DraftKings sued over alleged AI targeting of losing gamblers
DraftKings is facing a proposed class action in the United States over allegations it used artificial intelligence to identify gamblers likely to respond to promotions by betting — and losing — more money.
The lawsuit was filed in the US District Court for the District of Massachusetts by West Virginia resident Daniel Vest, turning recent scrutiny of DraftKings’ use of player data into a legal challenge.
Vest alleges DraftKings developed technology capable of analysing customers’ gambling behaviour and determining which players were particularly responsive to promotional incentives.
The lawsuit claims the technology was then used to encourage additional gambling rather than protect potentially vulnerable customers.
DraftKings strongly denies the allegations.
“DraftKings does not use AI to target customers based on losses, nor do we use AI to target customers based on indicators of potential problem gaming,” company spokesperson Park Winslow said.
“We intend to vigorously defend any potential lawsuits on the matter.”
The case is particularly notable because it follows the recent New York Times investigation into DraftKings’ use of machine learning, with that alleging the gambling giant had developed a model that assessed how responsive individual customers were to promotions.
The new lawsuit repeatedly draws on those allegations.
Vest claims he has wagered thousands of dollars through DraftKings over several years and received approximately 70 promotional emails, text messages, notifications and other communications during the 30 days ending September 25.
The complaint alleges customers were not adequately informed about the way AI or machine-learning technology was being used to analyse their behaviour.
“DK has weaponized AI to do just that — understand and exploit users’ vulnerabilities to financially benefit the company,” the lawsuit alleges.
Those remain allegations and have not been established by a court.
The plaintiff is seeking certification of the case as a class action, damages and disgorgement of money allegedly obtained through the disputed practices. The complaint also seeks to prevent DraftKings from using the alleged model to target customers with additional gambling promotions.
The case could have implications beyond DraftKings.
Online betting sites collect enormous quantities of information about how customers bet, deposit, withdraw and respond to promotions. Artificial intelligence and machine learning potentially allow operators to analyse those behaviours on an individual level.
Regulators are increasingly interested in how that technology is being used.
Massachusetts Gaming Commission chair Jordan Maynard said last week the regulator intended to examine the use of AI by DraftKings and other sports betting companies following the earlier reporting.
Massachusetts Attorney General Andrea Campbell’s office has also reviewed the new lawsuit.
“The allegations raise serious concerns about the potential use of technology to target or exploit consumers, particularly those who may be vulnerable to problem gambling or gambling addiction,” a spokesperson for Campbell said.
DraftKings operates regulated sports betting across numerous US states and also offers regulated online casino gaming in jurisdictions including New Jersey, Pennsylvania, Michigan, Connecticut and West Virginia.
The Massachusetts lawsuit now means the debate over how sportsbooks use player data is no longer purely a regulatory or responsible-gambling issue.
A federal court may ultimately be asked to determine where personalised gambling marketing crosses the legal line.
