Game Changing Technology and Regulations: How AI is Reshaping Online Sports Betting and What the U.S. May Do About It

By: Chelsea Mojica

Since its legalization, online sports betting has made its mark on professional sports.[1] Sports betting is an activity that allows gamblers to predict the outcomes of future sporting events in conjunction with monetary wagers.[2] Bookmakers—teams comprised of sports experts, analysts, and statisticians—set the initial betting odds for the public, relying on complex mathematical calculations, statistical models, and historical data.[3] The lower the probability of an event happening, the bigger the potential monetary reward.[4] When the sporting event begins, the odds may fluctuate, similar to the stock market.[5] However, odds can lack uniformity among sportsbooks, allowing bettors to receive more cash rewards through some sportsbooks than others.[6] Consequently, AI has integrated itself into the betting world in an attempt to expedite and protect an arduous odds-making process.[7]

Similarly, most AI systems work in a three-step pattern: AI systems (1) gather data from users, (2) compare it with existing data using a plethora of technological processes, and (3) produce an answer or result.[8] AI’s ability to quickly regurgitate information is why sportsbooks are implementing its systems into their businesses.[9] In fact, the sports betting market is estimated to generate more than $221.1 billion between 2025 to 2029 thanks to AI.[10]

Sportsbooks are using AI to predict potential game outcomes and assist in the odds-making process, picking up patterns that bookmakers may not have noticed before.[11] Furthermore, AI systems are increasingly being used to identify and prevent fraudulent activities, such as Sportradar’s Fraud Detection System (“FDS”).[12] AI is also being used as a safeguard, analyzing bettors’ gambling behavior and—by comparing other bettors’ data—detecting early signs of gambling addiction.[13] Through some sportsbooks, AI-generated chatbots are available to help bettors make better choices, answer queries about sports events, or even explain betting rules.[14]

However, the surge of AI in sports betting poses notable legal and ethical considerations. “AI models can learn and remember specific data points, meaning that, if they are open source, users’ sensitive personal information – like financial data – could be included in the code.”[15] As such, AI can inadvertently leak users’ private data.[16] Additionally, some scholars argue that AI in sports betting may actually increase problem gambling rather than decrease it.[17] Since AI can only use the information inputted into its system, AI does not take into account any information beyond what is available, including emotions and situational awareness of the game.[18] Therefore, AI can create inaccurate “predatory scenarios” in which “people who are already vulnerable because of mental health issues or a gambling addiction could be manipulated or targeted without their knowledge.”[19]

Despite the high traction of online sports betting and AI use in the United States, we do not have a comprehensive federal data protection law that safeguards bettors’ sensitive information.[20] It is particularly challenging to protect bettors’ information and mitigate gambling addiction when sports betting regulations and rules vary between states.[21]

However, on September 12, 2024, Representative Paul Tanko and Senator Richard Blumenthal reintroduced the Supporting Affordability and Fairness with Every Bet Act (the “SAFE Bet Act”) to combat “problem gambling” in the country.[22] The bill regulates three key areas of sports betting: advertising, affordability, and artificial intelligence.[23] The SAFE Bet Act would ban the use of AI to “track player’s gambling habits and individual promotions,” prohibit “sportsbooks from advertising during live sporting events that are intended to induce gambling with “no sweat,” or “bonus” type bets,” and limit customer deposits to five in a 24-hour period.[24] Additionally, the bill would “mandate gambling operators ensure customers who wager more than $1,000 can afford to do so.”[25] If the SAFE Bet Act is enacted, its effects could undermine the Supreme Court’s monumental 2018 holding in Murphy v. NCAA.[26] Furthermore, the outright prohibition of AI use in sports betting could disconcert the booming technology industry.

Comparatively, Congresswoman Andrea Salinas and Senator Richard Blumenthal have reintroduced the Gambling Addiction Recovery, Investment, and Treatment Act (the “GRIT Act”) which would use federal funding for “studying, preventing, and treating gambling addiction” across the country.[27] Unlike the SAFE Bet Act, the National Council on Problem Gambling—the country’s oldest and largest nonprofit organization on gambling issues—explicitly supports the legislation’s enactment.[28] “However, as a Democrat-led bill, the Act is unlikely to pass under a Trump government. Any plan to rely on general funds rather than gambling-specific dollars likely further lessens its chances.”[29] Regardless of whether these respective bills pass under the current administration, many agree that the rise of AI use in sports betting has ethical and legal concerns that must be addressed soon to protect bettors from privacy breaches and assuage problem gambling across the United States.

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[1] In 2018, the Supreme Court held that states may legalize sports betting, inherently striking down the Professional and Amateur Sports Protection Act. See Murphy v. NCAA, 584 U.S. 453, 485 (2018).

[2] Jason Logan, How to Bet on Sports: Sports Betting Explained, Covers (Aug. 30, 2024), https://www.covers.com/guides/how-to-bet-on-sports.

