Friday, April 6, 2018

DraftKings: Falsifying Advertisements (2016)

Controversy:

DraftKings' website home page
        DraftKings is a daily fantasy sports company in which players place bets daily on professional sports. People who play these games can bet directly on sporting events or they can choose lineups of athletes from professional sports and compete to see if their team can gain the most points. There are always opportunities to gamble each and every day because games are played on a daily basis. In America, this kind of gambling has become quite popular recently. The question that all players of DraftKings have is how much they can actually win by partaking in these gambling games. In the several weeks leading up to the 2015 National Football League season, DraftKings and its fantasy counterpart FanDuel “spent more on advertising than the entire American beer industry” as they attempted to grow larger (Van Natta Jr.). However, the information that DraftKings’ revealed in their ads was fudged in attempt to appeal to the general public. This information was inaccurate regarding the amount of money a person could actually win playing their games. In fact, “one DraftKings disclaimer cited by the attorney general’s office stated that the ‘average user’s winnings for the last 12 months [was] $1,263.’ But that figure failed to account for fees and losses” (Shen). With that, it was deemed that DraftKings did not properly advertise the significant advantages professional players have as well as the fact that they “fail[ed] to disclose the dangers of gambling addiction” (Lovett). Essentially, DraftKings was only displaying the winning figures, not the money that the average user had to spend in order to play the game nor was the money that they lost exhibited.

        The unethical advertisement strategies by DraftKings led to a six million dollar lawsuit ordered by the New York Attorney General Eric Schneiderman in October of 2016. The lawsuit was placed to resolve “false and deceptive advertising practices by the company” (Gouker).

        The stakeholders in this case include DraftKings as a company, the New York State Attorney General, the players of DraftKings along with their friends and families and even private bookmakers. All these people are affected by the lawsuit that occurred against DraftKings. In brief, the players are either losing money and becoming frustrated with the company that would result in the company losing some business or they are winning money and are thrilled. On the other hand, bookmakers could start seeing more people seeking them out for advice on what to bet on and how much to bet.


Individualism:

According to Individualism, a business' only concern is to maximize their profits while remaining within the realms of the law of society and human rights. It is deemed as a direct violation against stockholders if a business is not maximizing profits because a business has the duty of maximizing profit for those that hold stock in their company. In the case of DraftKings, their actions were unethical according to the theory of Individualism. With their false advertisements, they intended to maximize profits by marketing appealing prize money that a person could win. However, due to the fact that they “misled novice players about the substantial advantages that high-volume professional players had,” their advertisements were ethically impermissible under Individualism. Additionally, DraftKings “misled players about the likelihood that they would earn a positive return” (Drape). Although DraftKings attempted to maximize profits with their advertisements, the fact that they went against the law by falsely advertising their games makes these actions unethical according to Freidman’s Individualism.


Utilitarianism:
Drew Brees, one of the NFL's top quarterbacks.


        Utilitarianism has its main value focused on overall happiness. It says that actions taken by a business should aim at maximizing the happiness of all those who are affected and who are capable of feeling pleasure and happiness. In order to accurately analyze DraftKings’ actions based on Utilitarianism, all the stakeholders involved must be considered. Under Utilitarianism, the advertisements displayed by DraftKings are ethically impermissible. The players who are losing money to DraftKings are upset because they were lied to and expected to win at least something in return. Also, there is no happiness amongst the friends and family of the players of DraftKings because their loved ones are losing money. The lawsuit against DraftKings implies that DraftKings as a corporation is not happy both because they have a bad reputation now and it could affect the amount of people that play their games. In fact, DraftKings “briefly stopped operating in New York” after the lawsuit (Lovett). As a result, DraftKings lost some of their revenue on top of the six million dollar lawsuit they faced. The attorney general of New York is aggravated and annoyed by the actions of DraftKings because he does not want to see the people living in New York being lied to and cheated. The only other stakeholder that could benefit from this is a private bookmakers because they will make money off of those who seek their help for advice on what to bet on. This could also make the players of DraftKings even angrier because now they would have to spend even more money to be able to gamble more intelligently. Although there are some people that benefit and are happy with the actions of DraftKings, more stakeholders are upset and bothered because they are losing money and being lied to. Because the overall feeling is dissatisfaction, the advertisements put out by DraftKings are ethically impermissible according to the beliefs of Utilitarianism.


