A well-known betting company has developed an artificial intelligence system aimed at identifying customers likely to incur significant losses, subsequently overwhelming them with promotional offers to encourage more betting.
DraftKings established a machine learning model in 2023 that evaluated online casino players based on their expected losses after receiving free bets or bonuses, according to a New York Times investigation released on Friday. The report reviewed internal documents, presentations, and betting records, while also including insights from over 40 former employees.
The AI system assessed each player’s activity levels, daily financial balances, and the ratio of their losses to bets placed. According to the Times, employees referred to the result as an “elasticity” score; a higher score indicated a player who might be worth pursuing with additional incentives. (RELATED: Sports Betting Industry Playing Its Hand In 2026 Elections)
Jayden Butts, a previous data analyst who worked with the system on numerous casino players, felt some discomfort regarding its implications. “We are analyzing traits and characteristics that we can target for what we consider a good investment,” Butts mentioned to the Times. “Interestingly, the best investment would be someone struggling with gambling addiction.”
Online gambling firms have amassed substantial amounts of user data. Former DraftKings employees shared with the Times that they utilized data science methods to pinpoint gamblers more prone to engage with promotional offers—often resulting in losses.
The company had the option to redirect its data analysis for more positive outcomes. In 2024, a data scientist named Nestor Hernandez started developing a model intended to identify gamblers at risk of a crisis. However, DraftKings ultimately decided to discontinue this initiative, as reported by the Times. Chief Responsible Gaming Officer Lori Kalani indicated that company leadership opted against predictive modeling because it lacked an “evidence-based” foundation.
DraftKings has challenged the report’s claims. The company asserted to the Times that its promotions target customers who display “sustained, engaged use” of their platform, rather than those who are identified as potential losers, and deemed Butts’s tests as “preliminary and inconclusive.”
These developments have significant implications. According to the Times, DraftKings reported approximately $8.7 billion in gross gambling revenue last year and distributed around $3 billion in promotions, as noted by Citizens Bank research.
Regulators are now paying attention. Senator Richard Blumenthal of Connecticut and Representative Paul Tonko of New York have proposed the SAFE Bet Act, which would prohibit sportsbooks from utilizing AI to analyze betting trends and provide personalized offers. Meanwhile, both DraftKings and its competitor FanDuel have significantly increased their federal lobbying expenditures, with DraftKings reportedly doubling its spending to nearly $900,000 in 2025, as reported by OpenSecrets.
