DraftKings ‘Free Bet’ Promos Targeted Problem Gamblers Using AI: Report

Report indicates former and current DraftKings employees say the company has declined to use AI tools to warn consumers showing signs of gambling addiction.

Revelations from former and current DraftKings employees have prompted an investigation into how the sports betting app uses artificial intelligence, amid claims the technology is being used to identify losing gamblers and target them with “free bet” promotions designed to keep them wagering.

According to a recent report by The New York Times, some employees say the same machine-learning models used to identify customers likely to continue betting could also be used to detect signs of problem gambling and warn those users. However, they claim DraftKings officials have resisted using the technology for that purpose for years.

Following publication of the report, the Massachusetts Gaming Commission announced plans to review how licensed gambling operators in the state use artificial intelligence, with DraftKings expected to be the first company examined. The announcement came as the commission released sports wagering data showing online sportsbooks generated $47.09 million in revenue during August alone.

Sports Betting Addiction Concerns

The revenue figures highlight how widespread online sports betting has become since the U.S. Supreme Court ruled in 2018 that individual states could decide whether to legalize the practice. Since then, most states have authorized sports wagering, helping companies like DraftKings, FanDuel and BetMGM grow into major online gambling platforms.

That growth has also brought increasing concern over gambling addiction linked to sportsbook apps. Young adults and college-aged men appear to be particularly vulnerable to gambling addiction risks, experts warn, in part because they are highly comfortable with instant online transactions while often having relatively limited experience managing their own finances.

The concerns go beyond the accessibility of the apps themselves. According to The New York Times report, DraftKings has developed machine-learning models capable of identifying gamblers who consistently lose more than they win, allowing the company to tailor “free bet” promotions and other incentives to users who may be more likely to keep wagering.

A growing number of consumers who say they were harmed by these practices are now filing sports betting lawsuits against DraftKings and other sportsbooks. The claims allege the companies used aggressive promotional tactics and personalized incentives to encourage continued betting among users showing signs of problem gambling, ultimately contributing to severe addiction and financial losses.

DraftKings AI Allegations

According to the Times report, DraftKings first built a machine learning model in 2023 after spending millions of dollars on promotions. The company did not know if the promotions were working or how, and a data analyst says he was brought in to test its effectiveness.

The analyst told the Times that the goals were to get the artificial intelligence to look for patterns in consumer data to discover what made people spend and who was most likely to fall prey to the tactics. He indicated the model was designed to look for those who gamble more and lose more.

Those same parameters turned out to be extremely similar to signs of gambling addiction, targeting those who will lose the most and still keep betting in an attempt to win their money back, a known losing tactic called “chasing the dragon,” which is often considered a sign of addiction.

However, the Times claims that numerous employees said they urged the company to pursue using the technology to help warn consumers that they were displaying addiction warning signs. They said the company refused, finding no use for it and questioning its viability, and shelved what work had already been done.

Similar allegations have now drawn the attention of Massachusetts gambling regulators. Jordan Maynard, who chairs the Massachusetts Gaming Commission, announced at a public meeting on September 24 that the commission would discuss the issue with DraftKings officials and will investigate how all licensed betting companies throughout the state use AI.

The workers interviewed at DraftKings already were of the opinion that the technology is dangerous to consumers, because of how accurately and ruthlessly they are targeted. DraftKings has refuted those claims.

Sports Betting Lawsuits

Consumers across the country have filed lawsuits against DraftKings and other sportsbooks, alleging that personalized promotions and repeated incentives encouraged them to continue betting despite mounting losses.

The claims describe resulting financial harm that includes substantial debt, depleted savings and, in some cases, serious emotional and mental health consequences.

Sports betting addiction attorneys are investigating potential claims for those who have experienced significant financial and psychological injuries after developing a gambling addiction due to sportsbook apps and promotions. Companies that may be involved in these cases include:

Consultations and case evaluations are free to help potential claimants determine if they are eligible to pursue compensation through a gambling addiction lawsuit. Each claim is handled on a contingency fee basis, meaning there are no fees or expenses unless a recovery is obtained.

To stay up to date on this litigation, sign up to receive sports betting addiction lawsuit updates sent directly to your inbox.