Betmakers Cap Winning Gamblers While Rewarding Losers

Sports betting platforms are restricting the stakes of their most successful customers while showering those who lose money with rewards, according to a state investigation and complaints from professional gamblers. This disparity in treatment has drawn scrutiny from regulators and lawmakers who argue the industry is designed to protect house profits rather than offer fair play.

In 2024, the Massachusetts Gaming Commission conducted an investigation into how gambling companies manage individual betting accounts. The regulator required firms to provide data on their limiting practices. The review revealed a consistent pattern: betting limits for winning gamblers were decreased, while limits for losing gamblers were increased. The commission found that 0.64% of all betting accounts in the state had been subject to such restrictions.

Mike Manning, a professional bettor who uses mathematical models to predict outcomes, experienced this practice firsthand after Massachusetts launched sports gambling in 2023. Manning said he was winning on nearly every available app before platforms began capping his wagers. On DraftKings, his limit dropped to $25 per bet. On BetMGM, where he previously wagered between $1,000 and $5,000 per game, his limit fell to $5. Another bettor, Michael Trevithick of Michigan, showed a betting ticket indicating DraftKings limited his wager on the NBA Cup to 49 cents.

Brianne Doura-Schawohl, director of the Campaign for Fairer Gambling, described the strategy as ensuring the house always wins. She stated that the practice is unfair because pervasive advertising tells consumers they can win. Last week, a group of U.S. lawmakers wrote to major gambling platforms expressing concern over how they exploit vulnerable bettors. The letter noted that perks such as exclusive events, celebrity videos, and Super Bowl tickets distract bettors from their financial losses and encourage them to continue playing.

Chris Swett, a former South Carolina attorney, illustrates the other side of the ledger. Swett pleaded guilty to wire fraud and money laundering after stealing approximately $2 million from his law firm to fund gambling on FanDuel. He said a FanDuel employee assigned him a VIP host after he began wagering $25,000 a month. The host provided free tickets and contest entries to keep him playing. Swett wagered $11 million over two years and lost about $1 million. He faces a maximum of 20 years in federal prison.

DraftKings explained its practice in a 2023 filing with the U.S. Securities and Exchange Commission, stating it restricts betting limits based on individual customer profiles and risk levels. A company spokesperson said these limits apply to less than 0.15% of accounts and are generally a response to activity that appears designed to exploit odds errors. FanDuel stated that it has made changes to its VIP program, including additional employee training and new technologies to identify problem gambling. The company also noted that it uses tools to protect its financial risk in rare instances where individuals use sophisticated income generation strategies.

Massachusetts became the first state to require gambling companies to notify gamblers when they are limited and to specify the reason. FanDuel told Manning he was restricted due to an assessment of his wagering patterns and their impact on the company's long-term risk position. DraftKings told Manning the action was for internal risk management purposes. Matthew Litt, a New Jersey attorney, said the practice is legal as long as companies do not discriminate based on protected characteristics such as race or religion.