New York Advance Proposal Banning AI Betting Promotions and Specific Bet Types

New York regulators have taken another step towards tightening oversight of online sports betting, advancing proposals that would restrict the use of artificial intelligence in customer marketing and introduce new requirements for identifying players showing signs of gambling harm.

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Both measures were approved to move into the public comment stage during a meeting last week of the New York State Gaming Commission, with no timeline yet set for final adoption.

Alongside a plan targeting AI-driven promotions and wager recommendations, regulators are also considering rules that would require sportsbooks to monitor player behaviour, carry out reviews when certain thresholds are reached, and apply a series of escalating interventions for customers deemed to be at risk.

While the measures remain under review, the Commission signalled that it expects operators to strengthen consumer protections. 

“The industry is on notice by me and this Commission that they need to solve this problem,” chair Bryan O’Dwyer said. “They better solve the problem because I think it is a problem. It is a problem that needs to be addressed.”

Proposed AI rules would ban personalised betting promotions

The most significant proposal would place strict limits on the use of AI and other automated tools across New York’s regulated betting market.

Under the draft rules, operators and their partners would be prohibited from using artificial intelligence, machine learning or similar systems to personalise promotions, bonuses, odds, offers, messages or product recommendations based on individual customer data.

The restrictions would also cover automated wager suggestions. Sportsbooks would not be allowed to use these systems to recommend specific bets, wager types or stake amounts. 

Regulators have additionally proposed banning the use of such technology where its purpose, or likely effect, is to increase betting activity, engagement or operator revenue.

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According to documents presented to commissioners, operators would not be able to avoid the restrictions by having staff approve AI-generated outputs, nor would customer consent provide an exemption.

One exception has been included for pari-mutuel horse racing. Under the proposal, racing customers could opt into a separate application that suggests wagers, but only under strict conditions.

Sportsbooks face new duties to identify at-risk bettors

A second proposal focuses on customers who may be showing signs of gambling-related harm. It would require every mobile sportsbook to implement systems that automatically flag accounts for review when certain activity thresholds are reached.

Among the proposed triggers are deposits above $10,000 within 24 hours, deposits of more than $100,000 over 90 days, and wagering activity exceeding $1m during the same period. DraftKings has confirmed that it already follows these thresholds following a rule update in neighboring New Jersey.

Once a customer is flagged, operators would have to conduct a review of both gambling patterns and financial vulnerability. If concerns remain after that assessment, the customer would be classified as an at-risk patron and become subject to a phased intervention process.

Under the proposal, accounts could ultimately be suspended or closed if a customer continues to meet the criteria for an at-risk gambler following further intervention.

While the proposal has been in the works since March, the recent advancements follow a recent New York Times investigation into DraftKings’ use of machine learning in promotional targeting. 

This has also triggered intense regulatory scrutiny across multiple states, with the Massachusetts Gaming Commission launching a formal investigation into these AI-driven marketing practices and governors in states like Maryland and Maine actively pushing for stricter limits to protect at-risk gamblers.

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