DraftKings faces scrutiny over AI betting promotions
DraftKings is facing fresh scrutiny over its use of artificial intelligence after an investigation alleged the US gambling giant used machine learning to identify customers expected to lose more money after receiving promotions.
The New York Times investigation was based on internal company documents and interviews with more than 40 former DraftKings employees.
According to the investigation, DraftKings developed a machine-learning system in 2023 that calculated an internal measure known as an “elasticity” score.
The model reportedly analysed information including gambling frequency, account balances and the relationship between customer losses and total wagers.
It was designed to predict the financial return DraftKings could expect from offering an individual customer a bonus or promotion.
Former data analyst Jayden Butts, who reportedly tested the system, told the Times its logic meant: “The best investment would be a problem gambler.”
DraftKings (DraftKings review) disputes the suggestion that it targets vulnerable customers because of their losses.
The company says promotional offers are directed towards players demonstrating sustained engagement with its products rather than being targeted on the basis of gambling losses.
DraftKings operates responsible gambling programmes and has a dedicated responsible gaming team.
The investigation nevertheless raises important questions about the increasingly sophisticated use of player data across the online gambling industry.
It also reports that DraftKings worked on a separate predictive system intended to identify customers potentially experiencing gambling harm, but that project was not ultimately deployed in the same way.
The company reportedly said leadership did not consider predictive risk tools sufficiently evidence-based.
The allegations arrive at a sensitive time for US online gambling operators as states increasingly scrutinise sportsbook promotions and player-protection practices.
Artificial intelligence and automated personalisation are becoming increasingly important tools for gambling companies, allowing casinos and betting sites to tailor bonuses, betting recommendations and marketing to individual customers.
The DraftKings case could now focus regulatory attention on where the line should be drawn between personalised gambling marketing and the identification of vulnerable players.
