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DraftKings Challenges Interactive Games’ Geolocation Patent: A Deep Dive into the Legal Battle and Its Implications for US Sports Betting

By jili tutorial · September 22, 2026

DraftKings Challenges Interactive Games’ Geolocation Patent: A Deep Dive into the Legal Battle and Its Implications for US Sports Betting

Overview of the Dispute

DraftKings, one of the largest sports betting operators in the United States, has formally petitioned the US Patent and Trademark Office (USPTO) to invalidate US Patent No. 12,406,284, held by Interactive Games LLC. This move is the latest twist in a broader legal conflict that began in April 2024, when Interactive Games sued both DraftKings and FanDuel for allegedly infringing five of its patents related to geolocation and geofencing technology.

The patent in question was originally developed by Cantor Gaming, the now-dormant gambling technology division of global financial services firm Cantor Fitzgerald. Two of the five patents at the center of the lawsuit were invented by Howard Lutnick, who served as CEO of Cantor Gaming before becoming US Secretary of Commerce in 2024. These patents were later transferred to Interactive Games, a company that appears to be a patent-holding entity (often called a “non-practicing entity” or “patent troll”).

The Patent at the Center of the Battle

What Does US Patent No. 12,406,284 Cover?

US Patent No. 12,406,284 describes a system that uses geofencing—a virtual geographic boundary—to control user access to gambling platforms. Specifically, the patent covers methods for:

This technology is now a standard feature of nearly every mobile sportsbook operating in the US, where each state has its own set of gambling laws. Operators must determine a user’s exact physical location at the moment of each bet to ensure compliance.

Why DraftKings Is Challenging the Patent

DraftKings argues that none of the claims in the ’284 patent represent a genuine innovation. The company contends that the core concepts—using GPS or IP-based location to restrict activity—were well-known before the patent’s priority date of 2009. In its petition, DraftKings points to prior art that it claims the USPTO examiner overlooked during the original application process.

Key arguments from DraftKings include:

The Role of Geofencing in US Sports Betting

A Patchwork of State Laws

Since the US Supreme Court struck down the federal ban on sports betting in 2018, each state has been free to legalize and regulate wagering independently. This has created a complex web of rules. For example:

How Operators Currently Comply

Every licensed mobile sportsbook uses geofencing software to determine a user’s location at the time of each transaction. Typically, the system:

  1. Checks the device’s GPS coordinates and cross-references them with a database of state boundaries.
  2. Also uses Wi‑Fi positioning and IP address data as fallback methods.
  3. Blocks any attempted wager if the location is not within a permitted jurisdiction.

Without such technology, operators would face massive legal exposure. Therefore, the outcome of this patent dispute could affect the entire industry—potentially forcing all operators to pay licensing fees to Interactive Games or redesign their compliance systems.

DraftKings is not the first operator to challenge Interactive Games. FanDuel faced a similar lawsuit over the same set of patents. In that case, the USPTO’s Patent Trial and Appeal Board (PTAB) reviewed several claims and ultimately ruled that only one of the patent’s multiple claims was patentable. The rest were invalidated on grounds of obviousness or lack of novelty.

This outcome provides a strong precedent for DraftKings. If PTAB follows the same reasoning, it is likely to find at least the challenged claims of Patent No. 12,406,284 unpatentable as well.

Next Steps in the Process

DraftKings’ petition now heads to PTAB, which will decide whether to institute a formal review. The board will evaluate:

If PTAB agrees to review, it will launch a full investigation, including expert testimony and briefing. A final decision could take 12–18 months.

Broader Implications for the Industry

What a Victory for DraftKings Would Mean

What a Loss Would Mean

Conclusion: A Pivotal Moment for Mobile Wagering

The outcome of DraftKings’ challenge will have ripple effects far beyond the two companies directly involved. As mobile sports betting continues to expand into new states, the question of who owns the fundamental technology for location-based compliance becomes increasingly critical. For now, all eyes are on the Patent Trial and Appeal Board.