DraftKings, FanDuel Face Questions From Lawmakers Over VIP Rewards Targeting Problem Gamblers

Senator, Representatives want answers on how DraftKings, FanDuel, Kalshi and others select who gets VIP memberships and special offers.

A group of U.S. lawmakers are warning that when online sports betting apps send tons of promotions, VIP offers and free bets, it is because their algorithm thinks the recipient is a potential gambling addict.

On October 22, U.S. Senator Richard Blumenthal of Connecticut, Representative Paul Tonko of New York and Representative Valerie Foushee of North Carolina sent letters (PDF) to the CEOs of BetMGM, Caesars, DraftKings, Fanatics, Kalshi and Polymarket, demanding answers about how the companies select customers for VIP programs and other gambling promotions.

The lawmakers raised concerns that sportsbooks may be using customer data to identify individuals who frequently lose money or exhibit signs of gambling addiction, then targeting those same individuals with incentives to continue wagering.

Citing reports of severe financial losses, mental health problems and deaths linked to gambling addiction, the lawmakers are seeking information about how betting companies collect and analyze customer data, whether their algorithms are designed to predict addictive behavior and how that information influences the promotions offered to individual users.

Days later, a CBS News report raised additional concerns about a practice known as “limiting,” in which sportsbooks allegedly restrict promotions and betting opportunities for customers who consistently win. The report suggested that while profitable bettors may receive fewer incentives, those who frequently lose money may continue receiving offers encouraging them to place additional wagers.

Sports Betting Addiction Risks

The rapid expansion of legalized sports betting has made gambling more accessible than ever, raising concerns about the potential for addiction and the ways online sportsbooks encourage continued wagering.

In 2018, the U.S. Supreme Court struck down a federal law that largely prohibited states from authorizing sports betting, allowing individual states to decide whether to legalize the activity. Since then, most states have authorized some form of sports wagering, fueling the growth of mobile betting platforms such as DraftKings and FanDuel.

Unlike traditional gambling, which often required individuals to visit a casino or sportsbook, mobile apps allow users to place wagers from virtually anywhere, at any time. Bettors can gamble on game outcomes, individual player performances and even specific plays or events as they unfold during live sporting events.

This constant accessibility, combined with promotional notifications, free bets and personalized incentives, has raised concerns that online sportsbooks may be encouraging excessive gambling among individuals who are already struggling to control their betting habits.

Those concerns are now central to a growing number of sports betting addiction lawsuits being filed nationwide, which allege that gambling companies use sophisticated algorithms to track customers’ betting patterns, spending habits, losses and other activity to identify those most likely to continue wagering.

According to the lawsuits, rather than using that information to intervene when individuals exhibit signs of problem gambling, sportsbooks allegedly target vulnerable customers with VIP memberships, bonus offers, free bets and other incentives designed to encourage larger and more frequent wagers.

Plaintiffs claim these practices can deepen gambling addictions, leading to substantial financial losses, mounting debt and serious consequences for individuals and their families.

Lawmakers Question Sportsbook VIP Programs

The lawmakers’ letter questions sportsbook VIP programs, where gamblers are often assigned to an individual to personally assist with their use of the platform, offering them uniquely tailored bonuses and enticements. The perks can include access and even tickets to major sporting events, videos from celebrities and athletes and more, at the cost of more wagering.

The letters claim that some companies are now suspected of using artificial intelligence to even more efficiently target potential gambling addicts.

“Unsurprisingly, VIP programs have been at the center of controversy in both independent investigations as well as litigation filed by victims of the gambling industry. FanDuel, for instance, offered one of its VIP customers a personal message from Philadelphia Phillies first baseman Bryce Harper at the height of their addiction. In addition, recent reporting from ProPublica revealed that DraftKings rewarded a journalist who imitated clear signs of problem gambling—including chasing losses, placing nonstop microbets, and betting on obscure events—with a VIP membership.”

– U.S. Lawmakers’ Letters to Sportsbook CEOs

The letters demand CEOs provide information on how many consumers are in their various VIP reward programs, their average winnings and losses, information on promotions sent when gamblers attempted to cut back on their wagering by closing their accounts, and how much revenue the VIP programs bring in. They also seek details of the perks, offers and services provided by the sportsbooks to those VIP customers.

Additionally, lawmakers also want information on how the sportsbooks select who gets offered VIP membership, their average winnings and losses, if those customers had ever requested to suspend their accounts and whether they showed signs of problem gambling or significant hardship.

The lawmakers are calling for the CEOs to answer their questions by November 5.

Sports Betting Addiction Lawsuits

The letter comes as an increasing number of  DraftKings sports betting addiction lawsuits and FanDuel sports betting addiction lawsuits continue to be filed nationwide. Many include allegations almost identical to the concerns raised in the lawmakers’ letters, indicating the sportsbooks targeted them with the purpose of fostering addiction and draining their bank accounts.

Sports betting addiction lawyers continue to review potential claims for individuals who suffered significant financial losses or psychological damage due to addictive gambling behaviors against companies including:

Individuals who experienced serious gambling-related losses can request a free and confidential case evaluation to determine whether they may be eligible to pursue a sports betting addiction lawsuit. These claims are handled on a contingency fee basis, meaning there are no upfront legal fees or expenses.

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