Online Betting Platforms Face Scrutiny Over VIP Perks for Losers and Limits on Winners
Regulators and lawmakers investigate online sportsbooks for rewarding heavy losers with VIP perks while restricting successful bettors' accounts.
POLICY WIRE — Washington, D.C. — Online sports betting companies are facing mounting pressure as regulators and lawmakers scrutinize the industry’s dual-track approach to customer management: showering heavy losers with extravagant rewards while actively restricting the accounts of successful gamblers.
State officials have begun investigating a practice known as limiting, where platforms reduce the maximum wager allowed for bettors who demonstrate consistent success. Brianne Doura-Schawohl, director for the Campaign for Fairer Gambling, argues that the industry must ensure the house always wins, noting that pervasive advertising creates a false impression that consistent victory is attainable for the average user.
A group of U.S. lawmakers recently sent a letter to major gambling platforms expressing concern that these companies exploit vulnerable individuals by granting VIP status to frequent losers. The letter highlights how perks like Super Bowl tickets, celebrity videos, and exclusive event access distract bettors from their financial losses and encourage continued wagering.
Conversely, professional bettors often find their accounts severely restricted, with some limits dropping below $20 or even 50 cents. In a 2023 filing with the U.S. Securities and Exchange Commission, DraftKings defended this practice, stating it manages betting limits at the individual level based on risk profiles and enterprise-level exposure.
Professional bettor Mike Manning, who uses analytical models to guide his wagers, reported that his limits were slashed across multiple platforms after he began winning. While DraftKings cited internal risk management, FanDuel informed Manning that his restrictions were based on an assessment of his wagering patterns and their impact on the company’s long-term risk position.
The Massachusetts Gaming Commission investigated this trend in 2024, finding that winning gamblers frequently face reduced limits while losing gamblers see their limits increased. Although the commission found that only 0.64% of accounts in the state were restricted, the practice has sparked a debate over whether the industry operates on a ban or bankrupt model.
Legal experts, such as New Jersey attorney Matthew Litt, note that these restrictions are generally legal provided they do not discriminate based on protected characteristics like race or religion. Massachusetts has since become the first state to mandate that companies notify customers when their accounts are limited and explain the reasoning behind the decision.
The human cost of these systems is highlighted by the case of Chris Swett, a former South Carolina attorney currently awaiting sentencing for wire fraud and money laundering. Swett admitted to stealing $2 million from his firm to fund a gambling addiction on FanDuel, where he was encouraged by a VIP host to wager more even after expressing that he was tapped out.
FanDuel stated that it has implemented significant changes to its VIP program since Swett’s involvement, including enhanced employee training and new technologies to identify problem gambling. The company maintains that it is an entertainment platform rather than a tool for professional income generation and that its risk management measures are reviewed by state regulators.
For those seeking assistance, the National Problem Gambling Helpline is available by calling or texting 1-800-MY-RESET, and Gamblers Anonymous provides support via their national hotline at 1-855-222-5542.
Reporting by Policy-Wire (PW)
