Massachusetts Asks Sportsbooks How AI Targets Bettors

Massachusetts gaming regulators are asking licensed sportsbooks to explain how artificial intelligence influences their marketing, including whether customer losses or signs of problem gambling make bettors more likely to receive promotional offers.

In an Oct. 9 letter, Massachusetts Gaming Commission Executive Director Dean Serpa requested written responses by Nov. 3. The inquiry follows Chair Jordan Maynard's Sept. 24 directive to investigate operators' use of AI and machine learning.

Participation is voluntary, and the commission that oversees Massachusetts sports betting says responses will remain confidential and help inform future policy decisions. The inquiry does not establish that any sportsbook has violated state regulations.

How losses influence promotions

The five-page questionnaire covers eight areas, including customer data collection, promotional targeting, automated decisions and responsible-gambling safeguards.

Regulators want to know whether AI determines which customers receive offers, how much those incentives are worth and when Massachusetts sportsbook promos and promotional messages are delivered.

The review extends beyond technology explicitly marketed as AI, covering algorithms, predictive analytics and automated profiling systems, including those involving human oversight.

One question asks whether sportsbooks use customer losses as an input when deciding which promotions to offer.

The commission also wants to know whether sudden increases in deposits, wagering frequency, bet sizes or losses influence marketing decisions.

Importantly, regulators are examining whether potentially harmful gambling behavior triggers additional promotions rather than protective interventions. Operators denying that practice are being asked to explain the safeguards preventing it.

The questionnaire also addresses accountability, asking whether employees can override automated decisions and reconstruct why a particular customer received an offer.

DraftKings disputes targeting allegations

The investigation follows a New York Times report in September alleging that DraftKings used machine learning to identify customers likely to gamble and lose more after receiving promotional incentives.

The investigation drew on internal documents and interviews with former employees, raising questions about how gambling companies use customer data to drive engagement.

A proposed class-action lawsuit filed Sept. 30 subsequently accused DraftKings of using AI-driven promotions to encourage potentially harmful gambling behavior.

DraftKings disputes those 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," spokesperson Park Winslow told WBUR.

The company also said it intends to defend itself against the litigation.

Massachusetts already regulates automated targeting

Massachusetts has existing restrictions governing the use of customer information in sportsbook promotions.

Under 205 CMR 257.02, operators cannot use certain personal information to encourage specific wagers or promotions through algorithms, machine learning or other systems they know, or reasonably expect, will make their platforms more addictive.

The regulation also restricts promotional targeting based on customers' use of responsible-gambling tools, including wagering limits and cooling-off periods.

Operators must separately analyze customer behavior to identify potentially harmful gambling patterns and develop interventions. They must report their findings and mitigation efforts to the commission at least every six months.

Those requirements make the current inquiry particularly relevant. Regulators want to understand not only whether sportsbooks identify vulnerable customers, but how that information influences subsequent marketing decisions.

For now, Massachusetts is gathering information rather than announcing new restrictions. Operators have until Nov. 3 to respond, with the findings potentially shaping how the state oversees AI-driven sportsbook promotions.