DraftKings and FanDuel Restrict Winning Bettors While Offering Perks to Losers

State regulators have identified a pattern in which online sports betting platforms reduce the maximum wager amounts for successful gamblers while increasing limits for those who are losing. This practice, known as limiting, effectively cuts off professional bettors who consistently win, allowing companies to maintain their profit margins. The Massachusetts Gaming Commission confirmed this trend in an investigation conducted last year, finding that winning gamblers face decreased betting limits while losing gamblers see their limits raised.

The regulatory scrutiny comes as lawmakers and industry advocates raise concerns about how these platforms manage risk. Brianne Doura-Schawohl, director of the Campaign for Fairer Gambling, stated that the house must ensure it always wins. She argued that the practice is unfair, particularly given widespread advertising that suggests customers can win. Last week, a group of U.S. lawmakers sent a letter to major gambling platforms expressing concern over the exploitation of vulnerable bettors. The letter noted that perks such as exclusive event access, celebrity videos, and Super Bowl tickets distract bettors from financial losses and encourage them to keep wagering.

Professional bettors, often called sharp bettors, report that their accounts are frequently restricted. Mike Manning, a full-time professional bettor from Massachusetts, signed up with every available sports gambling app when the state launched sports gambling in 2023. Manning uses mathematical models and analytical approaches rather than intuition. He said he was winning on nearly every app until the platforms began limiting his bets. On DraftKings, his limit was set to $25 per bet. On BetMGM, he initially wagered between $1,000 and $5,000 per game, but that amount soon dropped to $5. Manning described the disparity in treatment as predatory and unfair, noting that companies exploit losing bettors while showing successful ones the door.

The extent of the restrictions can be minimal. Michael Trevithick, a bettor from Ann Arbor, Michigan, shared a betting ticket showing that DraftKings allowed a maximum wager of 49 cents on the NBA Cup. In a 2023 filing with the Securities and Exchange Commission, DraftKings explained that it restricts betting limits based on individual customer profiles and risk levels to the enterprise. A DraftKings spokesperson stated that the company applies customer-specific limits to less than 0.15% of accounts as an enterprise risk control. The company said these decisions are based on customer behavior, irrespective of whether the customer is winning or losing.

The Massachusetts Gaming Commission required gambling companies to provide data on how they limit bettors after noticing the practice in 2024. The regulator found that 0.64% of Massachusetts betting accounts had been restricted. Massachusetts became the first state to require companies to notify gamblers who have been limited and to specify the reason. FanDuel wrote to Manning that he was restricted due to an assessment of his overall wagering patterns and their impact on long-term risk. DraftKings told Manning it took action for internal risk management purposes.

While winners are capped, frequent losers often receive incentives to continue betting. Chris Swett, a former South Carolina attorney, pleaded guilty to wire fraud and money laundering charges in federal court. He stole approximately $2 million from his law firm to fund his gambling addiction, stating that every bit went into FanDuel. By 2019, Swett was wagering $5,000 to $10,000 a month. A FanDuel employee emailed him that anyone spending $25,000 a month was eligible to be paired with a VIP host who would provide free tickets and complimentary entries. Swett said the host kept incentivizing him to bet more, even after he wrote that he was tapped out for the month. In a two-year span, Swett wagered $11 million and lost about $1 million. He now faces a maximum of 20 years in federal prison.

FanDuel responded in a statement that millions of customers use the platform responsibly and have access to tools for controlled play. The company said it has made changes to its VIP program, including additional training for employees and new technologies to identify problem gambling. FanDuel stated that it is an entertainment company and not a tool for professional bettors to gain an edge. It noted that it is common for platforms to use tools to protect financial risk when individuals attempt to deploy sophisticated income generation strategies.

BetMGM declined to comment on the practice. Matthew Litt, a New Jersey attorney who works on gambling cases, said the practice is legal as long as companies do not discriminate based on protected characteristics such as race or religion. The National Problem Gambling Helpline offers resources at 1-800-MY-RESET, and Gamblers Anonymous provides a hotline at 1-855-222-5542.