In recent days, media discussions regarding DraftKings' use of artificial intelligence to target losing bettors have prompted state regulators in Massachusetts and New York to ramp up their scrutiny of sportsbooks. These regulators are looking to understand better how operators incorporate AI and machine learning into their marketing strategies.
On October 9, the Massachusetts Gaming Commission (MGC) reached out to the state’s licensed sportsbooks, asking them to provide detailed explanations of their AI usage. Executive Director Dean Serpa sent letters requesting information on various aspects of sportsbook operations, including marketing, promotions, customer engagement, and the assessment of gambling behaviors. The MGC is particularly concerned about the potential for AI to influence decision-making processes related to customer targeting.
The commission has requested written responses by November 3 to several specific questions. These inquiries cover whether sportsbooks use AI technologies to make marketing decisions based on player data, such as losses or betting frequency, and whether their systems can modify marketing efforts based on a user’s betting activity. They also inquire about AI’s role in predicting customer behavior and its integration into responsible gambling safeguards, including human oversight in promotional decisions.
This push for transparency follows comments made by MGC Chairman Jordan Maynard during a meeting on September 24, where he indicated that the commission would start evaluating AI's role in sports betting customer interactions. Maynard expressed the MGC's commitment to understanding these rapidly evolving technologies and their implications for consumers.
Highlighting the concerns raised by the New York Times and ProPublica about DraftKings allegedly using AI to target vulnerable gamblers, DraftKings CEO Jason Robins defended his company’s practices during the SBC Summit in Lisbon. He asserted, "Every single person in the company will tell you that it’s not at all what we want … the worst possible thing for our company, for our industry."
Meanwhile, New York regulators are also taking significant steps. During a New York State Gaming Commission (NYSGC) meeting, commissioners voted unanimously to advance proposals aimed at controlling AI usage among sportsbook operators. The new measures include prohibiting mobile sports betting operators from using AI to personalize promotions or provide tailored betting recommendations without customer consent. Additionally, operators will be required to identify users potentially displaying problem gambling behaviors and engage them regarding responsible gambling resources.
Chair Brian O'Dwyer emphasized the importance of responsible gaming practices in the industry, stating, "The mobile sports wagering industry has long maintained that they consider integration of responsible gaming practices a significant element of their business."
Before these proposals become official rules, they will undergo a public comment period. This follows prior announcements by New York Gov. Kathy Hochul earlier in March, urging the NYSGC to address issues like underage gambling and how at-risk customers are marketed to.
Other states, including Maine and Maryland, are also considering the implications of AI in online gambling. In Maine, the Gambling Control Unit is monitoring AI use but has yet to establish specific regulations. In Maryland, recent AI principles announced by the office of Gov. Wes Moore include measures intended to protect at-risk gamblers by regulating how operators engage with these individuals.
Concerns about AI's role in gambling extend to federal legislators as well. A bill co-sponsored by Senator Richard Blumenthal aims to prohibit the use of AI for monitoring betting activities and targeting customized promotions, particularly concerning users with known gambling issues. These developments indicate a growing emphasis on responsible gambling practices as states and federal lawmakers evaluate AI use in the wagering industry.
