AI-Driven Gaming Promotions Draw a Lawsuit and a Regulator's Questions
by: Brian Schaller & Joyce Kim
Scrutiny of AI-driven marketing in the gaming industry appears to be increasing. Our September 8 post covered proposed restrictions on AI-powered gaming promotions. Since then, the scrutiny has come from two other directions: a private plaintiff and a state regulator. In late September, a bettor filed a proposed nationwide class action against DraftKings that treats the responsible-play language in the company's privacy notices as a contractual promise. A few weeks later, the Massachusetts Gaming Commission (the “Commission”) asked every sports wagering operator in the state how it uses AI and machine learning in marketing. This post covers both developments and why they may matter to operators and to the vendors that are part of their marketing systems.
A Class Action Pleads the Privacy Notice as the Contract
In Vest v. DraftKings, Inc.,[1] a West Virginia bettor seeks to represent everyone DraftKings deemed “elastic” or who received targeted messages or promotions “based on DraftKings' use of the Model.” According to the complaint, DraftKings built a machine learning model that scored each customer so that “[t]he higher the score, the more money a gambler was likely to lose for each promotion offered.” The complaint alleges that customers tagged "elastic" received extra emails, texts, and in-app notifications, along with extra promotions “intended to keep them gambling.”
The complaint pleads several counts, including breach of contract and implied contract, relying on a common theory in privacy litigation that treats the privacy notice itself as the contract. The contract counts rest on a “Responsible Play” disclosure that the complaint quotes from DraftKings' sportsbook and casino privacy notices, which states that DraftKings “may use the information collected about you to assess whether you are responsibly playing” and “may contact you to provide resources.” The complaint alleges that DraftKings instead used that information “for the exact opposite purpose.” It also states that the plaintiff will move to add a Massachusetts consumer protection claim under Chapter 93A if DraftKings does not make an acceptable settlement tender within 30 days.
DraftKings disputes the allegations, reportedly stating that “DraftKings does not use AI to target customers based on losses, nor do we use AI to target customers based on indicators of potential problem gaming.” The court has not ruled on the allegations.
Massachusetts Asks Operators How Their Marketing Models Work
On September 24, Commission Chair Jordan Maynard directed staff to engage with all sports wagering operators about their use of AI and machine learning. Following that directive, the Executive Director issued an October 9 letter requesting operators for voluntary, confidential written responses to detailed questions regarding their use of AI, with particular focus on marketing and promotions. Among other things, the letter asks which systems come from third-party vendors, whether a patron's losses are an input into any promotional decision, and, where a vendor supplies the model, what “representations or assurances” the vendor has provided about whether the model “could encourage addictive or harmful gambling behavior.” It also asks whether the operator could identify the data, model, or factors behind a promotional decision.
The letter is a request for information, not an enforcement action. The questions sit alongside the Commission's sports wagering data privacy regulation, 205 CMR 257.00, which bars an operator from using patron data, “or any information derived from it,” to promote specific wagers or promotional offers based on “[a]ny computerized algorithm, automated decision-making, machine learning, artificial intelligence, or similar system that is known or reasonably expected by the Sports Wagering Operator or a vendor to the Sports Wagering Operator to make the gaming platform more addictive.” The DraftKings class action complaint discussed above also cites this regulation to bolster its claims.
Why It Matters
A private class action and a regulator's questionnaire are different avenues, though both are directed at how player data feeds promotional decisions. The complaint's major theory currently runs through the company's own privacy notice rather than a gambling-specific duty of care. It is worth confirming whether your privacy notice's description of how player data is used accurately reflects how your marketing systems use that data today.
The Massachusetts rule's knowledge standard extends to “a vendor to the Sports Wagering Operator,” and the Commission's letter asks what vendors have represented about their models. Operators may want to check whether their segmentation and personalization tools could fall within the rule and, where a third-party tool is involved, confirm with the vendor how the tool functions and what the vendor has represented about it.
[1]Vest v. DraftKings, Inc., No. 1:26-cv-14462 (D. Mass. filed Sept. 30, 2026).
Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE. This summary does not constitute legal advice.