New York Moves to Bar Sportsbooks From Using AI to Target Bettors

The New York State Gaming Commission voted on Friday, October 9 to propose two rules aimed at the state’s nine licensed mobile sportsbooks. One would bar them from using artificial intelligence to decide who gets a promotion or to suggest a bet. The other would make each operator name one employee to step in when a customer shows signs of a gambling problem.

Neither rule is in force yet. Both votes were to propose the text, and staff have already asked commenters to pay special attention to one new requirement. The rules would land in New York, where mobile sportsbooks took $26.16 billion in bets in the fiscal year that ended in March.

Consent Won’t Save a Promo

The AI rule would become a new section 5404.1 of the state’s gaming regulations, and it reaches well past sports betting. Casinos, video lottery operators, racetracks, off-track betting corporations and lottery courier services are all covered. The proposed text says no licensee, affiliate or vendor may use “any automated decision system or algorithmic profiling” that processes a person’s data to “select, customize, time or deliver any promotion, bonus, offer, odds, limit, message or product recommendation.”

Suggesting “any wager, wager type or wager amount” is out as well. The draft also closes the two obvious ways around it. “Human review or approval of system output does not exempt such activity,” it reads, and patron consent does not waive the ban.

Then it flips the burden of proof. Any offer that varies between customers in a way tied to their data is presumed to break the rule. An operator can only beat that presumption with “clear and convincing evidence” from logs it has to keep for at least seven years.

What Sportsbooks Could Still Do

Promotions offered to every eligible customer at the same time, under published criteria, stay legal. So do systems used only for fraud prevention, anti-money laundering, age verification or Responsible Gambling interventions. Volume-based loyalty tiers survive, but promo criteria can’t be built on “wagering history, spending, losses or inferred vulnerability.”

The only consent-based exception is for horse racing. A pari-mutuel licensee could offer a separate app that suggests bets if the customer opts in, the setting defaults to off and the customer reaffirms it every 12 months. The staff memo says the text makes “substantive changes” to the short version circulated for comment in March.

One Named Person at Every Sportsbook

The second rule adds a subdivision to section 5330.34. Commission staff based it on a New Jersey proposal published in September 2025. Each operator would designate a Responsible Gambling lead, who keeps a list of at-risk patrons and makes sure they get no direct advertising.

Automatic triggers send an account for review. They include deposits over $10,000 in 24 hours, deposits over $100,000 in 90 days, more than $1,000,000 wagered in 90 days and three canceled withdrawals in 10 days. New since March, the review has to assess the customer’s “financial vulnerability.”

Three phases of intervention follow. The first is a message, normally an email, about limits and self-exclusion, the second is a video the customer must watch before betting again, and the third is direct contact from the lead by phone or video call. If three calls go unanswered, the account is suspended until the two speak. A customer the lead still judges to be at risk after that conversation has the account closed.

O’Dwyer Puts Operators “On Notice”

Chairman Brian O’Dwyer said after the votes that the intervention rule has a gap. A bettor cut off by one sportsbook could, as he put it on the Commission’s webcast, “exhaust their welcome at one” and then work through the others. He wants the operators to share data so that can’t happen.

O’Dwyer told them: “The industry is on notice by me and this commission that they need to solve this problem.” He added that “if the industry does not address it then we will address it.” Before the vote, one commissioner asked staff to find a “dozen or so” outside AI experts to weigh in on the first rule.

A 51% Tax Meets a Promo Ban

It’s a lot of money to regulate. New York taxes mobile sports betting revenue at 51%, and the Commission’s reports show $2.6 billion in gross gaming revenue last fiscal year, with $1.33 billion of it going to education. In the week ending October 4 alone, bettors staked $619.4 million.

The nine licensed operators are Bally Bet, BetMGM, Caesars Sportsbook, DraftKings, theScore Bet, Fanatics, FanDuel, Resorts World Bet and Rush Street Interactive. All of them would answer for their affiliates and vendors under the AI rule.

Hochul Asked for This in March

The rules trace back to Gov. Kathy Hochul and her State of the State program. In March she said New York needed safeguards to “keep artificial intelligence from preying on gamblers,” and the Commission took comments on its early drafts until May 15.

New York isn’t the only state asking. The Massachusetts Gaming Commission said in September that it would examine how its sportsbooks use AI after a New York Times investigation into DraftKings. New York’s draft goes further on penalties. A breach would count as a separate violation for each patron or prospective patron affected, and the penalties listed include license revocation.