Two separate investigations have raised concerns about betting site DraftKings’ marketing to target problem gamblers, including its use of AI. On September 19, the New York Times reported that the company’s machine learning model targeted people who were more likely to respond to betting promotions by gambling and losing more money.
The model crunched data on each customer, including how often they bet, how much they lost, and what their daily account balances were. According to the report, it used this information to send targeted advertising to lure those people back to the site with promotions. DraftKings uses promotions to entice users into betting more. These offers include profit boosts on winnings.
At news nonprofit ProPublica, journalist Jake Pearson made himself an experimental subject. He spent thousands of dollars betting on the DraftKings app in an experiment to see how the company’s marketing would play out. He reported receiving more promotions as his losses mounted.
After he lost nearly $1,800 betting on basketball in a single evening, DraftKings invited him to a VIP tryout. Full membership followed later.
DraftKings would occasionally send automated messages reminding him to bet responsibly, he said. But he found they were no match for the product design pushing him to do more gambling.
DraftKings denied unfair targeting of gambling customers, arguing instead that its promotions reward engagement rather than losses.
The company’s machine learning model, which former insiders say was developed starting in 2023, replaced a cruder system that crunched basic numbers to report on a user’s behavior.
The newer system dug through data on its own, assessing how much individuals would be likely to lose after receiving promotions. It created an “elasticity” score and used it to identify customers likely to lose more in response to offers, the Times said. This would help the company maximize its return on its promotional spending, said former employee Jayden Butts, who helped develop the system. Butts spoke to the Times as part of an investigation that included interviews with over 40 former employees, along with reviews of Slack communications, internal memos, and betting records.
Other employees attempted to get approval for another model at DraftKings. It would analyze gambling activity in a similar way, but with the opposite goal: to flag users whose gambling was getting out of hand and who were at risk of falling into crisis. According to the data scientists interviewed by the Times, the system showed promise at identifying customers who might need help with compulsive gambling, but DraftKings shut the project down after canceling a demo. Later attempts to develop similar systems within the company also failed.
Behavioral ads and gambling harm
Digital rights advocates warn that AI enables companies to process more data faster for digital advertising. The Electronic Frontier Foundation says this:
“supercharges the harms of online behavioral advertising.”
It’s particularly damaging when advertising encourages addictive behaviors such as gambling.
And online betting looks set to expand. Companies including DraftKings are now running online casino games in select jurisdictions, while prediction markets that allow people to trade forecasts on specific events are also flourishing.
The statistics on gambling are alarming. The World Health Organization estimates that 1.2% of the world’s adult population has a gambling disorder, and that people betting at harmful levels generate around 60% of gambling losses. People struggling with gambling might find it difficult enough to stay away from gambling venues, but mobile gambling apps with hard-to-ignore push notifications and emails can increase the temptation.
What users can do
If you gamble, monitor your gambling activity and set limits, avoid chasing losses, give yourself timeouts from gambling, and talk to someone if you’re struggling with compulsive gambling.
In the US, the National Problem Gambling Helpline connects people with support and local resources via phone and online chat. In the UK, GamCare’s National Gambling Helpline provides 24/7 phone support and other resources.
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