Betting Apps Cap Winners at Pennies While Rewarding Losers

Online sports betting platforms have faced increased scrutiny over how they manage customer limits. Recent inquiries from state regulators and lawmakers reveal a pattern where successful bettors face restricted wagering amounts while frequent losers receive enhanced benefits.

A group of U.S. lawmakers wrote to major gambling companies last week regarding the treatment of vulnerable customers. The letter described perks for losing bettors, which include access to exclusive events, celebrity content, and Super Bowl tickets. These incentives are designed to keep customers betting despite financial losses.

In contrast, winning gamblers often encounter caps on their bets. These limits can drop below $20 and sometimes fall under 50 cents. DraftKings explained this practice in a 2023 filing with the Securities and Exchange Commission. The company stated it restricts limits based on individual customer profiles and risk levels to the enterprise.

Mike Manning, a professional bettor from Massachusetts, experienced these limits after the state launched sports gambling in 2023. Manning uses mathematical models to place bets and reported winning on nearly every app. Platforms subsequently reduced his betting capacity. DraftKings limited his wagers to $25 per bet. BetMGM allowed him to bet $1,000 to $5,000 per game initially but later reduced his limit to $5.

The Massachusetts Gaming Commission investigated this disparity in 2024. The regulator found that winning gamblers saw their limits decrease while losing gamblers saw their limits increase. Gadoon Kyrollos, another professional bettor, described the model as a strategy to either ban or bankrupt the customer. Manning called the disparity predatory and unfair to successful bettors.

Only a small fraction of accounts face these restrictions. The Massachusetts Gaming Commission reported that 0.64 percent of betting accounts in the state had been restricted. Matthew Litt, a New Jersey attorney, noted that the practice is legal unless companies discriminate based on protected characteristics such as race or religion. Massachusetts became the first state to require companies to notify limited gamblers of the reasons for the restriction.

FanDuel told Manning his restriction resulted from an assessment of his wagering patterns and their impact on long-term risk. DraftKings cited internal risk management purposes for its actions. Michael Trevithick of Ann Arbor, Michigan, provided a betting ticket showing DraftKings allowed him to wager a maximum of 49 cents on the NBA Cup. A DraftKings spokesperson said the company applies customer-specific limits to less than 0.15 percent of accounts to manage enterprise risk.

Chris Swett, a former South Carolina attorney, illustrates the opposite side of the equation. He pleaded guilty to four counts of wire fraud and four counts of money laundering in federal court. Swett stole about $2 million from his law firm to fund his gambling addiction on FanDuel. He stated that every dollar he stole went into the platform.

Swett discovered Daily Fantasy Sports and began wagering $5,000 to $10,000 a month by 2019. A FanDuel employee emailed him that customers spending $25,000 a month could be paired with a VIP host. This host provided free tickets and complimentary contest entries if Swett continued betting. In one 2020 email, Swett wrote that he was tapped out for the month. Two days later, his host offered him a 4 percent bonus on new bets.

Swett wagered $11 million and lost about $1 million over a two-year span. He now faces a maximum of 20 years in federal prison. FanDuel stated in a statement that it has made changes to its VIP program, including additional employee training and new technologies to identify problem gambling. The company emphasized that it is an entertainment platform and not a tool for professional bettors to earn a living.