Is AI Secretly Controlling Your Sports Betting App? State Regulators Want Answers

Are algorithms secretly driving your sports betting app? Massachusetts gaming regulators want to know if artificial intelligence has become the standard engine behind online sportsbooks—and whether it’s crossing ethical lines.

The Massachusetts Gaming Commission (MGC) recently notified its licensed online sportsbooks that it wants answers about how they’re using AI and other machine learning technologies in their operations. The state gaming regulator requested that each online sportsbook disclose how automated tools are utilized and what safeguards platforms have governing these technologies.

The letter asks how AI is involved with marketing and promotions, responsible gaming, and VIP schemes. The MGC says the request is voluntary, and therefore sportsbooks’ disclosures will not be made public.

The MGC regulates seven online sportsbooks: Bally Bet, BetMGM, Caesars Sportsbook, DraftKings, Fanatics, FanDuel, and theScore.

DraftKings Inquiry

The regulatory inquiry comes in the wake of heightened scrutiny surrounding Boston-based DraftKings. A New York Times investigation revealed that DraftKings used machine-learning models to score customers and deliver targeted marketing incentives to bettors likeliest to incur high losses.

While DraftKings maintained a model to analyze player responsiveness, reports indicated the company declined to deploy a counterpart harm-detection system meant to flag problematic gambling behaviors.

The fallout—which quickly spawned a proposed federal class-action lawsuit alleging deceptive targeting—prompted the MGC to examine whether DraftKings and other operators are deploying AI algorithms in ways that exacerbate gambling addiction rather than protecting consumers.

Sportsbook Compliance

The MGC is among the most proactive state gaming regulators in the nation, meeting far more frequently than other state gaming bodies that have many more casinos and online sportsbooks.

Massachusetts is home to only three casinos: Encore Boston Harbor, MGM Springfield, and Plainridge Park. The state also dedicates more funding to problem gambling services than any other state.

The AI inquiry is to determine if online sportsbooks are benefiting from AI by targeting bettors who often lose, and if audit protections exist to satisfy consumer protection laws.

“Does the Operator assess whether a marketing or promotional model could encourage increased wagering or otherwise contribute to problematic or addictive gambling behavior?” the AI letter asks. “What testing or validation does the Operator perform to determine whether an algorithm, AI system, or machine-learning model may encourage increased wagering?”

The MGC also asks if AI models recognize a consumer’s gambling-risk indicator in determining how to craft a marketing incentive, and if AI ever excludes a patron that is detected to be exhibiting problematic betting behavior.

Massachusetts Sports Betting

Sports betting in Massachusetts began in person on Jan. 31, 2023, and online sportsbooks took their first bets on March 10, 2023. Through August 2026, the Commonwealth has collected more than $500 million in state taxes from legal sports gambling.

Retail oddsmakers share 15% of their sports betting revenue with the state. Online sportsbooks are taxed higher at 20%.

The sportsbooks have taken more than $25 billion in bets, generating revenue upwards of $2.5 billion.

National Ripple Effects

As one of the industry’s most influential watchdogs, the MGC’s proactive investigation could set a blueprint for commercial sports betting governance nationwide. With state bodies in New York, Maryland, and Maine already weighing or advancing strict limits on algorithmic player profiling, Massachusetts’ findings could accelerate a shift toward mandatory AI transparency.

If disclosures reveal that automated models systematically prioritize operator margins over consumer protection, state lawmakers across the country may soon mandate independent algorithm audits, strict consent requirements, and binding safeguards to shield vulnerable bettors from predatory, data-driven targeting.