What changed in this filing

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Item 1. Legal Proceedings

2023-08-04 compared with 2023-05-05 · 79 added, 44 removed, 252 unchanged (33% of the section changed)

37 unchanged sentences

District Court for the District of Delaware.

In the Complaint, IG alleges that our daily fantasy sports (“DFS”) product offering infringes two patents:

8,956,231 (the “231 Patent”), which is entitled “Multi-process communication regarding gaming information”, and U.S.

In the Complaint, IG alleges that our DFS product offering infringes two patents:

8,956,231 (the

“231 Patent”), which is entitled “Multi-process communication regarding gaming information”, and U.S.

8,974,302 (the “302 Patent”), which is entitled “Multi-process communication regarding gaming information.” That same Complaint alleges that our Sportsbook product offering infringes two additional patents:

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On November 23, 2022, IG filed its reply briefs in the appeals of the IPRs related to the ’231 Patent and ’967 Patent.

Oral argument for both appeals has been set for June 7, 2023.

The District Court litigation remains stayed pending resolution of all appeals from the inter partes reviews.

Oral argument for both appeals was held on June 7, 2023.

On June 9, 2023, the Federal Circuit affirmed the PTAB’s decisions for the IPRs related to both the ’231 Patent and ’967 Patent.

The ’302 Patent is currently subject to an ex parte reexamination proceeding at the U.S.

Patent and Trademark Office (U.S.

Patent Application No.

90/015,151) (the “’302 Reexam”).

On June 12, 2023, a non-final office action was issued in the ’302 Reexam, rejecting or objecting to all claims in the ’302 Patent.

The District Court litigation remains stayed pending resolution of both:

(1) all appeals from the inter partes reviews, and (2) the '302 Reexam and any subsequent appeals therefrom.

We intend to vigorously defend this case.

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On July 28, 2021, Winview filed an amended complaint, in which it alleges that the Company infringes two additional patents:

9,993,730 (“the ’730 Patent”), entitled ”Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S.

9,993,730 (“the ’730 Patent”), entitled ”Methodology for Equalizing Systemic Latencies in Television

Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S.

10,806,988 (“the ’988 Patent”), entitled “Method Of and System For Conducting Multiple Contests of Skill with a Single Performance”.

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We also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in the SEC matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Any adverse outcome in the SEC matter

could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, we do not believe, based on currently available information, that the outcome of the SEC matter will have a material adverse effect on our financial condition, although the outcome could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

1 unchanged sentence

On October 21, 2021, the first of five substantially similar putative shareholder derivative actions was filed in Nevada by alleged shareholders of the Company.

The actions purported to assert claims on behalf of the Company against certain current

and former officers and/or members of the board of directors of the Company and DEAC.

The actions purported to assert claims on behalf of the Company against certain current and former officers and/or members of the Board of Directors of the Company and DEAC.

The two actions filed in the U.S.

8 unchanged sentences

On August 12, 2022, a putative class action was filed in Nevada state District Court in Clark County against Golden Nugget Online Gaming, Inc.

(“GNOG Inc.”), the Company and one of its officers, as well as former officers or directors and the former controlling stockholder of GNOG Inc.

(“GNOG Inc.”), the Company and one of its officers and two affiliates, as well as former officers or directors and the former controlling stockholder of GNOG Inc.

and Jefferies LLC.

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in connection with the GNOG Transaction, and the other defendants aided and abetted the alleged breaches of fiduciary duty.

On November 1, 2022, defendants filed motions to dismiss the action on the grounds of improper forum and lack of personal jurisdiction over certain defendants.

On December 22, 2022, plaintiff filed its opposition to defendants’ motions to dismiss.

On January 23, 2023, defendants filed reply briefs in further support of their motions to dismiss.

On February 7, 2023, the parties filed supplemental briefs with respect to the motions to dismiss.

Those motions remain pending.

On November 1, 2022, defendants filed motions to dismiss the action on the procedural grounds of improper forum and lack of personal jurisdiction over certain defendants or, in the alternative, to stay the action pending resolution of parallel proceedings in the Delaware Court of Chancery.

On May 24, 2023, the court (i) granted the motions to dismiss for improper forum with respect to GNOG Inc.

and its former officers and directors other than Mr.

Fertitta, as well as Jefferies LLC, (ii) denied the motions to dismiss for improper forum with respect to the Company and its officer and two affiliates, as well as Mr.

Fertitta and Fertitta Entertainment, Inc., and (iii) granted the non-dismissed defendants’ alternative request to stay the action for at least nine months pending resolution of parallel proceedings in the Delaware Court of Chancery.

On June 29, 2023, the plaintiff filed a motion for reconsideration of the court’s order insofar as it found certain claims subject to a Delaware forum requirement, which motion remains pending.

On September 9, 2022, two similar putative class actions were filed in the Delaware Court of Chancery against former directors of GNOG Inc.

