{"slug": "massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors", "title": "Massachusetts Regulators Move to Examine DraftKings' Use of AI on Bettors", "summary": "The Massachusetts Gaming Commission ordered its staff to engage directly with DraftKings to determine how the company's artificial intelligence targets bettors, following a September 19 New York Times investigation into DraftKings' machine-learning \"elasticity score\" model. The Times reported that DraftKings used the model to direct roughly $400 million in bonus bets and perks toward customers most likely to keep losing money in 2025, and that a separate model designed to flag problem gambling, built by data scientist Nestor Hernandez, was shelved. Former DraftKings data analyst Jayden Butts told the Times, \"We are looking for traits and features that we can target that indicate a good investment. The best investment would be a problem gambler.", "body_md": "*Massachusetts gaming regulators are now digging into whether DraftKings built its AI to keep losing gamblers betting, turning a New York Times investigation into an active regulatory question.*\n\nThe Massachusetts Gaming Commission has ordered its staff to sit down with DraftKings and find out exactly how the company's artificial intelligence targets its bettors. Commission Chairman Jordan Maynard made the call this week. It came days after The New York Times reported that DraftKings built a machine learning model to identify customers most likely to keep losing money after getting a promotional offer, then aimed its marketing straight at them.\n\n\"These AI technologies are evolving rapidly across our society, and we share the concerns over their application,\" Maynard said, directing Executive Director Dean Serpa and commission staff to engage directly with DraftKings to understand what the Times actually found.\n\nWhat the Times found, in a report published September 19, was a system DraftKings calls an elasticity score. It measures how much revenue a customer is worth for every promotional dollar spent on them. The model is built from how often someone bets, how their account balance moves, how much they've already lost, and how likely they are to quit gambling altogether. A former DraftKings data analyst, Jayden Butts, put it bluntly to the Times: \"We are looking for traits and features that we can target that indicate a good investment. The best investment would be a problem gambler.\"\n\nThat's the sentence driving this whole story. It isn't an abstraction about algorithmic bias or the general risks of AI personalization. It's a former employee describing, in plain language, a company scoring its own customers by how likely they are to have a gambling problem, then spending marketing dollars to keep them playing.\n\n[DraftKings Used an AI Score to Chase Its Biggest Likely Losers, NYT Finds](https://startupfortune.com/draftkings-used-an-ai-score-to-chase-its-biggest-likely-losers-nyt-finds/)\n\nA New York Times investigation found DraftKings built a machine-learning model that scores customers by how much they're likely to lose, then used it to direct roughly $400 million in bonus bets and perks toward the highest scorers in 2025. Former employees say a parallel effort to flag gambling harm, built by data scientist Nestor Hernandez, was... - [how DraftKings uses AI to target losing bettors](https://startupfortune.com/draftkings-used-an-ai-score-to-chase-its-biggest-likely-losers-nyt-finds/) - [machine learning model predicts customer losses for promotions](https://startupfortune.com/draftkings-used-an-ai-score-to-chase-its-biggest-likely-losers-nyt-finds/)\n\nThe Massachusetts response didn't come out of nowhere. The commission had already commissioned a study from the University of Nevada, Las Vegas' International Gaming Institute, examining how AI gets used in promotions, player acquisition and responsible-gambling tools across the industry. That study, released last November, found what regulators called a governance gap and recommended Massachusetts stand up an AI taskforce to monitor the technology. The commission did exactly that. The DraftKings story is the first real test of whether that taskforce has teeth or whether it's a committee that meets quarterly and issues reports nobody reads.\n\nEqually notable is what the Times reported DraftKings didn't build. According to the investigation, the company had also worked on a separate model designed to flag problem gambling, and shelved it, while the model steering promotions toward its heaviest likely losers moved forward. You don't need a law degree to see why regulators would care about that sequencing more than almost anything else in the story.