How AI is changing online sports gambling in the U.S.

The explosion of sports betting coinciding with the rise of artificial intelligence has propelled the industry into a new, analytical era, shifting traditional gambling towards an algorithm-oriented approach.

Sports betting has always held a key position in the gambling world, but thanks to recent legislative changes and the adoption of AI, it has been fundamentally reshaped. Longstanding Las Vegas odds-making practices are being replaced by data-driven automation, online platforms, and complex algorithms that aim to transform predictions into near-precision.

This massive surge in online sports betting is rooted in the 2018 U.S. Supreme Court decision, which repealed the Professional and Amateur Sports Act. This 1992 law had broadly banned state-authorized sports wagering nationwide (with exceptions for Delaware, Montana, Nevada, and Oregon). Following nearly 35 years without a legal channel for betting in most states, the ruling allowed individual states to set their own terms for legalization and regulation.

Since 2018, 39 states and the District of Columbia have approved some form of sports betting, with 31 of those legalizing both retail and online wagering. The launch of online sportsbooks like DraftKings and FanDuel has spurred rapid growth. Last year, the American Gambling Association (AGA) reported that U.S. sports betting revenue hit an unprecedented $13.71 billion. Compared to 2023, popularity increased by nearly 24 percent, with FanDuel boasting 4.5 million active users and DraftKings tallying 4.8 million active users.

As online sportsbooks gain nationwide traction, so too has the deployment of AI. AI is now deeply embedded in sportsbook operations, with proprietary algorithms calculating odds and recommending wagers. These systems rapidly process historical data and specific player statistics to accurately project money lines, offering an analytical perspective on sports for both operators and bettors.

AI is also a critical tool for fraud prevention, odds setting, and detecting match-fixing. For instance, SportRadar’s Fraud Detection System utilizes AI to monitor betting markets for anomalies, flagging suspicious patterns that could indicate potential match-fixing. This technological vigilance helps stabilize the betting environment and promotes transparency for users.

The algorithms and AI models continue to advance, with various startup companies developing products to aid bettors. MonsterBet, for example, is an AI startup that offers its sports betting bot for a monthly fee of $77. It employs intricate algorithms to gather publicly available data across multiple sports, claiming precise accuracy.

Despite the substantial technological strides made by AI in the sports gaming sector, there is a pronounced gap in regulation governing its use in sports betting. A study co-authored by researchers from the University of Florida and the University of Nevada, Las Vegas, highlighted the growing risk of misuse by unregulated AI systems, noting that few policies currently exist to challenge unethical AI use. While non-industry-specific frameworks, like the blueprint for an AI Bill of Rights, are available, no gambling-specific laws are in place. With the user base rapidly expanding, experts are concerned that this regulatory vacuum could allow AI companies to exploit bettors for increased profit.

The same study revealed that AI-enhanced micro-betting, while highly engaging, is intentionally optimized for profit. It possesses the capability to identify and target bettors susceptible to a gambling addiction, pushing them toward self-depleting behaviors. Features involving suggested parlays and quick-decision wagers can lead bettors to quickly lose track of their finances and accrue significant debt. This serious oversight poses major financial and mental health threats unless addressed by federal gaming regulations.

Nasim Binesh, an assistant professor at the University of Florida and a co-author of the study, stated, “The potential for AI to exacerbate gambling harms and exploit vulnerable individuals is a stark reality that demands immediate and informed action.”

The convergence of AI and sports betting is especially timely in Wisconsin, where a bipartisan bill was recently introduced to legalize statewide online sports wagering. This move would permit betting anywhere in the state, moving beyond the current restriction to in-person wagers at tribally-owned casinos. The bipartisan effort, spearheaded by State Representatives Tyler August, R-Walworth, and Kalan Haywood, D-Milwaukee, and State Senators Howard Marklein, R-Spring Green, and Kristin Dassler-Alfheim, D-Appleton, could attract thousands of new participants.

Sports betting is relatively new to Wisconsin; Gov. Tony Evers first amended a deal in 2021 with the Oneida Nation to allow legal sports betting. Since then, eight other tribes have followed, meaning nine of the eleven federally recognized tribes in the state offer sports wagering on their properties. Currently, tribal-owned casinos are the sole legal outlets in Wisconsin, and all bets must be placed in person at these locations.

While proponents argue that legalizing online sports betting in Wisconsin will generate millions in revenue, the absence of federal oversight for AI-driven betting platforms presents significant risks concerning addiction and financial stability.

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The adoption of AI in online betting increasingly blurs the boundary between legitimate technological innovation and customer exploitation as both sectors mature. Despite the promise of fairer odds and more accurate data for bettors, the reality is that sportsbooks employ extremely complex algorithms that are opaque to the average user. Their systems are designed to constantly adjust odds to minimize operator risk, securing the house’s permanent advantage. Rob McDole, a researcher at Cedarville University, notes that while bettors may feel empowered by AI tools, sportsbooks are likely using similar, or superior, technologies to maintain that “zero-sum” advantage.

Simultaneously, AI offers substantial benefits in reinforcing responsible gambling measures. AI innovations, such as predictive analytics, can identify compulsive behavior among bettors with greater accuracy than previous methods. These new systems are crucial for promoting player safety in a gaming industry that has witnessed an alarming growth rate in cases of gambling addiction.

As the sports betting ecosystem continues its development, the relationship between AI in sportsbooks and the subsequent need for federal regulation will be the defining factor shaping the entire gaming landscape. This betting boom—fueled by automation, analytics, and easy access—is a mirror of a wider cultural shift towards digital convenience and immediate gratification. For better or worse, AI will be essential to how sportsbooks operate moving forward.