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On January 13, 2023, defendants filed a motion seeking dismissal of the action.

On March 1, 2023, co-lead plaintiffs filed their opposition to defendants motion to dismiss.

On April 3, 2023, defendants filed their reply brief in further support of their motion.

The motion to dismiss remains pending.

On June 8, 2023, the court denied defendants’ motion to dismiss.

The Company intends to vigorously defend against these claims.

8 unchanged sentences

Patents are asserted against one or both of the Company's DFS and Casino product offerings in the amended complaint:

9,613,498 (“the ’498 Patent”), entitled “Systems and Methods For Peer-to-Peer Gaming”;

9,978,205 (“the ’205 Patent”), entitled “Location Based Restrictions on Networked Gaming”;

10,497,220 (“the ’220 Patent”) entitled “Location Based Restrictions on Networked Gaming”);

10,614,657 (“the ’657 Patent”) entitled “Location Based Restrictions on Networked Gaming”;

11,024,131 (“the ’131 Patent”) entitled “Location Based Restrictions on Networked Gaming” (collectively, the “Arrow Gaming Patents”).

9,613,498, entitled “Systems and Methods For Peer-to-Peer Gaming”;

9,978,205, entitled “Location Based Restrictions on Networked Gaming”;

10,497,220 entitled “Location Based Restrictions on Networked Gaming”;

10,614,657 entitled “Location Based Restrictions on Networked Gaming”;

11,024,131 entitled “Location Based Restrictions on Networked Gaming” (collectively, the “Arrow Gaming Patents”).

On November 9, 2021, we filed a motion to dismiss plaintiff’s complaint.

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On December 2, 2022, the Company filed a reply in support of the motion to stay.

Between August 22, 2022 and August 30, 2022, the Company filed petitions for inter partes review with the Patent Trial and Appeal Board challenging the validity of each of the Arrow Gaming Patents.

Between August 22, 2022 and August 30, 2022, the Company filed petitions for inter partes review with the PTAB challenging the validity of each of the Arrow Gaming Patents.

On March 14, 2023, the PTAB granted institution of all inter partes review petitions, and it is expected to issue final written decisions by March 14, 2024.

On June 7, 2023, Arrow Gaming filed its responses to the petitions.

DraftKings’ replies in support of the petitions are currently due on September 6, 2023.

On April 3, 2023, the District Court administratively terminated the lawsuit pending the PTAB’s final written decisions.

7 unchanged sentences

The following U.S.

Patents are asserted against Company’s Sportsbook and Casino products in the complaint:

9,965,920, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity” (“the ’920 Patent”);

10,043,341, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity” (“the ’341 Patent”);

10,147,266, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity” (“the ’266 Patent”);

10,255,755, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity” (“the ’755 Patent”) (collectively, the “Beteiro Patents”).

Patents are asserted against the Company’s Sportsbook and Casino products in the complaint:

9,965,920, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity”;

10,043,341, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity”;

10,147,266, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity”;

10,255,755, entitled “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity” (collectively, the “Beteiro Patents”).

The Company filed its motion to dismiss plaintiff’s complaint on February 9, 2022.

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On March 9, 2023, Beteiro filed its opening appellate brief.

DraftKings’ responsive brief is due on June 2, 2023.

On October 28, 2022, the Company filed petitions for inter partes review with the Patent Trial and Appeal Board challenging the validity of each of the Beteiro Patents.

DraftKings’ responsive brief was filed on June 9, 2023.

Beteiro’s reply brief was filed on July 1, 2023.

On October 28, 2022, the Company filed petitions for inter partes review with the PTAB challenging the validity of each of the Beteiro Patents.

Between May 11, 2023 and May 12, 2023, the PTAB instituted review for all Beteiro Patents.

Beteiro’s responses to the petitions are currently due on August 4, 2023.

We intend to vigorously defend this case.

34 unchanged sentences

Colossus filed its reply brief on April 11, 2023.

A hearing has been set for the motion to strike on June 6, 2023.

Magistrate Judge Burke held a hearing on Colossus’ motion on June 6, 2023 and subsequently issued a report and recommendation (the “Second Report and Recommendation”) that the motion be denied in part and granted in part.

Colossus filed objections to the Second Report and Recommendation on June 21, 2023, and DraftKings filed its response to Colossus’ objections on July 5, 2023.

On August 2, 2023, Judge Noreika overruled Colossus’ objections and adopted the Second Report and Recommendation.

Between November 29, 2022, and February 7, 2023, the Company filed petitions for inter partes review with the PTAB challenging the validity of the Colossus Patents.

With respect to the seven patents remaining pending in the case, the PTAB granted institution of IPRs for each of the ’341 patent, ’969 patent, and the ’822 patent.

The PTAB denied institution of IPR for each of the ’516 patent, ’716 patent, and the ’338 patent.

The parties await the PTAB’s decision whether to institute IPR for the ’779 patent.

