Louisiana regulators delayed a five-year renewal of DraftKings’ sports-betting licence on Oct. 15, granting the company a conditional four-month extension instead while they investigate questions about artificial intelligence, responsible-gambling safeguards and shareholder suitability.
The Louisiana Gaming Control Board unanimously approved the extension through Feb. 19. DraftKings’ existing licence expires Nov. 10, and a full renewal hearing is scheduled for Feb. 18.
The State Police Gaming Enforcement Division told the board that shareholders owning at least 5% of DraftKings had not undergone required suitability reviews. One shareholder had sought classification as an institutional investor, but that request had not been resolved. Assistant Attorney General Delancey Houston said the investigation remained incomplete and required more time to examine recent allegations against the company.
The conditional licence carries seven requirements. DraftKings must make required suitability filings or institutional-investor petitions within 30 days; provide formal responses on artificial intelligence, prediction-market activity, digital offerings to Louisiana residents and other information; and certify that its marketing, commercials and digital advertising comply with responsible-gambling rules. It must also appoint a senior representative to deal with the board within seven days and comply with requests for information while the temporary permit is in force.
Board chair Christopher Hebert said reporting by The New York Times had raised “very serious questions,” while ProPublica’s work was “very troubling.” Hebert said news reports were not regulatory findings, but the board had a duty to investigate issues that could affect gaming integrity and protections for Louisiana residents. The board described its action as a measured oversight response, rather than a finding that DraftKings had committed wrongdoing.
The New York Times had reported that DraftKings used machine learning and artificial intelligence to target promotions at losing bettors. The board’s questioning also focused on how the company treated customers displaying signs of gambling problems. Paul Liberman, DraftKings’ president of operations, said the company could determine whether customers were winning or losing because it held their financial records, but denied that it used AI to target losing gamblers.
DraftKings has said it does not market to customers based on signs of potential problem gambling. Lori Kalani, its chief responsible gaming officer, told the board that 175 Louisiana accounts had been shut down during the year, though she did not know the company’s total number of users in the state. She said its system, largely made up of in-app messages about available tools, worked as intended.
The scrutiny followed ProPublica’s test of safeguards at DraftKings and other betting apps. The news organisation said a reporter was given VIP status after deliberately betting like a problem gambler, and continued to receive promotions after opting into tools intended to curb betting. In one test, the reporter lost nearly $4,500 betting on tennis in 24 hours; after selecting less restrictive controls, he received four promotional push notifications, which stopped only after he selected a more restrictive cool-off option.
Louisiana health officials have said the number of residents believed to have a gambling disorder has risen alongside the popularity of online gambling and prediction-market sites. A health official said during the summer that gambling addiction ranked among the department’s three leading priorities.
