Louisiana Tabled DraftKings' License as Regulators Weigh Betting Rules

Louisiana regulators declined to renew DraftKings' five-year operating license at an Oct. 15 meeting and gave the company a temporary four-month permit instead, while Ohio proposed barring sportsbooks from marketing to customers who have just set responsible-gambling limits. The two moves, reported by ProPublica on Oct. 30, mark the first regulatory consequences from a run of reporting on how online sportsbooks treat the heaviest bettors.

The Louisiana Gaming Control Board acted partly in response to a ProPublica investigation published in September, in which a reporter who deliberately bet like a problem gambler was given VIP status, and to a New York Times report a week earlier that DraftKings had used machine learning and artificial intelligence to target promotions at losing bettors. The board also cited paperwork concerns.

"While news stories are not findings of regulatory violations, as regulators we have a responsibility to examine these matters that could affect the integrity of gaming operations and the protections of our citizens here in Louisiana," said board chair Christopher Hebert, who said the Times had raised "very serious questions" and called ProPublica's reporting "very troubling."

What DraftKings told the board

DraftKings disputed the characterizations. Paul Liberman, a co-founder who serves as president of operations, told the board: "We do not use artificial intelligence to target losing gamblers by any means."

Lori Kalani, the company's chief responsible gaming officer, said DraftKings had closed 175 accounts in Louisiana this year over suspected problem gambling. Asked for the state's total number of users, she said she did not know. "I know that we're doing our job and that when we see something, we say something and we engage," Kalani said. "I just can't tell you if 175 is the right number. I wish it was zero."

She also drew a line around what the company sees as its role: "We're not physicians, we're not clinicians and that's not our role, but we certainly want to help people enjoy the service, the platform that we're offering them." In response to the original investigation, Kalani said DraftKings' responsible gaming system, which consists largely of in-app messages about the company's tools, "worked the way it was supposed to," and cautioned against drawing broad conclusions from one user's experience.

A DraftKings spokesperson told ProPublica that as a regulated operator the company "values an open and ongoing dialogue with regulators" and that regular check-ins are normal course of business.

Ohio targets the gap between a limit and a push notification

The day after the Louisiana meeting, the Ohio Casino Control Commission proposed amending its sports gaming advertising rule, Rule 3775-16-03, to address what it called "potentially harmful targeted marketing that is being sent to individuals who are engaging with problem gambling tools." Under the proposal, sportsbooks could not send direct advertising or marketing to a bettor for 48 hours after that person enabled or changed any responsible gaming tool, including wager or deposit limits. The exception is a newly created account. Public comment closed Oct. 30.

The amendment addresses a specific finding in the ProPublica reporting: after losing nearly $4,500 on tennis in 24 hours, the reporter set limits on time and spending and received the first of four promotional push notifications 30 minutes later. Only a full "cool-off" stopped them.

Andromeda Morrison, the commission's interim executive director, said her office had been working on the language for some time. "Hopefully this is something that is fairly easy for the industry to see as a common sense restriction to make sure those consumers are making good choices without those push notifications," she told ProPublica.

Not everyone in the addiction field is enthusiastic. Keith Whyte, a former director of the National Council on Problem Gambling who now consults for industry and nonprofit groups, warned that the rule could have the opposite effect by making a voluntary safety tool feel like an admission. "I think the implication is that using a responsible gaming tool is a sign of a gambling problem," he said. The rule still faces hearings and further comment periods, and Ohio regulators separately advanced a rule this year to bar credit card deposits at sportsbooks.

Congress sets a Nov. 5 deadline

At the federal level, Sen. Richard Blumenthal of Connecticut and Reps. Paul Tonko of New York and Valerie Foushee of North Carolina have asked sportsbooks and prediction market operators for details on their VIP programs, including enrollment numbers and revenue generated from those customers. Answers are due Nov. 5.

FanDuel replied on Oct. 20 that its VIP program exists to provide enhanced service and to encourage customers who choose to wager to use FanDuel rather than a competitor. DraftKings told ProPublica it would respond after reviewing the letter.

In New York, investigators for the attorney general's office have contacted former DraftKings employees about the issues raised in the Times story, the newspaper reported. The office declined to comment. DraftKings and FanDuel also face a proposed class action in Orleans Parish alleging the companies designed their apps to exploit compulsive bettors; neither company has been found liable.

Why the states are moving first

The enforcement energy is coming from gambling regulators and state attorneys general rather than from Washington, which has no federal regulator for sports betting and has left consumer protection to the states that allow it. That patchwork is why a licensing decision in Baton Rouge and a rulemaking docket in Columbus can matter more to a company's bottom line than a congressional letter.

For people in treatment for gambling addiction, the practical question is whether any of it changes the moment when an app notices a customer chasing losses. Louisiana health officials say the number of residents believed to have a gambling disorder has risen in recent years, and one top official said this summer that gambling addiction was among the department's "top three priorities." The board's four-month permit runs into February, with the investigators' findings still outstanding and no date set for a renewal vote.