Louisiana Extends DraftKings Licence Amid AI And Responsible Gambling Investigation

The Louisiana Gaming Control Board (LGCB) has unanimously approved a conditional extension of DraftKings' sports betting licence, allowing the operator to continue operating while regulators investigate concerns surrounding its use of artificial intelligence and responsible gambling practices.

The decision, announced on 15 October, extends DraftKings' authorisation until 19 February 2027, with a full licence renewal hearing scheduled for the previous day. The operator's existing licence had been due to expire on 10 November.

Regulators are examining allegations that DraftKings used AI-powered marketing systems to target customers who consistently lose money, alongside questions about its treatment of VIP players displaying potential signs of gambling harm.

An outstanding shareholder suitability assessment has also contributed to the decision to delay a full renewal.

DraftKings Faces Seven Regulatory Conditions

The conditional extension requires DraftKings to meet seven compliance obligations before regulators reconsider its licence in February.

These include submitting outstanding shareholder suitability documentation, providing information about its use of AI and prediction markets, and reviewing its advertising and marketing materials to certify compliance with responsible gambling requirements.

DraftKings must also submit monthly reports covering regulatory compliance, new wagering products, promotional activity, customer complaints, changes to player protection systems and any significant operational failures.

The operator has been instructed to appoint a senior representative to communicate with regulators and cooperate fully with requests for information throughout the conditional period.

Louisiana Gaming Control Board Chairman Chris Hebert emphasised that the extension was intended to provide investigators with sufficient time to examine the allegations rather than indicate that any violations had occurred.

“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.He also stressed that the decision “is not a determination that DraftKings has engaged in any wrongdoing.”

Assistant Attorney General Delancey Houston confirmed that additional time was required to investigate the concerns raised about the operator.

DraftKings Responds To AI Marketing Allegations

DraftKings President of Operations and Co-Founder Paul Liberman appeared before the board alongside Chief Responsible Gaming Officer Lori Kalani to answer questions about the company's marketing systems and player protection measures.

Liberman rejected suggestions that DraftKings uses AI to identify and deliberately target customers who lose money, arguing that such an approach would make little commercial sense given the proportion of sportsbook customers who lose over time.

“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.”

The investigation comes amid wider scrutiny of AI-driven sportsbook marketing across the United States. DraftKings is facing a lawsuit brought by West Virginia resident Daniel Vest, who alleges that automated promotional systems were used to target vulnerable customers.

Vest claims he received approximately 70 promotional messages within a month, although the allegations have not been established as findings of wrongdoing.

The Massachusetts Gaming Commission has separately questioned operators about the use of automated systems in determining promotional offers and the extent of human oversight involved.

Operator Highlights Responsible Gambling Safeguards

Kalani told Louisiana regulators that DraftKings uses artificial intelligence to identify customers who may be experiencing gambling-related harm, with behavioural indicators triggering reviews by its responsible gambling team.

Customers who disclose financial difficulties or gambling-related distress to customer service representatives are automatically referred for further assessment.

According to Kalani, DraftKings has closed 175 Louisiana customer accounts during 2026 following responsible gambling interventions, broadly consistent with its closure rate during the previous year.

The operator also suspends promotional communications for two weeks following a cooling-off period and for 30 days after a customer completes 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.

DraftKings will now be required to demonstrate its compliance with Louisiana's conditions before the February renewal hearing, when regulators will determine whether to grant the operator a full licence extension.