DraftKings AI Targets Losing Gamblers as Massachusetts Gaming Commission Launches Investigation

Massachusetts Gaming Commission Launches Investigation into DraftKings AI Practices

The Massachusetts Gaming Commission announced Thursday it would examine how DraftKings and other licensed sportsbooks deployed artificial intelligence in their operations, following explosive revelations from a New York Times investigation1

1

. Jordan Maynard, chair of the Massachusetts Gaming Commission, instructed staff to engage with DraftKings about the findings and learn how all licensed betting companies in the state were using AI4

4

. Commissioner Paul Brodeur described the Times's findings as "troubling" and emphasized the need to "find out what the facts are on the ground"1

1

.

How DraftKings AI Targets the Gamblers Likeliest to Lose

The New York Times investigation, based on interviews with over 40 former DraftKings employees and internal company documents, revealed that gambling companies built sophisticated machine learning models to identify customers most likely to continue gambling and losing when sent promotional offers3

3

. Former data analyst Jayden Butts explained his assignment was to test an AI model that prioritized free bets and bonuses for likely losers, asking: "Is this person going to give us more than we're giving them?" If yes, the company would "open the floodgates"2

2

.

In 2023, DraftKings built an AI model to target customers based on "elasticity"—measuring their responsiveness to promotional incentives2

2

. The model analyzed dozens of data points for each gambler, including betting frequency, daily account balances, and loss-to-bet ratios3

3

. Early 2024 data showed highly elastic slots players lost significantly more money than less elastic players2

2

.

AI-Driven Targeting of Problem Gamblers Raises Ethical Concerns

Six former employees who built these machine learning models expressed deep concerns that the technology would harm people struggling with addiction1

1

. "It is as predatory as it sounds," said a former DraftKings analyst who quit in 2024. "If you lose more, we give you more, so you keep playing more"3

3

. Butts acknowledged that by strict financial logic, "the best investment would be a problem gambler"5

5

.

The AI model to target profitable losers incorporated another system calculating how likely users were to stop gambling3

3

. One employee worked on identifying customers at risk of quitting the platform to bring them back5

5

. This level of data surveillance tracked betting frequency, account balances, and loss patterns to maximize customer lifetime value through targeted promotional offers5

5

.

Shelved Technology Could Have Identified Problem Gambling Patterns

While DraftKings refined its machine learning to target losing gamblers, the company shelved efforts to use similar technology for responsible gaming interventions. Former employee Jake Shannin revealed that in early 2025, his team prepared to present a crisis prediction model to DraftKings's chief responsible gaming officer, Lori Kalani2

2

. However, the presentation was canceled on the scheduled day, and two other attempts to build similar algorithms were also shelved2

2

.

Nestor Hernandez had started building a system to AI to identify problem gamblers by assigning risk scores, which could warn or ban customers before losses spiraled5

5

. The project was terminated in 2025, months after Hernandez left the company5

5

. Kalani told the Times that DraftKings made a "collective decision" not to use predictive models for identifying problem gambling because the technology "wasn't evidence-based"5

5

.

Regulatory Efforts and Massachusetts Gambling Regulations

Massachusetts prohibits using customer data to offer promotions based on automated systems, including artificial intelligence, that are "known or reasonably expected" to make gambling sites more addictive1

1

. Licensed operators must report to the Massachusetts Gaming Commission at least twice yearly on how they analyze customer behavior to promote responsible gaming and mitigate addictive gambling1

1

.

Operators face potential discipline for non-compliance, including fines or license suspension1

1

. The commission formed an AI task force after a 2025 University of Nevada, Las Vegas study found a regulatory "governance gap" between technological advancements and existing practices4

4

. Maryland Governor Wes Moore called this week for legislation preventing gambling companies from using algorithmic tools to identify and target users showing problem-gambling patterns4

4

.

Industry Response and Future Implications

DraftKings vehemently denied the allegations, stating it "does not use A.I. to target anyone based on losses and does not market to customers based on indicators of potential problem gaming"1

1

. The company emphasized it works diligently to comply with all Massachusetts sports betting regulations4

4

.

FanDuel, DraftKings' largest competitor operating in Massachusetts, stated it used machine learning to identify signs of harmful play for customer protection, but didn't address whether it used AI for other business purposes1

1

. Federal lawmakers have proposed legislation setting nationwide standards, including banning AI to monitor betting activity and target customers with individualized promotions1

1

. Senator Richard Blumenthal stated at a Wednesday news conference that the Times investigation "provides graphic and powerful proof" that gambling companies "are relentlessly and tirelessly taking advantage of vulnerabilities, simply to make more money"1

1

.