DraftKings' AI Bonus System Put Losses in the Spotlight

DraftKings, a Boston-based betting company, built a machine-learning system in 2023 to decide where promotional money would bring the biggest return. Jayden Butts, a data analyst who had worked there for about a year, was assigned to test it. The system reviewed customer records. It looked at how often people bet, their daily account balances, how much they usually lost compared with how much they wagered, and how likely they were to quit. A higher score meant a customer was expected to lose more after getting an offer. DraftKings could then send free bets and bonuses to those people.

Each year, DraftKings spent hundreds of millions of dollars on promotions advertised through email and phone alerts. The goal was to find customers who would respond by betting more and losing more. That created a troubling overlap. The company earns money when gamblers lose, while the same behavior patterns can also warn of addiction. Six former employees said the targeting work continued and became more refined. Four others said efforts to build a similar warning system were delayed or stopped. Two former employees said a project that would give users risk scores was pushed aside.

Smartphone gambling gave DraftKings access to huge amounts of customer data. Interviews with more than 40 former employees, along with internal memos, presentations, Slack messages, and records from customer experiments, showed how the system was used. The records could help the company predict both profitable losses and possible harm. The documents showed two different uses for the same information: selling more bets or flagging possible trouble.

Late in 2024, Butts said DraftKings fired him for performance reasons during a brief business slowdown. Some employees thought the promotional tests were not producing the expected results. The company paused part of its data-science work, then restarted it with several new machine-learning projects. Butts and five former colleagues said they regretted helping build a tool they came to see as dangerous. DraftKings denied that its marketing was unfair or improperly targeted. It said promotions were aimed at customers who showed sustained, engaged use of the platform.