DraftKings Sportsbook’s Louisiana License May Be in Danger

DraftKings Sportsbook is in hot water down in the bayou. 

The Louisiana Gaming Control Board has decided to delay DraftKings' full license renewal until February. The operator was supposed to renew on November 10, but the regulator wants more information on how the platform uses AI in its marketing to bettors. 

To give itself more time to investigate, the LGCB temporarily extended DraftKings’ license to February 19, with a hearing set for the day before.

The regulator's unprecedented move follows a bombshell report from the New York Times. The paper reported that DraftKings used AI to target losing bettors, including those whose betting habits were declining. This temptation prevents those struggling with compulsive betting from getting the help they need.

DraftKings has consistently denied the NYT report, insisting its AI is not programmed to target vulnerable bettors. However, the operator has not yet shared full details of the new tech tool with state regulators.

Louisiana's online sports betting market has eight sportsbooks, but DraftKings is the first to face questions about its use of AI during the license renewal process.

How Will DraftKings Respond?

DraftKings can continue operating in Louisiana until at least February, but it must decide how to respond to the regulator’s surprise delay.

Many will quickly point to DraftKings' lack of transparency as evidence of its guilt, but that isn’t the only possibility. AI use in the sports betting industry is still relatively new, so operators closely guard it from rivals. While the LGCB will promise confidentiality, the threat of a leak is enough to keep operators like DraftKings from complying.

The good news for the gambling giant is that regulators in other states have not followed Louisiana’s lead. The Massachusetts Gaming Commission recently sent operators a voluntary questionnaire with over 70 questions about AI. This allows sportsbooks to answer some, but not all, of the probing questions without fear of penalty.

DraftKings also holds the cards in this potential showdown. 

It's one of the state's most popular platforms, which lets it generate public pressure on the LGCB and lawmakers to back down. 

The operator also has a prediction market platform it could launch in the state if the LGCB revokes its sportsbook license. While it would lose many bettors, it would also be exempt from state taxes and regulations.