DraftKings Faces Conditional License Extension in Louisiana Amid AI Investigation

The Louisiana Gaming Control Board has taken a decisive step that leaves US gaming giant DraftKings in a temporary state of uncertainty. In a unanimous vote, the board granted a conditional four-month extension of the company's sports betting license. This extension is valid until February 19, whereas the original authorization was set to expire on November 10. The regulators made it clear that this is not a free pass but rather an oversight measure to investigate serious allegations. At the core of the matter is how DraftKings utilizes Artificial Intelligence and whether all major shareholders meet strict suitability criteria.

The atmosphere during the hearing was tense as Paul Liberman, DraftKings' President of Operations and co-founder, and Lori Kalani, the Chief Responsible Gaming Officer, addressed the board's questions. Assistant Attorney General Delancey Houston reported that the Louisiana State Police Gaming Enforcement Division found discrepancies regarding shareholders who own at least 5% of the company. Apparently, necessary suitability submissions are missing for these individuals. One investor has requested to be classified as an institutional investor, a status the regulators have not yet finalized. Such regulatory gaps in the highly sensitive gambling industry are often grounds for a full revocation of operating permits.

Numbers and facts

The investigation focuses on several critical deadlines and data points. The full renewal hearing is scheduled for February 18, just one day before the new extension expires. DraftKings now has exactly 30 days to provide detailed reports on its use of AI, prediction market activities, and digital offerings to Louisiana residents. Also within 30 days, the company must certify that all marketing materials comply with responsible gambling requirements.

Interesting insights into the operational level were provided by the player protection figures. Lori Kalani stated that the company closed 175 accounts in Louisiana during the year discussed. These closures occurred because customers did not follow responsible gambling advice and are separate from voluntary self-exclusions. This figure is trending at a similar level to 2025. Furthermore, the company emphasized that it does not send marketing materials to affected customers for two weeks after a cool-off period or for 30 days after a self-exclusion.

Background

Particularly explosive is the allegation that DraftKings uses algorithms to specifically target customers who are experiencing high losses. Paul Liberman vehemently denied this before the board. While he admitted that DraftKings uses financial data to determine if a player is winning or losing, he denied the use of AI to target losing gamblers.

“This proposal is not a determination that DraftKings has engaged in any wrongdoing. Rather it is a measured regulatory response that allows us as a Board to fulfill our oversight responsibility.” - Chris Hebert, Chairman of the Louisiana Gaming Control Board

Lori Kalani added that AI at DraftKings is primarily used in the area of player protection. Automatic warning systems are triggered if customers express signs of financial distress or psychological strain to customer service.

“We can’t diagnose when someone has a compulsive gambling problem. We’re not physicians, we’re not clinicians and that’s not our role, but we certainly want to help people enjoy the service, the platform that we’re offering them.” - Lori Kalani, Chief Responsible Gaming Officer at DraftKings

Why it matters for German players

For German customers playing with operators licensed by the Gemeinsame Glücksspielbehörde der Länder (GGL), reports of such practices in the US are often concerning. However, the German legal system provides a much tighter framework through the State Treaty on Gambling 2021 (GlüStV 2021). In Germany, the use of algorithms to maximize losses is prevented by strict advertising guidelines and the central monitoring system LUGAS.

While the US is still debating whether "losers" can be targeted with advertising, Germany has firmly established stake limits of 1 Euro per spin on virtual slots and a cross-operator deposit limit of 1,000 Euro per month. German players should ensure they only use providers listed on the official GGL whitelist. Only there is it guaranteed that mechanisms like the panic button system and the cross-check with the OASIS lockout file function correctly. Those playing with MGA or Curacao providers expose themselves to the exact risks currently being investigated in Louisiana: a lack of transparency in AI usage and insufficient protection against gambling addiction.

What it means for GGL-licensed casinos

The developments in Louisiana send a signal to the entire global market, including German licensees. The GGL monitors international trends very closely. Should the allegations against DraftKings be substantiated, this could lead to even stricter regulation of AI-supported marketing tools in Europe. German providers must already prove that their early detection systems for gambling addiction work effectively. The DraftKings case highlights that transparency in data processing may decide the retention of a license in the future. For GGL casinos, this means increased documentation requirements to prevent any suspicion of "loss maximization" from arising in the first place.