[3] Earnest Horn, How Do Sportsbooks Set Odds?, Bettors Insider (Mar. 15, 2024, 2:07 PM), https://www.bettorsinsider.com/news/2024/03/15/how-do-sportsbooks-set-odds.

[4] Id.

[5] Compare Ryan Knuppel, How Predictive Analytics for Sports Betting is Changing, Knup Sports (Feb. 2, 2025), https://knupsports.com/how-predictive-analytics-for-sports-betting-is-changing/ (“[T]he odds and implied probability rates associated with those odds are subject to change at any time without prior warning to reflect what’s happening in those events.”), with Adam Hayes, How Does the Stock Market Work?, Investopedia (Oct. 18, 2024), https://www.investopedia.com/articles/investing/082614/how-stock-market-works.asp (“When stock prices rise, it often signals investor confidence in the economy, while falling prices may indicate concerns about economic stability.”).

[6] Horn, supra note 3.   

[7] Neil Sahota, The Game Changer: How AI Is Transforming The World Of Sports Gambling, Forbes (Feb. 11, 2024, 10:00 AM), https://www.forbes.com/sites/neilsahota/2024/02/11/the-game-changer-how-ai-is-transforming-the-world-of-sports-gambling/.

[8] Cole Stryker & Mark Scapicchio, What is generative AI?, IBM (Mar. 22, 2024), https://www.ibm.com/think/topics/generative-ai.

[9] Sahota, supra note 7.

[10] Infiniti Research, Inc., Sports Betting Market to grow by USD 221.1 Billion (2025-2029), drive by the digital revolution. Report with market evolution powered by AI – Technavio, PR Newswire (Jan. 29, 2025, 5:27 PM), https://www.prnewswire.com/news-releases/sports-betting-market-to-grow-by-usd-221-1-billion-2025-2029-driven-by-the-digital-revolution-report-with-market-evolution-powered-by-ai—technavio-302362922.html.

[11] Understanding AI Sports Betting, Jobs in Sports (Dec. 23, 2024), https://blog.jobsinsports.com/2024/12/23/ai-in-sports-betting//.

[12] See Sahota supra note 7.

[13] See Sahota supra note 7; see also Vincenzo Giuffré, The use of AI in the regulated gambling sector, DLA Piper (July 3, 2023), https://www.dlapiper.com/es-pr/insights/publications/law-in-tech/the-use-of-ai-in-the-regulated-gambling-sector (explaining that AI can compare data of known problem gamblers and use it to identify bettors at risk of problem gambling, even at an “early stage,” and flag “large number of bets on an unlikely outcome.”).

[14] See iGB Editorial Team, Exploring the potential and pitfalls of AI in sports betting, iGamingBusiness (Oct. 30, 2023), https://igamingbusiness.com/tech-innovation/artificial-intelligence/exploring-the-potential-and-pitfalls-of-ai-in-sports-betting/.

[15] Id.

[16] Id.

[17] Ziv Chen, Is AI the Future of US Sports Betting?, Sportsbook Review (Jan. 2, 2025, 2:10 PM), https://www.sportsbookreview.com/news/ai-sports-betting-impact-jan-2-2025/#:~:text=While%20more%20accurate%20odds%20and,an%20increase%20in%20problem%20gambling.

[18]  iGB Editorial Team, supra note 14.  

[19] Chen, supra note 17 (quoting Timothy Fong, co-director of the UCLA Gambling Studies Program).

[20] See Gulshan Kumar, A Guide to Sports Betting Laws and Regulations in the United States, SDLC Corp (Dec. 11, 2024), https://sdlccorp.com/post/a-guide-to-sports-betting-laws-and-regulations-in-the-united-states/.

[21] iGB Editorial Team, supra note 14; see Murphy, 584 U.S. at 485.

[22] Jessica Golden, U.S. lawmakers introduce bill to put regulations on sports betting operators, CNBC (Sept. 13, 2024, 12:57 PM), https://www.cnbc.com/2024/09/13/federal-bill-regulations-sports-betting-operators-safe-bet-act.html.

[23] Id.

[24] Id.

[25] Id.

[26] See Murphy, 584 U.S. at 485.

[27] Robyn McNeil, GRIT Act: Push for Federal Funding to Gambling Addiction Programs Resumes for 2025, Richmond Times Dispatch (Feb. 12, 2025), https://richmond.com/sports/betting/grit-act-federal-funding-gambling-addiction-programs-2025/article_b5365b7e-bc76-50e7-baeb-00f033228567.html.

[28] Pat Evans, GRIT Act Reintroduced Using US Sports Betting Excise Tax Funds, Legal Sports Rep. (Feb. 11, 2025), https://www.legalsportsreport.com/224557/grit-act-sports-betting-2025-reintroduced/ (including the Oregon Council on Problem Gambling and Connecticut Council on Problem Gambling as supporters of the GRIT Act.).

[29] McNeil, supra note 27.