\n\n## DraftKings isn't just facing a commission memo\n\nMassachusetts is a state regulator asking questions, not a courtroom. But DraftKings is already answering similar allegations elsewhere. The City of Baltimore sued DraftKings and Flutter Entertainment, FanDuel's parent, back in April 2025. The suit claims the companies used sophisticated analytics to identify users with gambling disorders and then directed maximally exploitative promotions at them - a near word-for-word preview of what the Times just reported. A separate class action targets DraftKings' Predictions product, covering users in states including Alabama, California, Florida, Georgia, Minnesota, New Mexico, South Carolina and Texas. It argues the company dresses sports bets up as federally regulated event contracts to dodge state betting restrictions altogether.\n\nNone of that is proof of wrongdoing. But it is proof of something else: DraftKings now has a state gaming regulator, a city government and a multi-state class action all asking versions of the same question at once. What exactly is the company's AI optimizing for, and who decided that a problem gambler counts as a good investment?\n\nDraftKings trades as DKNG on Nasdaq and reported $1.65 billion in first-quarter revenue this year, up 17% from a year earlier. For a company that size, regulatory attention of this kind is the risk that doesn't show up in an earnings call until it does. Sports betting operators have spent years building consumer trust in states that only recently legalized their product. An AI system a regulator describes as needing scrutiny is exactly the kind of headline that invites more states to ask the same question DraftKings' own analyst already answered.\n\nMassachusetts hasn't accused DraftKings of anything yet. Maynard's language was careful, framed as understanding rather than punishing. But the commission built an AI taskforce for a reason, and DraftKings is now the first company it's actually using that taskforce on.\n\n**Also read:** [OpenAI Is Reportedly Building a $500 a Month ChatGPT Pro Max Tier](https://startupfortune.com/openai-is-reportedly-building-a-500-a-month-chatgpt-pro-max-tier/) • [The Developer Who Says He Built Jev First Just Gave Everyone a Free Version](https://startupfortune.com/the-developer-who-says-he-built-jev-first-just-gave-everyone-a-free-version/) • [Kalshi used AI to turn a YouTuber white in an ad built from his stolen video](https://startupfortune.com/kalshi-used-ai-to-turn-a-youtuber-white-in-an-ad-built-from-his-stolen-video/)\n\n[Mike Johnson Rejects a Federal AI Moratorium, Citing the China Race](https://startupfortune.com/mike-johnson-rejects-a-federal-ai-moratorium-citing-the-china-race/)\n\nHouse Speaker Mike Johnson says Congress should reject a federal AI moratorium, warning it would cede ground to China, and is pushing industry self-regulation with independent audits instead. He's arranging a White House meeting with AI executives even as Bernie Sanders and Steve Bannon jointly demand curbs and New York's Alex Bores pushes... - [why US AI regulation matters for national security](https://startupfortune.com/mike-johnson-rejects-a-federal-ai-moratorium-citing-the-china-race/) - [congressional stance on AI development versus China competition](https://startupfortune.com/mike-johnson-rejects-a-federal-ai-moratorium-citing-the-china-race/)\n\n*This article is posted in [AI News](https://startupfortune.com/category/ai/), check it out for more related stories.*\n\n## Join the discussion\n\n[Open in the community →](https://startupfortune.com/community/)\n\nAlmost there. Sign in and your reply posts straight away.", "url": "https://wpnews.pro/news/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors", "canonical_source": "https://startupfortune.com/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors/", "published_at": "2026-09-25 02:30:14+00:00", "updated_at": "2026-09-25 02:59:12.660737+00:00", "lang": "en", "topics": ["artificial-intelligence", "machine-learning", "ai-ethics", "ai-policy"], "entities": ["DraftKings", "Massachusetts Gaming Commission", "Jordan Maynard", "Dean Serpa", "The New York Times", "Jayden Butts", "Nestor Hernandez", "Flutter Entertainment"], "also_reported_by": [], "alternates": {"html": "https://wpnews.pro/news/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors", "markdown": "https://wpnews.pro/news/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors.md", "text": "https://wpnews.pro/news/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors.txt", "jsonld": "https://wpnews.pro/news/massachusetts-regulators-move-to-examine-draftkings-use-of-ai-on-bettors.jsonld"}}