The Louisiana Gaming Control Board (LGCB) has granted DraftKings a conditional license extension instead of a full renewal so investigators can review allegations about the operator’s use of artificial intelligence (AI) and its responsible gambling practices.
The board voted unanimously on Thursday to extend the company’s authorization through February 19, 2027, with the full renewal hearing set for February 18, 2027. DraftKings’ Louisiana sports betting license was set to expire on November 10.
The board questioned DraftKings President of Operations and co-founder Paul Liberman and Chief Responsible Gaming Officer Lori Kalani about reports that the company used AI to target losing bettors, and about its treatment of VIP customers who may show signs of a gambling problem. One shareholder who has not undergone suitability checks also contributed to the delay.
Assistant Attorney General Delancey Houston said the Division has concerns about the recent allegations against DraftKings and that “additional time is needed to fully investigate those allegations.”
Seven conditions before February
Chairman Chris Hebert said the board has used conditional renewals before to give the attorney general’s office and state police time to finish investigations.
“Nevertheless, as regulators, we have a responsibility to examine these matters that could affect the integrity of gaming operations and the protection of our citizens here in Louisiana,” Hebert said.
Under the conditional approval, DraftKings must:
- Provide all suitability submissions within 30 days, including petitions for the outstanding shareholder to be considered an institutional holder.
- Submit protocols for timely notification of shareholder ownership.
- Submit formal responses on its use of AI, prediction market activity, digital audits of Louisiana residents, and any other information requested, within 30 days of each request. Written questions will follow in the coming days.
- Review and certify responsible gambling compliance for marketing materials, commercials, and digital ads within 30 days.
- File monthly compliance reports on the 15th of each month on prediction market products, new digital wagering products, anticipated offerings, new contests or promotions, material changes to geolocation, know-your-customer, anti-money laundering and responsible gambling systems, unresolved compliance issues, significant system failures, material customer complaints, advertising or marketing violations, pending litigation or regulatory actions, other updates, and corrective actions and their status.
- Designate a senior representative within seven days for board communications.
- Cooperate fully with all directives and submit all required information during the conditional period.
Hebert said the proposal “is not a determination that DraftKings has engaged in any wrongdoing.”
Scrutiny extends past state lines
DraftKings already faces a lawsuit over AI marketing from West Virginia resident Daniel Vest, who alleges that the company used customer data and automated marketing systems to target vulnerable bettors. Vest claims he received approximately 70 promotional messages within roughly one month.
The Massachusetts Gaming Commission (MGC) recently asked operators to explain whether automated systems influence which customers receive offers and whether employees oversee those decisions. The Federal Trade Commission has also been reviewing sportsbook advertising.
Liberman questions the logic of targeting losers
Liberman said most of DraftKings’ customers are losers in the first place, so using AI to find and target losers does not really make sense.
“Identifying a losing gambler doesn’t necessarily make sense in that context because most customers that play on the platform are not going to be winners,” Liberman said. “But we don’t use that, once again, to target in any way a particular customer or customer segment because we don’t think that that’s relevant.”
Liberman also said DraftKings was the first US operator to end credit card deposits for sports betting. However, records show otherwise. DraftKings removed the option in August 2025, while Betr banned credit card deposits in October 2022, and Fanatics has not allowed them since it took over PointsBet in April 2024.
The MGC also fined DraftKings $450,000 because it did not prevent bettors from using credit card funds deposited in other states to wager in Massachusetts through its shared wallet. In November 2024, the company attributed the issue to a misinterpretation of the rules.
A tool for problem gambling detection
Kalani said DraftKings uses AI to identify customers who need help. Multiple triggers prompt intervention from responsible gambling staff, and any customer who tells a service representative about distress or financial trouble is automatically flagged for review by the team.
DraftKings closes the accounts of customers who do not follow its responsible gambling advice. The company has closed 175 Louisiana accounts this year, a pace similar to 2025, according to Kalani. That figure excludes customers who stopped playing, closed accounts on their own, or entered self-exclusion or a cool-off period. DraftKings also withholds promotions for two weeks after a cool-off period and for 30 days after self-exclusion.
“It does us no good to have people who are gambling out of control, spending more than they can afford to lose; it just doesn’t make sense,” Kalani said.