TLDR
- West Virginia resident Daniel Vest filed a proposed federal class action lawsuit against DraftKings on Sept. 30 in Massachusetts.
- The lawsuit claims DraftKings used AI and customer data to find gamblers most likely to bet more after receiving promotions.
- A New York Times report said the company’s model gave customers an “elasticity” score to decide who received incentives.
- DraftKings denies using AI to target customers based on losses or signs of problem gambling.
- The Massachusetts Gaming Commission is separately reviewing AI use by DraftKings and other licensed sportsbooks.
DraftKings is facing a proposed federal class action lawsuit that accuses the sports betting company of using artificial intelligence to target gamblers with promotions. The company denies the claims.
West Virginia resident Daniel Vest filed the complaint on Sept. 30 in federal court in Massachusetts. DraftKings is based in Boston.
The lawsuit claims the company used customers’ personal betting data in ways that went against its promises to promote responsible gambling.
Vest says he has bet thousands of dollars each year with DraftKings for several years. He claims he received at least 70 emails, texts, push notifications, and other messages from the company in about 30 days ending Sept. 25.
He is seeking to represent a nationwide class of DraftKings customers. These are customers the lawsuit says were flagged by the company’s AI systems as especially responsive to gambling incentives.
How the Alleged AI Model Worked
The lawsuit cites a September investigation by The New York Times. The newspaper reported that DraftKings built a machine learning model to predict which customers were most likely to gamble, and lose, more after getting promotions.
According to the Times, the system gave each customer an internal “elasticity” score. Customers labeled “inelastic” were seen as unlikely to change their betting much because of promotions, so they received fewer offers.
Customers labeled “elastic” were considered more valuable targets for promotions.
A former employee quoted by the Times said the model was meant to show whether a customer would give DraftKings more money than the company gave back in incentives. If so, the employee said, the plan was to “open the floodgates.”
Vest’s lawyers argue this conflicts with DraftKings’ own privacy notices. Those notices say customer data may be used to spot potentially problematic play and to offer responsible gambling resources.
The lawsuit claims the company instead used that data to find customers likely to lose more money or leave the platform. It says DraftKings then encouraged them to keep gambling.
The complaint also points to Massachusetts rules. These rules bar sportsbooks from using customer data to promote bets through AI or machine learning systems that operators know, or should expect, could make their platforms more addictive.
DraftKings Responds to the Lawsuit
DraftKings rejected the allegations. “DraftKings does not use AI to target customers based on losses, nor do we use AI to target customers based on indicators of potential problem gaming,” a spokesperson told Boston.com.
The spokesperson added that the company plans to “vigorously defend” itself in court.
Vest is asking for damages, refunds, and the return of money the lawsuit says DraftKings gained through the model. He also wants a court order blocking the company from using the model to encourage customers to keep gambling.
Separately, the Massachusetts Gaming Commission is reviewing how DraftKings and other licensed sportsbooks use AI and machine learning. The review began after the Times investigation was published.
The commission has not found that DraftKings did anything wrong.
