Baltimore Sues FanDuel, DraftKings for Targeting Problem Gamblers

by Emily Washburn | May 6, 2025 | Culture

FanDuel and DraftKings target people with gambling problems, the city of Baltimore alleged in its lawsuit against the two largest online sports books in America.

The case makes Baltimore the first public entity to take online sports betting companies to court over exploitative business practices that have become industry staples.

The suit, filed in Baltimore Circuit Court in April, accuses FanDuel and DraftKings of:

  • Using misleading promotions like “no sweat” bets to encourage Baltimoreans to wager every day.
  • Using extensive online data collection to identify lucrative problem gamblers and exclude professional gamblers.
  • Targeting problem gamblers with special promotions and services to extract maximum profit.

Baltimore claims this business model violates both a city code preventing businesses from engaging in “unfair, abusive or deceptive trade practices” and a state gambling regulation forbidding sports books from “[conducting] sports wagering in a manner that may adversely impact the public or the integrity of sports wagering.”

“[FanDuel and DraftKings’] actions demonstrate a callous disregard not only for the rule of law, but also for the public health, safety and well-being of Baltimore consumers,” the case concludes, requesting the judge fine the companies and force them to abandon business practices targeting problem gamblers.

Background

In 2018, the Supreme Court overturned a law preventing states outside of Nevada from licensing sports betting companies. Today, online sports betting is legal in 34 states and the District of Columbia.

DraftKings and FanDuel own approximately 70% of the national online sports betting industry, which made more than $10 billion in 2023. Marylanders bet more than $457 million on these two platforms in January alone.

While legalized sports betting captures record revenue for the gambling industry, indicators of problem gambling, particularly among young men, have increased apace.

Calls to the problem gambling hotline at the Maryland Center of Excellence on Problem Gambling (MCEPG) skyrocketed after the state legalized online sports betting in 2022. According to program director Mary Drexler, many of the new calls came from young men or their parents.

Baltimore’s suit quotes Drexler:

As the industry booms, problem gambling is growing too, especially among 18- to 24-year-old men who grew up loving sports — and their phones — and can’t restrain their mobile sports betting impulses.

Drexler’s observation helps contextualize MCEPG data showing one in five online sports bettors in Maryland demonstrated signs of problem gambling, compared to just one in 10 who bet on sports in person.

“No Sweat” Bets

FanDuel and DraftKings offer new customers “free, no risk” bets for signing up. The fine print on these “no sweat” or “bonus” bets show they have an expiration date and can only be wagered in small amounts at a time.

These qualifications effectively manipulate new gamblers into betting every day to “get their money’s worth.”

Even if a user makes a profit off their “no sweat” bets without forming a daily gambling habit, FanDuel and DraftKings don’t allow customers to cash out “no sweat” bets alone. They must wager some of their own money to access their winnings

In its suit, Baltimore calls this marketing “deceptive,” alleging:

These tactics prompt users to place larger and more frequent wagers than they might have initially intended when considering their personal limits on reasonable betting, by implanting the false idea that users are obtaining “free bets,” or otherwise taking on substantially less financial risk than they actually are.
Big Data

Once gamblers sign up, FanDuel and DraftKings deploy machine learning algorithms to determine each bettor’s lifetime value (LTV), or “the total income a business can expect from a typical customer during their lifetime.”

“Perversely, the metrics used to calculate LTV in sports betting … closely mirror established indicators of gambling addiction,” the suit notes, including:

  • Frequency and size of bets.
  • Time spent betting.
  • Loss chasing, or betting increasingly higher amounts to recoup money lost.
  • Deposit amounts and times.

These metrics allow online sportsbooks to identify and kick professional gamblers off their platforms. But, instead of excluding suspected problem gamblers, FanDuel and DraftKings use their treasure trove of data to create personalized notifications and promotions enticing big spenders back into the game.

Baltimore writes in the suit:

These notifications and promotions are not random, but, rather, are systematically designed and deployed using Defendants’ extensive data analytics capabilities to target users at moments when they are most likely to resume gambling.
VIP Programs

FanDuel and DraftKings assign VIP hosts to their best customers — the people losing the most money on their platforms. These employees establish one-on-one relationships with “clients” and funnel them a steady stream of promotions perks designed to keep them spending.

Kavita Fischer, a psychologist who lost $400,000 on gambling apps, says her DraftKings VIP host facilitated her gambling, even when she wanted to stop.

The Wall Street Journal’s Kate Linebaugh recounts one of Kavita’s experiences:

In January, Kavita emailed her DraftKings host to say she was doing terribly and that she wanted to try a different game or quit gambling completely. But Kavita also asked her host for another bonus.
In response, her host added $500 to her account and wished her luck, writing, “Hope you can get hot.”

Though Kavita displayed clear signs of problem gambling, including asking if DraftKings offered small loans for VIP clients, her host accepted her word that she was “gambling within her means.”

Baltimore alleges Kavita’s experience isn’t unique — it’s part of sportsbooks’ profit strategy:

Access and robust user data, coupled with the hosts’ and managers’ directive to keep these players betting as much as possible, creates an extremely potent mechanism to break down the defenses of individuals struggling with a gambling disorder.
Why It Matters

Problem gambling devastates families and communities. The social and monetary fallout burdens taxpayers.

But online sports betting companies have no incentive to exclude these problem gamblers, and every incentive to exploit them. Baltimore’s case presents convincing evidence that FanDuel and DraftKings not only allow exploitation to occur, but engineer it.

Consumer protection laws have prohibited these kinds of practices for generations. It’s about time governments started enforcing the law against online sports books.

Additional Articles and Resources

March Madness Sends Gambling Industry Profits Sky High

‘Addictive, Exploitative, Manipulative’: Les Bernal Breaks Down Predatory Gambling Ahead of the Super Bowl

Online Sports Betting Hooking Young Men on Gambling, Research Suggests

Online Super Bowl Betting Breaks Records