FanDuel and DraftKings face lawsuit in Louisiana over consumer protection concerns

• FanDuel and DraftKings face legal trouble in Louisiana as plaintiffs seek damages over "defective products"
• Part of the complaint alleges that the companies relied on technology to identify vulnerable consumers
• DraftKings was previously named in a NYT article over its alleged use of AI to identify "elastic" gamblers

FanDuel and DraftKings have been named in a proposed class-action lawsuits filed in the Civil District Court for the Parish of Orleans, Louisiana.

Latest complaint against major sportsbooks lands in Louisiana

The complaint alleges that the sportsbooks have breached state consumer protection laws, and focuses on the alleged use of artificial intelligence to track and issue personalized offers to sports bettors that were losing and keep them engaged longer.

"Harrowing accounts proliferate in which people describe feeling targeted and exploited by FanDuel and DraftKings, even after they tell representatives from the companies that they fear they are losing control and cannot, for example, pay their mortgage," the complaint stipulates.

In their complaint, the plaintiffs, represented by Adrian Payton, Toi Smith, and Yolanda Perkins, allege that the companies went even further, and leveraged technology to bypass self-exclusion and responsible gaming tools, which was a breach of the Sports Wagering Act.

This is not the first lawsuit filed over the issue, with another plaintiff in West Virginia filing a separate complaint at the beginning of October.

According to the complaint, DraftKings and FanDuels sought to "hook users" by using data and then proceeded to "target" and "exploit" the "most vulnerable." The lawsuit states that these practices are unfair, deceptive, and abusive, and in clear violation of established gambling laws.

The lawsuit further claims that the companies are violating the Louisiana Products Liability Act. The act specifically allows consumers to seek damages from a company if their product is proven to be defective, or that it has caused physical or financial harm.

However, proving this would be a tall order. This is the latest lawsuit that the companies are facing.

Scrutiny of AI use by betting companies intensifies

Some of the current legal backlash could be traced back to a New York Times article that interviewed former DraftKings employees and suggested that AI was indeed used to analyze betting patterns and determine which bettors were more "elastic," a term coined within the firm to indicate that some players are more receptive to bonus stimuli and could continue gambling longer if offered one.

However, DraftKings has flatly denied that it had used AI to target vulnerable consumers, and said that it has been doing what any other consumer-facing companyhas done by analyzing customer behavior.

The Louisiana lawsuit also alleges that both DraftKings and FanDuel have failed to offer adequate warnings about their products, citing what the complaint describes as a "highly addictive nature."

Regulators across the U.S. are beginning to look into the AI use of licensees, with the Massachusetts Gaming Commissionraising the issue recently.

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