Kantianism:

        Kantianism is an ethical theory that states that a business should act in ways that respect all individuals and the choices they make. Actions made by a business are considered ethical if they do the right thing for the right reason. In order for an action to be deemed permissible, companies must use informed and rational consent from all those who are involved. Under Kant’s Formula of Humanity, it is morally wrong to use people as a mere means to get what you want. Business entities should not exploit, deceive or harm any of their customers for their own benefit. The actions by DraftKings are considered morally wrong and ethically impermissible under Kantianism. The attorney general was quoted as saying “no company has a right to deceive New Yorkers for its own profit.” The fact that DraftKings lied to and deceived their customers directly violates Kant’s aforementioned Formula of Humanity. DraftKings intended to exploit their customers to gain revenue for their company by wrongfully advertising their fantasy sports games. Another important aspect to look at when discussing Kantianism is the fact that gambling is a severely addicting hobby. Making it more appealing to play, DraftKings removed the ability of those addicted to gambling to be rational because they believe that they can win a large quantity of money because that’s what was advertised to them.
Virtue Theory:
Aaron Judge (left) and Jose Altuve (right) are two
of the best players in the MLB. Players that
are often bet on by those playing DraftKings.
The Virtue Theory is based on four major virtue characteristics which are courage, honesty, temperance and justice. Courage relates to risk-taking and the willingness of a business to stand for the right actions. Honesty means that a business should be honest with all agreements that they make. Temperance ensures that a business maintains reasonable expectations and justice correlates to a business being fair in all their practices. For DraftKings, their unethical advertisements were intended to help them flourish by getting more people to play, thus more revenue for the corporation. However, under Virtue Theory, DraftKings’ advertisements are considered unethical and morally wrong. DraftKings may have flourished temporarily after they released their advertisements, but looking at it in the long run, their lawsuit and decrease in people who played their games reveal that the company did not flourish. By being unethical with their advertisements, DraftKings risked the company’s identity because now people who used to play might not want to play anymore because of the bad connotation that DraftKings has. It is also evident that DraftKings did not live up to their agreements because they advertised that people had an excellent chance of winning money, which was proved to be false. For these reasons, DraftKings was unethical according to Virtue Theory.
       
Bibliography
Shen, Lucinda. “DraftKings and FanDuel Settle New York Lawsuit for $12 Million.” Fortune, 26 Oct. 2016,
fortune.com/2016/10/26/draftkings-fanduel-settlement/.
Van Natta, Don. “The inside Story of the Quick Rise and Quicker Fall of DraftKings and FanDuel.” ESPN,
Gouker, Dustin. “DraftKings, FanDuel Pay $6 Million Each To Settle New York Case.” Legal Sports Report,
Lovett, Kenneth. “FanDuel, DraftKings to Pay $6M Each in Fines for Deceptive Ads.” NY Daily News,
Korman, Chris. “DraftKings and FanDuel Are Fun, Addictive, and Completely Unfair for Most Fans.” USA
Today, Gannett Satellite Information Network, 18 Sept. 2015, ftw.usatoday.com/2015/09/daily-fantasy-sports-football-drafkings-fanduel-commercials.
Drape, Joe. “DraftKings and FanDuel to Pay $6 Million Each to Settle New York Claims.” The New York
“DraftKings | Daily Fantasy Sports For Cash.” DraftKings - Daily Fantasy Sports for Cash,
Salazar, Heather. Western New England University. Spring Semester 2018 Class Notes.
Salazar, Heather. “The Business Ethics Case Manual: The Authoritative Step-by-Step Guide to
Understanding and Improving the Ethics of Any Business.”
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