#73 · Briefing · 10/1/2026

How Sportsbooks Use AI to Target Losing Gamblers

Regulators are investigating DraftKings over allegations that the sportsbook used a machine learning model to target losing gamblers with promotional offers to maximize revenue.

AI-generated illustration. Calculated to keep you hooked.

The regulatory environment surrounding online sports betting has shifted as the Massachusetts Gaming Commission initiated an inquiry into how licensed betting companies, including DraftKings, deploy artificial intelligence. This probe centers on allegations that DraftKings is utilizing a proprietary machine learning model, built back in 2023, to identify and target losing gamblers. The system reportedly analyzes customers' personal betting records to score users based on their expected losses after receiving a free bet or bonus, evaluating metrics such as play frequency, account balances, and loss-to-wager ratios to forecast which players will generate the highest promotional returns.

These allegations have been brought forward in reports detailing the inner workings of DraftKings' data operations, alongside accounts from four former employees who stated that the company stalled or shut down parallel efforts to use similar tools to predict gambling addiction risk. In response, DraftKings denies targeting customers based on their losses, asserting instead that its promotional offers are directed toward highly engaged users. The company also stated that its data science and analytics improved promotion-driven sportsbook margins by 13% in 2025, while vehemently denying the allegations of predatory targeting and maintaining that its marketing complies with all state regulations.

This development is highly significant because under Massachusetts rules, operators are prohibited from using automated systems to deliver promotions if those tools are expected to increase a platform's addictive qualities. If the predictive models are found to intentionally target vulnerable or losing players to keep them hooked, it could violate state standards designed to curb gambling addiction. The inquiry matters because it represents one of the first major regulatory efforts to police the intersection of machine learning, behavioral tracking, and consumer protection in the rapidly growing sports betting industry.

Other organizations have also weighed in on the broader implications of these behavioral tracking practices. The Electronic Frontier Foundation has advocated for a complete ban on all online behavioral advertising, using the DraftKings case to highlight what it describes as the harms of automated targeting. Meanwhile, the interest in commercial ad-tech extends beyond state regulators and advocacy groups; U.S. Immigration and Customs Enforcement recently issued a Request for Information to explore how commercial big data and ad tech providers can support investigative activities, showing the wide-ranging utility of such tracking data.

Despite the ongoing inquiry, several key elements remain unknown. The exact mathematical weights and algorithms of DraftKings' proprietary machine-learning model remain confidential, making it difficult to independently verify how the system processes user data. Furthermore, the Massachusetts Gaming Commission has not determined that DraftKings committed any regulatory wrongdoing, and it remains unclear how state regulators will ultimately police or enforce compliance regarding these complex predictive models.