A New York Times article this week highlighted how DraftKings used AI tools to identify gamblers likely to respond to promotions by betting and losing more. It also said that the company had developed technology to predict which users would develop gambling problems, but shelved the project.
It raises the question of what would incentivize the company to use its tools to intervene rather than to encourage those at risk of developing gambling problems.
Because there should be incentives. A Social Market Foundation study in the UK found that money spent on gambling supports fewer jobs and generates less tax revenue than money spent in most other sectors of the economy.
States Profit From Problem Gamblers
DraftKings pays a substantial amount of its revenue back in taxes. In New York alone, which imposes a 51% levy on gambling revenue, it paid $300 million last year.
In total, New York collected $1.3 billion in gaming taxes from mobile sports betting in the State Fiscal Year (SFY) 2026, according to a report published last week. $12 million (less than 1% of the amount of those taxes) went towards problem gambling services.
This is “a drop in the bucket compared to the billions being wagered,” said State Comptroller Thomas P. DiNapoli.
“We need to do much more to identify how mobile sports betting is impacting New Yorkers and ensure consumers are protected,” he added.
In Illinois, the state has raised gambling taxes twice in recent times, before implementing a per-bet fee on wagers. DraftKings strongly opposed the measures and is now charging users the fee directly.
DraftKings Faces Pressure From Taxes and Marketing Costs
The heavy tax burden is one of the reasons that DraftKings is failing to make a profit despite the huge revenues it generates.
The company has taken a growth-first model, but as new threats emerge, such as prediction markets, it continues to pile a huge amount of money into marketing.
Former DraftKings employees interviewed in the Times article published on Monday characterized those practices as predatory. DraftKings uses machine learning to identify players who are more likely to lose, then plies them with promotions to encourage them to gamble.
With these accusations already forming part of lawsuits against the company and rival platform FanDuel, there were few shocks in the article. It is already widely acknowledged that gambling companies rely on a small number of users losing obscene amounts to sustain their businesses.
“It is as predatory as it sounds,” a former DraftKings analyst told the Times under condition of anonymity. “If you lose more, we give you more, so you keep playing more.”
DraftKings said it “rejects any implication that its marketing practices are unfair or improperly targets customers.”
No Money In Player Protection
The company could also defend its position as it dedicates similar resources to protecting gamblers as New York authorities. Its responsible gambling department consists of about 50 employees (1%) of the company’s 5,000.
Even in this small department, it developed tools that employees said could be used to identify gamblers in trouble.
“Our conclusion was that it is possible, even with simple rules, to get a better-than-guessing sense” of whether a customer would end up needing an intervention, said a member of the team, Jake Shannin.
Instead of continuing to develop the project, the company is investing heavily to bring its prediction market product nationwide.