On August 1, 2023, DraftKings filed a motion to stay the case, but to allow foreign discovery to continue, during the pendency of the instituted IPRs.

We intend to vigorously defend this case.

28 unchanged sentences

Plaintiff alleges that, instead of paying out the prize money, the Company refunded entry fees to contestants that entered showdown or flash draft fantasy contests.

Plaintiff asserts claims for breach of contract, unfair and deceptive acts and practices, false advertising, and unjust enrichment.

Among other things, Plaintiffs seeks statutory damages, monetary damages, punitive damages, attorney fees and interest.

On April 14, 2023 the court granted plaintiff’s motion to file an Amended Complaint on or before May 8, 2023 and extended the time for DraftKings to respond to May 15, 2023.

On May 8, 2023, plaintiff Turley and a new plaintiff (Erik Ramos) filed a First Amended Class Action Complaint.

On June 12, 2023, DraftKings filed a motion to dismiss the claims asserted by both plaintiffs or, in the alternative, strike the flash draft allegations.

Plaintiffs filed an opposition on July 17, 2023.

Defendant was granted leave to file a reply, which is due on August 3, 2023.

The plaintiffs assert claims for breach of contract, unfair and deceptive acts and practices, false advertising, and unjust enrichment.

Among other things, plaintiffs seek statutory damages, monetary damages, punitive damages, attorney fees and interest.

The Company intends to vigorously defend this case.

4 unchanged sentences

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

Matter Related to DraftKings Marketplace

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this matter will have a material adverse effect on Company’s financial condition, although the outcome could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

Securities Matters Related to DraftKings Marketplace

On March 9, 2023, a putative class action was filed in Massachusetts federal court by an alleged purchaser of non-fungible tokens (“NFTs”) on the DraftKings Marketplace (“DK Marketplace”).

The complaint asserts claims for violations of federal and state securities laws against the Company and three of its officers on the grounds that, among other things, the NFTs that are sold and traded on the DK Marketplace allegedly constitute securities that were not registered with the SEC in accordance with federal and Massachusetts law, and that the DK Marketplace is a securities exchange that is not registered in accordance with federal and Massachusetts law.

Based on these allegations, plaintiff brings claims seeking rescissory damages and other relief on behalf of himself and a putative class of persons who purchased NFTs on the DK Marketplace between August 11, 2021 and the present.

The Company intends to vigorously defend this matter.

Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of this matter.

The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liability or damages.

Based on these allegations, the plaintiff brings claims seeking rescissory damages and other relief on behalf of himself and a putative class of persons who purchased NFTs on the DK Marketplace between August 11, 2021 and the present.

On June 27, 2023, the court entered an order authorizing the plaintiff to file an amended complaint by August 4, 2023.

The defendants’ response to the amended complaint is due on September 25, 2023.

We intend to vigorously defend this case.

On July 17, 2023, the Company received a subpoena from the Securities Division of the Office of the Secretary of the Commonwealth of Massachusetts seeking documents and requesting answers to interrogatories concerning, among other things, DK Marketplace and NFTs that are sold on DK Marketplace, and related matters.

We intend to comply with these requests.

Any adverse outcome in these matters could subject the Company to substantial damages and/or require alterations to the Company’s business.

The Company cannot provide any assurance as to the outcome of these matters.

The Company cannot predict with any degree of certainty the outcome of these matters or determine the extent of any potential liability or damages.

The Company also cannot provide an estimate of the possible loss or range of loss.

Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.

Any adverse outcome in these matters could expose the Company to substantial damages, penalties and/or require alterations to the Company’s that may have a material adverse impact on the Company’s operations and cash flows.

Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of these matters will have a material adverse effect on Company’s financial condition, although the outcome could

be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

Shareholder Derivative Litigation Related to DraftKings Marketplace

On May 31, 2023, a putative shareholder derivative action was filed in Nevada state court by an alleged shareholder of the Company.

The action asserts claims on behalf of the Company against certain senior officers and members of the Board of Directors of the Company for breach of fiduciary duty and unjust enrichment based primarily on allegations that the defendants caused or allowed the Company to disseminate misleading and inaccurate information to its shareholders in connection with NFTs that are sold and traded on the DK Marketplace.

The action also alleges that certain individuals are liable for trading in Company stock at artificially inflated prices.

The action seeks unspecified compensatory damages, changes to corporate governance and internal procedures, restitution, disgorgement, costs and attorney’s fees, and other unspecified relief.

No defendant has responded to the complaint in this case.

The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities.

The Company also cannot provide an estimate of the possible loss or range of loss.

Because this action alleges claims on behalf of the Company and purports to seek a judgment in favor of the Company, the Company does not believe, based on currently available information, that the outcome of the proceedings will have a material adverse effect on the Company’s financial condition, although the outcome could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

In addition to the above actions, we are subject to various other legal proceedings and claims that arise in the ordinary course of business.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings