit over unpaid ads

TAGs: Anthem Sports, daily fantasy sports, DraftKings, Leonard Postrado

Daily fantasy sports operator DraftKings is now in hot water over an alleged unpaid advertising and television programming deal.

DraftKings faces $4.16M lawsuit over unpaid adsForbes reported that Anthem Sports & Entertainment Corp., owners of Fantasy Sports Network Inc., dragged DraftKings to the U.S. District Court for the Southern District of New York after the latter reneged on its obligation to them as part of their commercial deal.

In its complaint filed on Friday, Anthem Sports has asked the court to order DraftKings to pay no less than $4.16 million in damages – including the alleged $575,000 unpaid invoices – and to indemnify them for the benefits that the defendant may have received through a special agreement.

Records showed that Anthem Sports and DraftKings signed a commercial agreement in June 2015, which requires DraftKings to pay $1.5 million per year, in monthly installments, for a total of three years in exchange for overseeing and operating a New York television studio that produced and distributed DraftKings ads, which would also run on DailyRoto.

The deal, according to Anthem Sports, branched out to a variety of other non-binding provisions. Simultaneously, according to the plaintiffs, DraftKings tried to acquire Fantasy Sports Network from Anthem Sports & Entertainment.

Concerned by these developments, Anthem Sports pointed said they requested DraftKings to tweak the original agreement. In response to their request, the plaintiff said they received a text message from a DraftKings representative telling them “Let’s get working in good faith.”

In September 2015, Anthem Sports said programming designed deliberately to favor DraftKings started airing. The plaintiffs, however, failed to provide advertising space on Daily Roto. Soon, the plaintiffs noted that most payments made by DraftKings has begun to reduce to $115,000 from $125,000.

Anthem Sports pointed out that the first three invoices submitted by the plaintiffs to DraftKings. Payment ceased thereafter. Still, the plaintiffs said they continued buckling down their work on creating content for DraftKings’ platforms.

The complainant said they reached out to Robins on April 4, 2016 after four invoices were past due. At first Robins assured them that payments would be made. But on the same day, DraftKings Chief Financial Officer Janet Holian asked the plaintiffs to stop producing the DraftKings-related programming.

Anthem Sports insisted that they are entitled to additional damages based on DraftKings’ promise that it would execute a contract reflecting the totality of the deal terms as well as the expenses that the plaintiffs incurred (well over $1 million, per the Complaint) due to DraftKings’ promises. Additionally, the plaintiffs allege that DraftKings was enriched at the plaintiffs’ expense.

In response to the law suit, Jason Alderman of DraftKings said: “DraftKings has not been properly served the complaint. If and when that happens we will vigorously defend ourselves from these meritless allegations.”

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