President Donald Trump’s Federal Trade Commission has quietly begun an investigation into online sportsbooks such as DraftKings and FanDuel for “deceptive and misleading advertisements.” That’s a good thing. These companies have built their entire business model on exploiting gambling addicts. Oversight is necessary and long overdue.
Just last month, the New York Times revealed how DraftKings uses AI algorithms to target the bettors most likely to veer into compulsive addictive behavior — not to cut them off, but to find ways to encourage them to keep gambling. And in July, the Philadelphia Inquirer published a report about how FanDuel’s “VIP” program, which similarly aims to keep its biggest losers from quitting, employs all sorts of methods to entice addicts back to the betslip, including in one instance a personalized message from Philadelphia Phillies right fielder Bryce Harper.
The truth is that the gambling industry isn’t very truthful. It often talks out of both sides of its mouth, depending on the target audience. To possible customers, these companies promise the opportunity to win big and enjoy your most rewarding season ever. To would-be regulators, they emphasize a commitment to “responsible gaming” and protecting problem gamblers from themselves.
But what do these companies say when they talk to each other in private? Well, thanks to new investigative reporting, now we know: they’re laughing about bilking their customers.
Last week, leaked audio from the Global Gaming Expo in Las Vegas revealed that gambling industry professionals were preoccupied with one question: How can the industry best use new technologies to maximize revenue?
The answer, it appears, is to identify and retain the biggest losers as customers.
CC Griffus, the director of iGaming & Sports Betting Operations at the Soaring Eagle Casino and Resort in Michigan, spoke brazenly about how the industry relies on its “VIP” players, the ones who lose the most money, to survive: “Five to ten percent of your top players are bringing in about eighty [percent],” she said. “We’re really trying to keep those ten percent around. If they do leave, then we’ve got some issues, right? Or we’re trying to get more … from them.”
That is: they’re trying to keep the addicts from quitting.
And, as Griffus explains, “every VIP starts as a new player.” Every new customer is a potential addict.
Persuading gamblers to lose more is key to the companies’ revenue maximization strategy. This necessarily requires enlisting big losers into VIP programs. But it also means, as one panelist suggested, reducing the “friction of financial transactions,” i.e., making it as easy as possible for a customer to wager more money than they initially intended. Online sportsbooks do this best by allowing users to connect their bank accounts and deposit thousands of dollars with one click. But casinos are apparently not too far behind as they invest in new technology that allows gamblers to avoid the ATM and instead use their smartphones to transfer money to gaming machines directly.
“It’s kind of scary,” Griffus admitted.
The gambling companies are extremely effective at controlling the narrative. Much of the criticism of the industry has been built on anecdotal accounts: a winner posting on social media about being limited or banned, or a big-time loser telling his story to the local newspaper. This has allowed the companies to largely avoid regulatory scrutiny up to this point.
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But that’s now starting to change — thanks to government oversight and quality investigative reporting.
We should all be applauding the Trump-Vance FTC for seeking to hold these predatory companies accountable.
Jon Schweppe is a senior adviser at American Principles Project. He previously served as a policy adviser to Chairman Ferguson at the Federal Trade Commission. Follow him on X @JonSchweppe.
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[ H/T Washington Examiner ]
