Federal lawmakers are intensifying their scrutiny of leading online sportsbooks and prediction markets regarding their VIP programs and promotional strategies tailored for individual users.
On October 22, U.S. Senator Richard Blumenthal (D-CT) reached out to six prominent companies, requesting detailed explanations by November 5. The companies included BetMGM, Caesars, DraftKings, Fanatics, Kalshi, and Polymarket.
Blumenthal's inquiry centers around how these companies manage their VIP programs and marketing strategies for VIP clientele, particularly regarding their use of artificial intelligence to customize offers that incentivize continued gambling. This investigation not only covers state-regulated online sportsbooks but also two significant sports prediction market platforms in the country.
The senator's questions delve deeply into the operations of the VIP programs. Among other inquiries, he sought information on the number of members in each program, the betting or trading history of those members before their VIP status, and the criteria used to qualify users for VIP status. He also asked whether exclusive offers were made to members who sought to decrease their betting activities, how such offers impacted their gambling behaviors, and if any personalized videos were sent to customers to encourage ongoing engagement. Additionally, he inquired about the revenue generated from VIP programs and the role VIP managers play in customer interactions.
Blumenthal’s efforts follow a prior inquiry into FanDuel, which arose from the controversial use of a personalized video featuring MLB player Bryce Harper. A user, identified as having faced gambling challenges and significant losses on the platform, received a video message from Harper, who later denied consenting to its use. This user, once part of FanDuel's VIP program, subsequently filed a lawsuit against both FanDuel and DraftKings, alleging that the companies exploited VIP hosts to promote gambling, exacerbating issues related to addiction and financial loss.
In August, Blumenthal, joined by Representatives Paul Tonko (D-NY) and Valerie Foushee (D-NC), wrote to FanDuel, Major League Baseball (MLB), and the MLB Players Association (MLBPA) to seek clarity on the usage of athletes in VIP marketing. The MLBPA has expressed a willingness to consider banning players from participating in such campaigns.
Following up in September, Blumenthal criticized FanDuel for providing unclear and unconvincing responses to their inquiry, stating doubts about the company’s commitment to protecting bettors from potential harm.
Despite the criticism, FanDuel has stated that it sent over two dozen personalized videos featuring various celebrities to customers as gestures of appreciation. The operator claims it remains transparent and cooperative; it maintains that it does not incentivize users to continue gambling excessively despite its VIP program. In a letter, FanDuel emphasized, “FanDuel empowers customers to manage their play,” asserting its focus is on ensuring a sustainable gambling experience rather than maximizing user activity.
Meanwhile, DraftKings is under scrutiny for its alleged practices involving AI, which have come under fire following investigations by The New York Times and ProPublica that highlighted its interactions with problem gamblers.
This media attention has prompted several states, including Louisiana, Maryland, Massachusetts, Michigan, and New York, to closely examine how their licensed gaming operators utilize AI. The Massachusetts Gaming Commission (MGC) requested detailed explanations from sportsbooks on October 9 about AI's role in marketing and promotional activities and whether a user's gambling losses are considered when tailoring offers. On the same day, the New York State Gaming Commission (NYSGC) proposed new rules to prohibit sportsbooks from leveraging AI and algorithmic methods to customize promotions aimed at increasing user engagement or spending.
At the federal level, Senators Blumenthal and Tonko are pushing for legislation that seeks to limit AI's role in sports betting through the SAFE BET Act.
