FTC Begins Probe In The US Online Sports Betting Industry

A major shakeup in US online sports betting may be on the horizon.

According to a Washington Sun report, the Federal Trade Commission has opened a new probe into the massive online sports betting industry. While the agency has not released details, it is believed it is examining how the industry advertises itself. However, it does not appear to include prediction market operators like Kalshi and Polymarket. 

Unlike state-level investigations into sportsbooks advertising, the FTC’s could lead to nationwide changes to the industry.

DraftKings, FanDuel at Center

While the investigation is into online sports betting, the FTC appears to be focused on DraftKings and FanDuel. The duo dominates online sports betting across the US, but are also coming off large scandals involving their ad practices.

DraftKings is dealing with fallout from a bombshell New York Times report accusing it of using AI to target losing bettors. The report found that the sportsbook sent more bonuses and promos to bettors who consistently lose and have responded to ads in the past. This is preventing struggling bettors from slowing down and getting help, fueling the growth of problem gambling.

FanDuel also faced a scandal over the summer for using celebrity videos for VIP customers. Regulators and lawmakers worried that the operator was using videos to target VIP bettors whose activity is slowing down. Since these videos didn’t directly solicit wagers, they aren’t subject to sports betting ad restrictions.

Calls For Transparency Increase

The scandals involving the country’s top two sportsbooks have led state regulators to push for more transparency from sportsbooks. In particular, they want to know how and when operators decide to send new promos and bonuses to bettors. 

The fear is that sportsbooks are catering to bettors who are losing but can't stop placing wagers. These bettors are being hammered with free promos to keep them betting, delaying their ability to get help.

Sportsbooks have been hesitant to share this information, claiming it's a competitive secret they keep confidential. However, these requests have largely come from state-level regulators, not a massive federal agency like the FTC.

Can the Probe Be Trusted?

A federal agency stepping in to review DraftKings' and FanDuel's ad practices could deliver a major win for responsible gambling advocates. However, there is some reason to wonder if that is the true motive.

US President Trump has strong financial ties to prediction market platforms like Kalshi and Polymarket. He nominated Michael Selig to run the Commodity Futures Trading Commission, which has filed lawsuits against several states attempting to push these platforms out. It has worked as a de facto ally for the emerging industry, despite Selig’s promises to let the legal system decide its fate.

Trump also nominated FTC Chairman Andrew N. Ferguson, who will have a large role in the investigation. The fact that the current probe doesn’t include prediction markets leaves many wondering whether the agency is also trying to protect the controversial industry.