The Massachusetts Gaming Commission (MGC) wants to know what happens when a sportsbook’s marketing system identifies a customer who’s losing money. They are questioning whether that user receives fewer promotions, or if the sportsbook uses AI to encourage them to keep betting. The MGC has asked sports betting operators to explain their marketing policy by November 3.
MGC Executive Director Dean Serpa sent a letter to licensed sports betting operators recently, seeking information about their use of AI. The MGC wants to understand how these systems influence customer promotions, including which bettors receive offers and how frequently they’re contacted.
In its five-page letter, the MGC also asks whether employees review promotions or if algorithms can send offers without human oversight. Operators have been asked to respond to this inquiry.
No sportsbooks have been accused of wrongdoing as part of this investigation, but regulators are gathering information to determine whether existing consumer protections are adequate or if improvements need to be made.
Sportsbooks have access to detailed information about their users. They can see how often someone bets, how much money they deposit, and whether they’re winning or losing.
The MGC wants to know how that information affects the advertisements and promotions.
For example, a customer who loses several bets might receive an offer encouraging them to make another deposit. Regulators want to understand whether AI systems can automatically trigger those promotions based on recent betting activity.
The MGC is also examining whether sportsbooks use customer data to predict who is likely to increase their spending or respond to a promotion.
These concerns relate to problem gambling. If someone starts betting more frequently or losing larger amounts of money, does the sportsbook’s system recognize those warning signs? More importantly, does it reduce promotional activity or continue encouraging that customer to wager?
With this letter, the MGC is seeking answers to these questions.
The latest inquiry follows a September investigation by The New York Times into DraftKings’ use of customer data and automated marketing systems. The investigation alleged that DraftKings used AI to identify customers who were particularly likely to respond to promotions and continue gambling despite substantial losses.
DraftKings has disputed allegations of improper conduct.
Following that reporting, Massachusetts regulators opened a broader review of how licensed sportsbooks use AI. MGC Chairman Jordan Maynard directed staff to examine industry practices in September, rather than focusing exclusively on DraftKings.
The new letter gives the MGC an opportunity to compare how operators approach personalized marketing and what safeguards they have in place.
The MGC also wants to know whether sportsbook employees can review or override AI-generated marketing decisions. Regulators are also asking whether operators can explain why a particular customer received a promotion.
That could become especially important when an automated system identifies issues of problem gambling within a user. A sportsbook might have technology capable of recognizing warning signs, but regulators want to know whether that information actually changes how the customer is treated.
This case highlights the growing challenge of how AI can be used responsibly within sportsbook promotions.
