DraftKings is facing a proposed class-action lawsuit alleging the sportsbook used AI to identify customers who were more likely to respond to promotions designed to increase their betting activity. The lawsuit, filed earlier this week in the U.S. District Court for the District of Massachusetts, was brought by West Virginia resident Daniel Vest. Vest alleges that DraftKings used AI to analyze user behaviour, identify certain bettors as more responsive to incentives, and target those users with promotions intended to keep them wagering. DraftKings denies those allegations.
According to the complaint, Vest wagered thousands of dollars through DraftKings over several years and received a significant volume of promotional messages encouraging him to keep betting. Vest alleges he received at least 70 emails, text messages, and app notifications from DraftKings during a roughly one-month period leading up to Sept. 25. Some of those messages allegedly included incentives designed to encourage him to keep betting.
At the center of the case is the allegation that DraftKings used AI to determine which users were more likely to increase their activity when offered a promotion. The complaint describes some customers as being identified as more “elastic,” referring to bettors who could potentially change their wagering behaviour in response to incentives.
Vest alleges DraftKings used customer information and betting patterns to make those conclusions without informing users about how the technology was being applied.
The lawsuit is seeking class-action status on behalf of other DraftKings users who allegedly dealt with this as well. It also seeks damages related to the company’s alleged use of customer data.
DraftKings has denied using AI the way it’s described in the lawsuit. The company plans to defend itself against the lawsuit. The legal challenge comes shortly after DraftKings CEO Jason Robins publicly defended the company’s approach to responsible gambling.
Speaking at the SBC Summit in Lisbon on Sept. 29, Robins addressed criticism surrounding the company’s marketing and player-protection practices. He defended its responsible gaming policy amid increased scrutiny of how sportsbooks interact with customers.
Robins has said responsible gaming is embedded throughout the company’s operations. DraftKings has also rejected suggestions that it intentionally targets potentially vulnerable customers in an effort to increase betting.
The lawsuit comes as Massachusetts regulators are already taking a closer look at how sportsbooks use AI. The Massachusetts Gaming Commission (MGC) recently opened an AI review following reports about how operators may use machine-learning technology for marketing, customer engagement, and responsible gambling.
The review doesn’t only include DraftKings. It could examine how licensed sportsbooks throughout the state use AI and related tools.
The MGC has previously studied how AI could be used to identify bettors who may be at risk of gambling harm. That research also raised questions about privacy, consent, and how customer data should be handled when AI systems are used.
As one of the licensed sportsbooks available in Massachusetts, DraftKings is a key operator in their review.
