Following accusations of operators using deceptive and misleading advertisements, the Federal Trade Commission (FTC) has begun investigating the US sports betting industry, but will exclude prediction market platforms such as Kalshi and Polymarket.
The FTC’s focus will revolve around allegations made against DraftKings and FanDuel, including DraftKings’ use of AI to target losing bettors and the recent scandal involving FanDuel and Philadelphia Phillies first baseman Bryce Harper.
According to sources familiar with the investigation, the FTC’s probe remains in the “early stages,” although political and career staffers will review online sportsbooks as part of the evaluation.
Former FTC Senior Policy Adviser Jon Schweppe, who served under President Trump-appointed Chair Andrew Ferguson, argued it’s "time to put online sportsbooks in the hot seat” and compared the industry to tobacco, technology and pharmaceuticals.
In late September, a New York Times report raised serious allegations against DraftKings, accusing the operator of utilizing AI-powered data analysis to target gamblers most likely to lose.
DraftKings reportedly uses data science to target losing gamblers with promotions and advertisements, while efforts to identify problem gamblers were either stalled or dropped entirely.
Prior to the DraftKings’ incident, FanDuel sent a video made by Harper to customer Terry Thompson, who filed a lawsuit against the operator in March for allegedly taking advantage of his gambling addiction.
On the website Cameo, Harper filmed a 21-second video for Thompson in November 2024, where the MLB All-Star addresses Thompson – and his son – by name, while the clip is also marked with a FanDuel logo.
At the time of writing, however, DraftKings confirmed the FTC has not yet sent a Civil Investigative Demand – or the typical subpoena issued by the agency.
Perhaps recent clarifications made by the Commodity Futures Trading Commission (CFTC) helped prediction markets avoid the FTC probe, as the CFTC confirmed wagers placed on sportsbooks and casino games are excluded from the definition of a “swap.”
The CFTC instead refers to sports event contracts as “financial instruments,” and believes such revisions provide “additional market clarity” and “resolve any ambiguity regarding these contracts.”
Atlanta Braves outfielder Ronald Acuña Jr. entered into a partnership with Kalshi on October 7, becoming the first active Major League Baseball player reported to endorse a prediction market platform
