DraftKings is currently confronting a new legal challenge as concerns about its artificial intelligence practices grow. The company is facing a proposed class action lawsuit regarding its alleged use of AI to target bettors.
The lawsuit was initiated by Daniel Vest, a customer from West Virginia, who claims that he received over 70 promotional communications, including emails and texts, within a single month. This legal action is built on findings from a September investigation by the New York Times, which suggested that DraftKings developed a machine-learning model to analyze customer betting histories and predict how promotions might influence their wins and losses.
Vest asserts that DraftKings utilized this model to pinpoint customers who were likely to incur further losses or abandon the platform, subsequently directing additional promotions and incentives towards them. Central to the lawsuit is the handling of customer data; DraftKings' privacy policy indicates that user information may be utilized to promote responsible gaming and provide support when problematic behavior is detected.
However, Vest contends that DraftKings violated this commitment by employing personal data for the opposite reason—specifically targeting customers who could lead to increased losses.
Regulatory authorities in Massachusetts and Michigan have already begun examining the issues highlighted by the New York Times investigation.
In other news, Kalshi has appealed to the Second Circuit to overturn a Connecticut federal judge’s decision that denied its request to prevent state enforcement against its sports event contracts. Kalshi argues that sports contracts should be classified as swaps and that the CFTC’s jurisdiction encompasses all agreements traded on designated contract markets.
Meanwhile, FanDuel has revealed that it sent around 30 personalized VIP videos featuring athletes and entertainers to its customers over the past two years. In a letter to lawmakers, FanDuel's SVP Cory Fox explained that these videos were meant as a gesture of appreciation for customer loyalty, not as a means to encourage further gambling. This disclosure follows scrutiny regarding a video sent to a customer who later sought treatment for gambling addiction.
Lawmakers have expressed concerns about whether FanDuel's VIP managers leverage personal relationships and incentives to promote continued betting, urging MLB and the MLB Players Association to restrict players from engaging in personalized gambling promotions following the Bryce Harper incident.