Louisiana joins a growing number of regulators scrutinizing DraftKings’ use of AI, while a WIRED investigation raises questions about wash trading and activity farming on Polymarket.
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The fallout from DraftKings’ alleged use of AI to target losing bettors has spread to Louisiana, where regulators have delayed a full license renewal to investigate the matter. Meanwhile, new scrutiny of Polymarket’s offshore platform has emerged amid more than $600 million in suspicious trading activity.
Elsewhere, Taiwan has blocked access to Kalshi and Coinbase over suspected election wagering, Entain released a third-quarter update, and a central figure in the NCAA and NBA betting scandals has pleaded guilty.
The Big Story: Louisiana Gives DraftKings a Temporary License Renewal
In what is usually a routine procedure, the Louisiana Gaming Control Board (LGCB) conditionally extended DraftKings’ license until Feb. 19, 2027, instead of granting it a full renewal.
The regulator will hold a full renewal hearing on Feb. 18, giving state investigators additional time to examine allegations concerning DraftKings’ use of AI and unresolved shareholder suitability requirements.
At Thursday’s hearing, board members questioned DraftKings co-founder and President of Operations Paul Liberman and Chief Responsible Gaming Officer Lori Kalani about The New York Times’ report alleging that the company uses AI to target losing bettors. Liberman denied the allegations.
Regulators also said certain shareholders holding at least 5% of the company had not completed suitability checks.
The temporary approval includes seven conditions that DraftKings must meet. These include submitting outstanding shareholder paperwork, responding to questions about AI and prediction markets, certifying DraftKings’ compliance with responsible gambling advertising requirements, and filing monthly compliance reports.
LGCB Chairman Chris Hebert stressed that the delay in granting a full license renewal does not mean DraftKings has engaged in wrongdoing. Instead, it gives regulators time to examine the reports and allegations.
The developments add to the growing regulatory scrutiny following the Times report. Last week, Massachusetts sent more than 70 AI-related questions to licensed sportsbooks, requesting voluntary responses by Nov. 3. Regulators in Michigan and Maine have also begun examining the concerns raised.
The Daily Wire
WIRED Investigation Flags More Than $600 Million in Unusual Polymarket Trades
A WIRED investigation identified more than $600 million in trading across two election markets on Polymarket’s offshore platform, much of it occurring after the outcomes were effectively decided. Researchers identified unusual trading patterns involving long-shot candidates in Ethiopia and Romania, raising concerns about possible wash trading and activity farming.
In Ethiopia, more than $285 million was wagered on a market predicting the country’s next prime minister. Only $173,000 was wagered on the eventual winner, who won by a substantial margin. Analysis by MSR Decode found that approximately $284 million involved pairs of accounts repeatedly trading contracts with each other.
The firm’s examination of more than 38,000 trading loops found that over 98% generated no profit or loss for either side. This suggests possible “activity farming,” in which traders attempt to inflate trading volume ahead of a potential cryptocurrency token distribution.
Researchers also identified suspicious activity in a 2024 Romanian election market. Barnard College economist Rajiv Sethi’s analysis estimated that 99.6% of trading volume during certain weeks involved wash trading, in which participants buy and sell assets to create the illusion of heavy trading activity.
Sethi described the patterns as “obviously some form of volume manipulation,” although the researchers acknowledged that suspicious trading patterns do not conclusively establish wash trading.
Polymarket told WIRED that it had flagged and investigated the activity and blocked the accounts involved. The CFTC declined to comment on whether it was investigating the trades.
Taiwan Blocks Kalshi and Coinbase Over Election Betting Concerns
Taiwan has blocked access to Kalshi and Coinbase’s prediction market platforms amid suspicions that they facilitated illegal election wagering.
According to Bloomberg, a New Taipei City court authorized the restrictions following a request from Taiwan’s Criminal Investigation Bureau. Authorities cited potential violations of the Public Officials Election and Recall Act, which prohibits gambling on elections.
The restrictions come ahead of Taiwan’s Nov. 28 local elections. Taiwan previously blocked Polymarket.
Prediction markets have faced restrictions in a growing number of countries, including France, Belgium, Czechia, Portugal, India, Australia, and Ireland.
