New York Advances Proposed AI Restrictions for Gambling Operators

New York gambling regulators have advanced proposed rules that would restrict the use of artificial intelligence (AI) and other automated technologies to personalise gambling promotions and recommend wagers, as part of a wider effort to strengthen protections for customers who may be experiencing gambling-related harm.

The New York State Gaming Commission unanimously advanced revised proposals covering AI, machine learning, algorithmic profiling and automated decision-making systems. The measures are intended to prevent gambling operators from using customer data to encourage individuals to spend more or increase their betting activity.

Under the proposed restrictions, operators would be prohibited from using these technologies to select, customise, time or deliver personalised bonuses, odds, betting limits, messages and product recommendations designed to increase customer spending or engagement. Automated systems would also be restricted from recommending specific wagers, bet types or stake amounts to individual customers.

The proposed rules would apply beyond New York’s nine licensed mobile sports betting operators. Their scope would extend to commercial casinos, video lottery operators, racetracks, off-track betting businesses, lottery courier services, platform providers, affiliates and technology suppliers. This broader coverage would bring multiple parts of the gambling sector within the proposed framework for controlling AI-driven customer targeting.

The restrictions would distinguish between the use of technology to encourage gambling and its use for protective or regulatory purposes. AI could continue to be used for activities such as identifying potential gambling harm, preventing fraud and supporting regulatory compliance. Limited exemptions may also be available where customers have provided informed consent. Certain pari-mutuel horse-racing applications that provide automated wager suggestions could qualify for an exemption where users have actively opted into the service.

The Commission has requested further technical and academic input before the proposed AI regulations return for final consideration.

A separate proposal would introduce additional obligations for mobile sports betting operators to identify customers whose activity may indicate a risk of gambling-related harm. Operators would be required to conduct due-diligence reviews when specified indicators arise and determine whether further intervention is necessary.

Potential warning signs include unusual deposit or wagering activity, repeated increases to account limits and evidence of financial difficulties, such as bankruptcy, court judgments or other debt problems. The proposals would also require operators to designate responsible gambling personnel who could contact customers identified as being at risk and provide information about available support resources.

New York Gaming Commission Chairman Brian O’Dwyer has also called for licensed operators to share information about customers who have been restricted because of gambling-related concerns. The aim is to reduce the possibility that individuals facing restrictions at one betting platform could immediately move to another operator without the underlying concerns being addressed.

The proposals follow increased scrutiny of how online sportsbooks use customer data and promotional tools. Recent media investigations have raised questions about whether personalised offers and automated marketing systems can target customers displaying signs of harmful gambling. Regulators are seeking to establish clearer boundaries around the use of such technologies while strengthening operators’ responsibilities towards their customers.

The Sports Betting Alliance, which represents mobile sports betting operators, has indicated that the industry is prepared to continue working with the Commission on additional regulatory measures. The organisation has said that further rules should strengthen consumer protection while supporting the integrity of New York’s regulated betting market.

Mobile sports betting is a significant source of state revenue in New York. According to the reported figures, the market generates more than US$1 billion in annual state tax revenue, with operators subject to a tax equivalent to 51% of gross gaming revenue.

Neither proposal has yet become final regulation. The measures are expected to undergo a 60-day public consultation, during which interested parties will have an opportunity to submit comments. The Commission will consider the proposals further after the consultation process, and no final vote date has been announced.

By fLEXI tEAM