DraftKings is facing a legal challenge from Colossus Bets after the latter filed a lawsuit on December 1, 2021 for patent infringement. The suit, filed in District Court for the District of Delaware, points to seven specific patents covering various gaming features that include a Cash Out feature.
Colossus Bets is a global operator and developer that provides lottery-sized pools with significant guaranteed jackpot and consolation prizes and partners with other operators like bet365, Matchbook and BetWay. Among the products developed by Colossus Bets is the Cash Out feature, which allows incremental cash-outs for players during play.
Cash Out is available as part of the Colossus suite of products but it can also be applied as an overlay for existing, non-Colossus products as well. The feature is deployed in products around the globe, both with in-house products as well as products for other operators such as Betfair New Jersey.
It is this Cash Out feature that is the subject of the current legal action. The move signals a larger intent from Colossus Bets to vigorously defend its patents in court wherever it sees an infringement.
Taking patent infringement seriously
Bernard Marantelli, the founder of Colossus Bets and inventor of the patents-in-suit, made it clear they tried to resolve the issue without legal action but stated that when that failed, the operator was left with little choice.
“We take our intellectual property very seriously,” Marantelli said. “This is the next step toward protecting our rights and income across the industry in the US.”
The lawsuit is part of a larger strategy aimed at protecting its intellectual property and follows similar legal action in Australia against Tabcorp. Global law firm DLA Piper is representing Colossus Bets in these and other patent and IP-related matters around the world.
The 2021 lawsuit against DraftKings comes after a few years of trying to resolve the matter outside the courts. Colossus Bets first notified DraftKings of the alleged violations as far back as 2018 and has since provided more than one notice of infringement.
The legal move came after Colossus Bets felt it had exhausted all its other options. “We attempted to resolve this amicably and we gave them ample opportunity to do so,” Marantelli said.
The suit was filed after DraftKings continued to offer the disputed products despite repeated notifications of ongoing infringement. The suit seeks to recover all damages available by law, including extra penalties for willful and deliberate infringement, stemming from the repeated infringement notices.
The action in the US is part of a larger global strategy to protect Colossus Bets’ patent rights. The company previously announced patent licenses around the globe with bet365 and Esports Technologies in markets like Australia, Japan, South Korea, the Philippines, Indonesia, South Africa, Singapore, Nigeria and Eurasia (EAPO).
While the claims are yet to be heard in court, this lawsuit, as well as the Australian lawsuit against Tabcorp, will have larger implications.
The scope of Colossus Bets’ patent library is quite large, and the aggressive legal moves will have implications for the entire gaming industry, both within the US and worldwide.
Other operators will likely be watching to see how this claim plays out in the US courts. It could signal a larger change in the global market, but at the very least the lawsuit shows Colossus Bets is willing to defend its rights in court wherever it sees infringement.
