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The City of Baltimore has filed a lawsuit against DraftKings and FanDuel, alleging that the companies utilize machine-learning algorithms and predictive modeling to identify and exploit vulnerable gamblers. The complaint claims these systems personalize promotions and push notifications to maximize user lifetime value, leading to increased gambling disorder and financial harm. The city seeks injunctive relief and civil penalties, arguing that these practices violate local consumer protection ordinances.
In Baltimore, the city sued DraftKings and FanDuel, alleging that the companies used predictive modeling with machine-learning algorithms, extensive user data, personalized promotions, push notifications, and VIP programs to identify and exploit vulnerable bettors, including people showing signs of gambling disorder. The complaint alleges these systems were designed to maximize user lifetime value and contributed to financial and public-health harms among Baltimore residents.
Domain classification, causal taxonomy, severity scores, and national security assessments were LLM-classified and may contain errors.
Using AI systems to gain a personal advantage over others such as through cheating, fraud, scams, blackmail or targeted manipulation of beliefs or behavior. Examples include AI-facilitated plagiarism for research or education, impersonating a trusted or fake individual for illegitimate financial benefit, or creating humiliating or sexual imagery.
Also classified as
The algorithmic targeting fosters severe behavioral and material dependence, leading to compulsive gambling and addiction.
The platforms utilize predictive algorithms to conduct targeted manipulation of vulnerable users' behavior for the companies' financial gain.
AI system
Due to a decision or action made by an AI system
Intentional
Due to an expected outcome from pursuing a goal
Post-deployment
Occurring after the AI model has been trained and deployed
The alleged harm is driven by proprietary algorithms deployed post-deployment that intentionally target and exploit vulnerable users to maximize platform engagement.
Added categories peak at 3: Substantial (Psychological Harm, Direct)
The City of Baltimore's lawsuit against sports betting platforms highlights the domestic regulatory and social challenges of commercial machine-learning systems. While the predatory targeting of vulnerable individuals causes localized social and financial harm, the incident lacks the scale, intent, or foreign state involvement to pose a significant threat to US national security.
The proprietary algorithms operate independently to analyze user data, personalize inducements, and decide when to send push notifications to maximize engagement without direct human intervention.
Unacceptable Risk. The report describes exploitative systems targeting vulnerabilities based on age or behavioral disorders, and AI used for behavioral manipulation leading to physical, psychological, or financial harm.
The algorithms model user behavior to identify vulnerabilities and recommend personalized content, such as push notifications and bonus bets, to maximize lifetime value.
The legal allegations and the mechanisms of algorithmic targeting are clearly described in the report, allowing for a highly confident assessment of the risks and harms.
The defense may argue that the algorithms are standard marketing optimization tools rather than predatory systems.
Technology
Predatory Targeting Algorithms
Algorithms altered to target users likely to suffer from gambling harm.
Push Notification Algorithms
Proprietary algorithms optimize notification timing to induce next bet.
Exploitable App Logic
Bots mimic disordered gamblers by opening apps in middle of the night.
Data Inputs
Exploitation of User Data
Using troves of data to identify and target vulnerable user behaviors.
Personalized VIP Profiling
Data on user habits used to personalize inducements and maximize LTV.
Human Factors
Compulsive Mobile Betting
Young men unable to restrain impulses due to constant phone access.
Illusion of Low Risk
Bonus bets lead users to believe gambling is not risky.
Disordered Gambling Behavior
Platforms designed to create and exploit disordered gambling habits.
Process and Methods
Relentless Push Notifications
Sending constant push notifications with calls to action to bet often.
Predatory Bonusing Practices
New user promotions forcing multiple bets within seven days.
Lack of Financial Checks
No robust financial checks or VIP program restrictions in the US.
Management
Prioritizing LTV Over Safety
Management focuses on maximizing lifetime total value of vulnerable users.
Deceptive Marketing Strategy
Designing platforms specifically to hook and exploit users for profit.
Exploitative VIP Programs
Using VIP programs to personalize and encourage continuous betting.
Regulatory Environment
Weak US Gambling Regulations
US lacks the financial checks and VIP restrictions found in the UK.
Inadequate Consumer Protection
Existing laws failed to prevent abusive trade practices by operators.
AI system involved
Identified by automated extraction; can differ from the alleged developers above.
