DraftKings Faces Scrutiny After New York Times Report on AI Promotional Targeting
The New York Times reported DraftKings built a 2023 machine learning model to score customers on likely losses from promotions using betting frequency, balances, and history. Over 40 ex-employees provided input. DraftKings denies loss-based targeting and cites a 13% margin gain from AI personalization.
SCCG Take — The episode exposes gaps in linking AI marketing tools to effective responsible gaming safeguards, requiring operators to strengthen internal validation before deployment.
DraftKings is facing scrutiny over its use of machine learning to direct promotional offers. A New York Times investigation alleges the operator built a model in 2023 from customer betting data. The system assessed betting frequency, account balance, and historical losses to score individuals on how much additional money they could generate through free bets and bonuses.
The New York Times based its reporting on interviews with more than 40 former DraftKings employees, internal documents, Slack messages, and test betting data. Jayden Butts, a former data analyst involved in model testing, described the intent as steering promotions toward customers expected to gamble and lose more.
DraftKings Rejects Targeting Based on Losses
DraftKings rejected that characterization. The company stated its promotions are directed towards customers who demonstrate sustained, engaged use of the platform, not toward customers based on their losses.
Chief Responsible Gaming Officer Lori Kalani said DraftKings had considered technology to identify customers at risk of developing gambling problems. Those projects were abandoned because the company determined there was insufficient evidence they were effective. DraftKings acknowledged using AI to personalise promotional spending. Data analytics increased margins on promotion-driven sports wagers by 13 per cent last year.
Limits of Current Responsible Gaming Tools
The reporting shows the operator weighed responsible gaming applications of similar technology but set them aside for lack of proven results. This leaves open questions on how AI personalization interacts with consumer protection duties in practice. Operators will track whether this episode prompts fresh reviews of promotional algorithms and the data inputs that drive them.
Reporting: Focus Gaming News
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
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