DraftKings Louisiana License Renewal Delayed as Regulators Probe AI Use

Louisiana regulators declined to hand DraftKings a routine renewal of its sports betting license, voting unanimously on Oct. 15 to extend the operator only until Feb. 19, 2027 while investigators examine its use of artificial intelligence, its shareholder records and how it markets to customers who may be struggling with gambling. The DraftKings Louisiana license renewal will now be decided at a full hearing on Feb. 18, the day before the conditional permit expires. The current license runs out on Nov. 10, Legal Sports Report reported.

DraftKings can keep taking bets in the state in the meantime. The vote was a conditional approval carrying seven requirements, and board chairman Chris Hebert said more than once that it was not a finding of wrongdoing.

"I recognize and I think this entire board recognizes that a news report, or news reports, plural, are not findings of regulatory violations," Hebert said. "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." He later told the DraftKings delegation that the proposal "is not a determination that DraftKings has engaged in any wrongdoing."

Seven conditions before February

The requirements, as set out at the hearing:

• Suitability submissions for every outstanding shareholder, including a petition to treat one holder as an institutional investor, within 30 days.
• Proposed protocols for notifying the board when ownership changes.
• Formal answers on AI use, prediction market activity and digital audits of Louisiana residents, within 30 days of the request.
• A full review and certification that marketing, commercials and digital ads comply with responsible gambling rules, also within 30 days.
• Monthly compliance reports by the 15th, covering prediction markets, new products, geolocation and know-your-customer changes, complaints, advertising violations, litigation and system failures.
• A senior executive named as the board's contact within seven days.
• Full cooperation with the board's directives.

Assistant attorney general Delancey Houston told the board that some shareholders holding 5% or more had not completed the suitability process, and that one had asked to be designated an institutional investor before regulators had decided whether that applies.

"The Division also has concerns regarding recent allegations brought against DraftKings and, therefore, additional time is needed to fully investigate those allegations," Houston said.

DraftKings denies targeting losing bettors

The hearing centered on reporting by the New York Times and ProPublica that DraftKings used AI to analyze player activity and steer promotions at losing bettors, including some showing signs of harm. Co-founder and president of operations Paul Liberman denied it, arguing that most customers end up net down anyway, so identifying losers makes little commercial sense. "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," he said.

Legal Sports Report flagged one claim from Liberman as incorrect. He told the board DraftKings was "the first in the country to get rid of credit card deposits across the board." The outlet notes that Betr banned credit card deposits in October 2022 and Fanatics never allowed them after taking over PointsBet in April 2024, while DraftKings removed the option in August 2025. DraftKings was also fined $450,000 by the Massachusetts Gaming Commission over credit-card funds reaching Massachusetts bets through its shared wallet, a penalty the company attributed to a misreading of the rules.

Chief responsible gaming officer Lori Kalani said AI is used to find customers who need help. She said DraftKings closed 175 Louisiana accounts this year, tracking close to 2025, and does not send promotions for two weeks after a cool-off period or 30 days after self-exclusion. "We can't diagnose when someone has a compulsive gambling problem," she said. "We're not physicians, we're not clinicians and that's not our role."

Other states ask the same questions

Massachusetts Gaming Commission executive director Dean Serpa sent letters on Oct. 9 to every licensed sportsbook asking how AI shapes marketing, promotions, customer outreach and the reading of gambling behavior indicators. Written answers are due Nov. 3. Gambling Insider reported the request runs to more than 70 questions, and said Michigan has also begun examining the issue. "These A.I. technologies are evolving rapidly across our society, and we share the concern over their application," chairman Jordan Maynard said at a September meeting, according to SBC Americas.

In New York, the State Gaming Commission voted unanimously to advance revised proposals that would bar mobile operators from using AI or algorithmic profiling to personalize promotions and betting recommendations, and from offering promotions designed to raise spending, revenue or engagement. Customers could opt in. A second proposal would require licensees to identify players showing signs of problem gambling and name a person to talk to them about tools and resources. "If the industry does not address it, then we will address it and they may not like the solution that we come up with," chair Brian O'Dwyer said. The revised rules go out for another round of public comment before a possible vote.

Maine's Gambling Control Unit has said it is monitoring AI use with no state rules specific to it, and Maryland governor Wes Moore's office published AI principles that include keeping operators from targeting players with problem-gambling patterns, SBC Americas reported. GamblingNews noted that a class action in Massachusetts alleges DraftKings used AI to find customers likely to respond to promotions, including people showing signs of harm. Those claims are unproven and the case is at an early stage.

DraftKings' Louisiana license now runs to Feb. 19. The board hears the full renewal case on Feb. 18, Massachusetts licensees' written answers are due Nov. 3, and New York's revised rules must clear another comment period before commissioners can vote.