DraftKings and FanDuel Accused of Using AI to Target Vulnerable Gamblers

Key points

• The New York Times reported that DraftKings developed a machine learning model called 'elasticity' to identify users most likely to respond to promotions and subsequently lose money.
• Former DraftKings employee Jayden Butts stated the model’s core question was whether a customer would generate more revenue than the incentives provided, with 'yes' triggering increased promotional offers.
• DraftKings allegedly canceled a project led by Jake Shannin that aimed to predict which users might become problem gamblers, with the presentation to chief responsible gambling officer Lori Kalani being canceled the day it was scheduled.
• CBS News reported that FanDuel used customer data to target users who had taken breaks from gambling, with a former employee claiming the company did not cut off problem gamblers to avoid slowing down bet placement.
• DraftKings and FanDuel pushed back against the reports, with DraftKings stating its marketing targets engaged customers, not those based on losses, and FanDuel’s industry representative arguing that problem gamblers are rare and that betting is for entertainment.
• DraftKings generates one-third of its revenue from online casino games like slots, which are only offered in a fraction of its jurisdictions, according to The New York Times.

Background

This story follows a series of recent investigations into the sports betting industry, including a July 2026 report on how FanDuel retained a gambling addict and a June 2026 case involving bribery and money laundering in prop bets. The current reports build on growing concerns about the ethical implications of using artificial intelligence in gambling platforms, particularly regarding the balance between customer acquisition and responsible gambling measures.

How outlets are covering it

The New York Times and CBS News present a critical view, emphasizing that DraftKings and FanDuel prioritize profit over customer welfare by using AI to target vulnerable users and suppressing protective measures. DraftKings and FanDuel, along with industry representatives like Joe Maloney of the Sports Betting Alliance, defend their practices as standard marketing and customer acquisition tools, arguing that betting is for entertainment and that problem gamblers are a small minority. The New York Times highlights the isolation and financial distress of individual gamblers, while CBS News focuses on the re-engagement of users who had paused betting. The sources differ in their emphasis: The New York Times focuses on the internal development and cancellation of protective models at DraftKings, while CBS News highlights FanDuel's targeting of users who had taken breaks from gambling.

Why it matters

The use of AI to target vulnerable gamblers raises significant ethical and regulatory concerns about the gambling industry's practices. If confirmed, these actions could lead to increased scrutiny from regulators and potential legal action against DraftKings and FanDuel. The reports highlight the potential for significant financial harm to individuals and the broader societal impact of online gambling, particularly when companies prioritize profit over customer welfare. This could influence future legislation and corporate policies regarding responsible gambling and data usage in the industry.

What to watch

Regulators may investigate the claims made by The New York Times and CBS News, potentially leading to new regulations or fines for DraftKings and FanDuel. The companies may face increased public scrutiny and potential legal challenges from consumers or advocacy groups. The industry may see a shift in how companies approach customer data and responsible gambling measures, with a greater emphasis on transparency and ethical AI use. Further investigations and reports may emerge, focusing on other gambling companies and their data practices.