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State of Play’s TL;DR
- A new industry legal update says artificial intelligence is spreading fast across gambling.
- Operators are using AI for fraud checks and responsible gambling tools even as lawmakers and regulators move to limit personalization and targeted advertising.
Artificial intelligence is now embedded across more of the gambling industry, from fraud detection to responsible gambling tools, but so is the scrutiny.
A new legal guide from Reed Smith says regulators, lawmakers, and litigants are increasingly focused on how operators use algorithms, personalization, and automated decision-making.
The article says the pace of change has accelerated since 2023. Identity fraud is getting more sophisticated, responsible gambling tools are becoming more data-driven, and policymakers are weighing limits on how betting platforms can use AI to track and target users.
AI fraud and player-monitoring tools are expanding
According to Reed Smith, deepfake-enabled fraud is now a major threat in gambling. It points to a February Connecticut case in which two individuals were charged with using thousands of stolen identities to defraud major online gambling platforms of $3 million. The report also says in-person casino identity fraud nearly doubled between 2024 and 2025.
In response, operators are moving beyond one-time know-your-customer checks and toward continuous monitoring that uses passive liveness detection, behavioral biometrics, and graph-based machine learning.
The same shift is showing up in responsible gambling. Major operators, the guide says, use AI to spot behavioral markers of harm and trigger interventions such as automated messages, cooling-off suggestions, and limit-setting prompts.
Still, industry adoption appears uneven. A 2026 report cited in the guide found 70% of gaming companies globally have some form of responsible AI practices, while less than 5% said those practices are embedded throughout their organizations.
Lawmakers and regulators are looking harder at personalization
The legal and policy response is broadening in the US and Europe. In Congress, the SAFE Bet Act would prohibit sportsbooks from using AI to track individual bettor behavior, generate personalized promotions, or create AI-driven microbetting products. The GAME Act would ban digital platforms and websites from using algorithms, AI, and targeted data to direct gambling ads at minors.
At the state level, Illinois’ SB 2398 and companion HB 1565 would bar AI-enabled tracking of wagering activity and AI-generated betting products, with related bills pending in New York and Oklahoma.
Outside the US, the UK Gambling Commission introduced mandatory financial vulnerability checks at a £500 net deposit threshold in August 2024, then lowered that threshold to £150 in February 2025. The UK Advertising Standards Authority also launched an AI-powered ad monitoring system in June 2025.
Litigation and prediction market fights are adding pressure
The guide also points to rising litigation risk around algorithmic design. Among the cited cases: a March lawsuit alleging AI-powered micro-betting and platform design can turn casual fans into continuous gamblers, and a July lawsuit alleging addiction harms were caused by intentional algorithm design.
Another fast-moving front is prediction markets, where AI-driven platforms use algorithmic pricing and settlement systems for event contracts. The guide says trading volume has surged past $24 billion per month, even as courts and regulators continue to clash over whether federal or state authorities should control those markets.
For gambling operators, the message is straightforward: AI may be improving compliance and player monitoring, but it is also becoming a bigger target for legislation, enforcement, and lawsuits.
Based on reporting by John P. Feldman, Casey H. Yang, and Elle Todd for Reed Smith.
