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New York regulators want sportsbooks to stop flagged high-risk bettors from simply moving to another operator. The state’s top gaming official warned the industry to build a data-sharing system itself or accept one designed by the state.
Commission Chair Brian O’Dwyer issued the warning Oct. 9, after the New York State Gaming Commission voted 6-0 to advance two proposed responsible gambling rules. One would restrict how gambling operators use artificial intelligence. The other would require sportsbooks to intervene when customers show signs of harmful gambling.
Neither rule is in effect. Both face a 60-day public comment period before returning to the commission, with no date set for a final vote.
Regulators press sportsbooks to share data
O’Dwyer said the at-risk rule will have limited impact if flagged customers can simply open accounts elsewhere. New York has nine licensed mobile sports betting operators.
He urged operators to develop a shared system for at-risk bettor information rather than wait for regulators to impose one. If the industry fails to act, he said, the commission will step in with an approach operators may not welcome. He called the proposals a chance to show responsible gambling is a genuine priority.
AI proposal targets personalized betting offers
The proposal would add a new Part 5404 to the commission’s rules. It would bar licensed operators and any affiliates, agents or vendors acting for them from using AI or other automated systems that process individual customer data to personalize promotions, bonuses, odds, limits, messages or product recommendations.
The systems also could not suggest wagers or stake amounts, or otherwise be used to increase wagering, engagement or revenue, according to RG’s review of commission materials.
The rule would cover not only mobile sportsbooks but also:
- Commercial casinos
- Racetracks
- Off-track betting corporations
- Lottery courier services
Employee review of AI recommendations would not exempt an operator, and customer consent would not override the ban, except under a narrow horse racing provision.
Offers that vary among customers in ways tied to individual data would be presumed to violate the rule unless operators show, with clear and convincing evidence, that published, objective criteria alone caused the variation.
Promotions offered uniformly to all eligible customers would remain allowed, as would automated systems for fraud prevention, identity verification, anti-money laundering checks and tools designed to reduce betting.
The horse racing exception would let pari-mutuel operators offer an opt-in app that suggests wagers using only a customer’s racing history and voluntarily supplied information. Consent would be off by default and renewed every 12 months.
Operators would face new compliance obligations
Operators would have to inventory every automated system that processes customer data, keep logs for at least seven years, allow commission audits and notify regulators 30 days before material changes.
Chief executives would certify compliance annually. Regulators could treat each affected customer as a separate violation, exposing operators to fines, suspensions or license revocation.
Rule would introduce staged interventions
The second proposal would require progressively stronger action when customers trigger problem gambling indicators. It is modeled on a New Jersey rule, ProPublica reported. The commission’s March draft listed 13 possible triggers, including deposits above $10,000 in 24 hours and account turnover above $1 million over 90 days, according to the governor’s office.
Operators would first point customers to deposit, loss and time limits. If concerning behavior continues, customers would have to watch a commission-approved educational video to keep betting. At the final stage, operators would contact the customer directly to discuss their gambling. Bettors also could not reverse a withdrawal request for three days.
Staff also added a financial vulnerability assessment that, Executive Director Robert Williams said, should focus on recent bankruptcies, court judgments and similar distress indicators.
Regulators seek expert input on AI
Williams said both proposals were first circulated for industry feedback in March as part of Gov. Kathy Hochul’s broader effort to curb gambling addiction. They drew dozens of public comments, ProPublica reported. Commissioner John Crotty asked staff to find outside AI experts, acknowledging the commission’s limited expertise.
ProPublica found promotions far outweighed responsible gambling notices sent to a reporter showing problematic betting behavior, and The New York Times reported that DraftKings used AI and data scientists to target promotions at losing bettors. DraftKings has defended its responsible gambling program.
New York is not the only state asking questions. Massachusetts regulators have sent operators more than 70 questions about AI, including whether a bettor’s losses make that customer more likely to receive a promotion. Answers are due Nov. 3.
Joe Maloney, president of the Sports Betting Alliance, said the group will keep working with regulators and wants rules to “strengthen the regulated market.” Gambling reform advocate Brianne Doura-Schawohl argued the proposals do not go far enough.
