DraftKings’s application for renewal of its sports betting permit in Louisiana has been put on hold until early next year, after regulators continue to investigate reports over the company’s use of artificial intelligence and the suitability of some shareholders.
The Louisiana Gaming Control Board (LGCB) voted unanimously Thursday to conditionally approve DraftKings for a four-month license extension through February 19, with the full renewal hearing scheduled for February 18.
DraftKings’s Louisiana sports betting license expires on November 10.
Assistant Attorney General Delancey Houston said the Louisiana State Police Gaming Enforcement Division recently discovered information indicating that certain shareholders presently holding 5% or more in the company had not submitted to suitability in connection with DraftKings.
Houston said one shareholder had requested to be labeled an institutional investor, but that still needs to be determined.
“The investigation is incomplete at this time,” Houston said. “The division also has some concerns about the recent allegations brought against DraftKings and therefore additional time is needed for the division to fully investigate those allegations.”
The nine-member Control Board had plenty of questions for DraftKings President of Operations and cofounder Paul Liberman and Chief Responsible Gaming Officer Lori Kalani during the hearing inside a House committee room at the state Capitol in Baton Rouge.
Most of those questions concerned a recent New York Times article alleging DraftKings uses artificial intelligence (AI) to target losing bettors and how the company treats bettors that may be showing signs of a gambling problem.
Board member Ronald Sholes asked Liberman if DraftKings had the ability to identify losing gamblers.
“Obviously, we have all the financial records of all our customers,” Liberman said. “So we’re able to see how individual customers perform and tell whether someone is a winning gambler or a losing gambler.
“We do not use AI in any way to target losing gamblers by any means,” Liberman said.
Chairman Chris Hebert recognized that news reports are not findings of regulatory violations, but the LGCB has a responsibility to examine matters that could affect the integrity of gaming operations.
The conditional license included a total of seven conditions, including providing all required suitability submissions or fillings of petitions to qualify as an institutional investor within 30 days. DraftKings will also have 30 days to submit formal responses concerning the use of AI, prediction market activity, digital offerings to Louisiana residents, and any other information requested.
The LGCB also required DraftKings to conduct and submit a review and certification of compliance of responsible-gambling requirements for marketing materials, commercials, and digital ads within 30 days.
The company is required to designate a senior company representative to handle all communications with the Board in seven days and fully cooperate with all directives and submit all information required, while operating with a conditional renewal permit.
“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,” Herbert said. “It will allow you an opportunity to respond and it will help to ensure the integrity of gaming.”