Entain Q3 Revenue Rises 2% as CEO Expects Brazil Return
Entain reported a 2% year-over-year increase in group net gaming revenue for the third quarter, supported by growth in the U.K. and Ireland despite “ongoing challenges” in Brazil.
Online net gaming revenue (NGR) rose 3% on a constant-currency basis, or 5% excluding Brazil. Gaming NGR increased 8%, while online NGR in the U.K. and Ireland climbed 14%. Brazil NGR declined 36%, with Entain calling it a “challenging market” before the country’s provisional online gambling ban took effect.
Despite the disruption, CEO Stella David told analysts that she expects the market to reopen. While the ban took effect on Sept. 25, it is initially valid for 60 days, with a possible 60-day extension, and requires congressional approval to remain in force. David said Entain is preparing for different outcomes and would take a cautious approach to reinvestment.
Entain maintained its full-year guidance. The company expects online NGR growth of 4% to 6% and underlying EBITDA toward the lower end of its £910 million to £960 million ($1.21 billion to $1.28 billion) range.
Major Figure Pleads Guilty to Charges in NBA, NCAA Basketball Betting Scandals
Professional gambler Shane Hennen has pleaded guilty to charges related to the NBA and NCAA betting scandals. Hennen previously pleaded guilty in a separate federal case involving rigged poker.
The new guilty pleas involve bribery and point-shaving in NCAA and Chinese basketball games, as well as wire fraud and money-laundering conspiracies tied to the use of nonpublic information to place wagers in the Terry Rozier NBA betting scandal.
Hennen faces a combined statutory maximum of 125 years in prison across the two cases, although his actual sentence could be substantially lower. Sentencing is scheduled for Feb. 25, 2027.
His guilty plea comes days after a co-conspirator in the NCAA case, Jalen Smith, received a six-year prison sentence.
Prediction Market Expansion: Hacksaw, PredictArena and ProphetX
The prediction market sector continues to expand.
Content provider Hacksaw Gaming announced the launch of a B2B prediction market platform that enables operators to offer peer-to-peer markets using its existing technology and distribution network.
The company said that the Malta Gaming Authority approved an extension of its B2B license to cover Type 3 Gaming Services, authorizing its peer-to-peer prediction market offering under Malta’s framework.
PredictArena announced the launch of its web platform through an introducing broker relationship with Crypto.com. The platform, which describes itself as creator-centric, connects sports handicappers, influencers, and former athletes with prediction markets, while Crypto.com provides exchange infrastructure.
In addition, sports betting analytics platform Juice Reel has integrated ProphetX’s exchange, allowing users to trade event contracts directly within the app. The partnership expands ProphetX’s distribution through Juice Reel’s existing performance-tracking and sports forecasting community.
Prediction Markets Weekly Roundup
The week opened with a newly released Reuters/Ipsos poll finding that 60% of Americans oppose betting on elections. Opposition was even higher for markets involving U.S. military actions (65%) and government policy announcements or decisions (63%).
Meanwhile, the CFTC’s new prediction market rules quickly made their way into several court filings.
Kalshi cited them in a request for a Sixth Circuit rehearing, Polymarket raised them in its New York lawsuit, and Underdog invoked them in a new challenge against Tennessee regulators. A federal judge also ordered additional briefing on their potential impact in the CFTC’s case against New York.
In Kentucky, a magistrate judge recommended sending the state’s enforcement lawsuits against Kalshi and Polymarket back to state court. On a different regulatory front, the SEC approved Cboe’s plans to introduce binary options tied to corporate performance, potentially opening another avenue for event-based trading.
Sports-related protections were another theme this week.
DraftKings self-certified injury-protected NBA player-statistics contracts, following a similar move by Kalshi for NFL markets. Kalshi also announced an athlete-harassment policy in partnership with Signify Group, while the NBA and WNBA launched a responsible gaming campaign addressing both sports betting and prediction markets.
Elsewhere, Google added Connecticut to its list of states where advertising for prediction markets is prohibited. Meanwhile, Kalshi’s expansion into tribal markets faced internal opposition after a rival Alabama-Quassarte leadership faction disputed the tribe’s announced partnership with the exchange.
