The Washington Sun puts the US online sports betting industry at $167 billion, and about half of men aged 18 to 49 have an active sportsbook account, according to Siena Research Institute and St. Bonaventure University. That industry now has the Federal Trade Commission looking at it for the first time.
The Sun reported on Oct. 13 that FTC officials have begun reviewing online sportsbooks, focusing on DraftKings and FanDuel and “probably” on allegations of deceptive and misleading advertising, according to three sources. Both political appointees and career staff are involved, though the review is at an early stage.
Most coverage will lead with the FTC. I’m more interested in what’s left out. The review is not expected to include prediction markets such as Kalshi and Polymarket. Just as Kalshi posts record NFL weekends built on parlays, Washington is moving to examine the regulated sportsbooks and not the federally regulated exchanges taking the same customers.
Key Takeaways
- The review: The FTC has started an early, nonpublic review of online sportsbooks, with DraftKings and FanDuel as the main targets (Washington Sun).
- The focus: Likely deceptive and misleading advertising. Research on suicide, hospitalizations and bankruptcies is also expected to be considered.
- No formal demands yet: DraftKings says it hasn’t received a Civil Investigative Demand. FanDuel says it hasn’t heard from the FTC.
- Prediction markets excluded: Kalshi and Polymarket aren’t expected to be part of the review.
- State pressure continues: Massachusetts is asking operators whether their AI targets losing bettors, and Michigan says it is “reviewing the issues raised.”
What the FTC Is Looking At
| Issue | Who / what | Status |
|---|---|---|
| Deceptive and misleading advertising | DraftKings, FanDuel | Early FTC review (Washington Sun) |
| AI targeting of losing bettors | DraftKings (New York Times, 40+ employee interviews) | Massachusetts Gaming Commission review; Michigan “reviewing the issues” |
| VIP celebrity videos | FanDuel (Bryce Harper video sent to a customer $1.5M in debt) | Sen. Blumenthal, Reps. Tonko and Foushee demanding all VIP videos |
| Health harms | Industry-wide | Research on suicide, hospitalizations and bankruptcies expected to be part of the review |
| Prediction markets | Kalshi, Polymarket | Not expected to be included |
“FTC investigations are nonpublic so we generally do not comment on whether we are investigating a particular matter,” an FTC spokesperson told Legal Sports Report.
Why a Republican FTC Is Taking This On
This is the most notable political part of the story. The Trump administration has taken a hands-off approach to gambling. The White House even promoted a Stake ad during the UFC event on the South Lawn this summer. But social conservatives are increasingly worried about what sports betting is doing to young men, and that view now has supporters inside the agency.
Jon Schweppe, a former senior policy adviser to Trump-appointed FTC Chair Andrew Ferguson, has argued it is “time to put the online sportsbooks in the hot seat,” comparing them to Big Tobacco, Big Tech and Big Pharma.
“They’re isolating specific customers who are problem gamblers and psychologically manipulating them to part with as much money as possible,” Schweppe told the Sun. “I don’t think there’s an appetite for a federal ban on sports gambling, but we should protect consumers from certain types of predatory behavior.”
One source described a generational split inside the administration: “A lot of the older officials don’t get what the big deal is. But younger appointees really get it. They get that the sports betting enterprise now is fundamentally different and wiping out entire families.”
Monica Vaca, who spent more than two decades as an FTC consumer protection attorney, said the allegations are core FTC territory: “This has been the bread-and-butter work of the agency for decades. The FTC has an extremely broad jurisdiction over the marketplace.”
The Industry’s Defense
Joe Maloney, president of the Sports Betting Alliance, pointed to the Responsible Online Gaming Association’s code of conduct, which he said “represents a commitment by ROGA’s members to uphold a set of consistent marketing standards that advances consumer protection.”
The industry’s data points:
| Industry claim | Figure | Source |
|---|---|---|
| Sportsbooks’ share of TV ad spend, 2024 | 0.8% | Nielsen Ad Intel / AGA |
| Alcohol’s share of TV ad spend, 2024 | 1.4% | Nielsen Ad Intel / AGA |
| Effect on credit scores | In line with national trends in legal states | Progressive Policy Institute |
Critics have their own figures. One advocacy group claims 86% of sportsbook revenue comes from 5% of players. That figure comes from an advocacy group, not a peer-reviewed study, but it describes a concentration of revenue that the New York Times’ reporting on DraftKings appeared to support.
The Prediction Market Gap
This is the part I keep coming back to. The Sun reports that the review won’t include Kalshi or Polymarket, and experts are divided on whether that makes sense. The prediction markets argue that because prices are set by the public, they have less reason to use misleading promotions. They also say sportsbooks only make money when the house wins, which gives them a reason to hook problem gamblers.
That argument has weakened over the past week. Bloomberg showed longshot money losing 15% on Kalshi and 27% on Polymarket before fees, and Kalshi’s record Saturday was more than 70% parlays. Polymarket has been accused by the Wall Street Journal of flooding social media with paid creators showing fake winnings. Senator Blumenthal has introduced legislation arguing that prediction markets offer “services that are substantially the same as betting, wagering, gambling and sports gambling.”
So the companies paying up to 51% state taxes, with age limits, geofencing and state regulators, are the ones facing federal review. The companies paying no state gambling tax, open to 18-year-olds in all 50 states, are not. If the FTC moves forward as described, that regulatory gap gets bigger.
What Happens Next
It’s early. Nobody has received a subpoena, and FTC reviews often go nowhere. But the agency has broad tools, including civil investigative demands, consent orders and advertising restrictions, and it doesn’t need Congress to act. A consent decree limiting how DraftKings and FanDuel market to losing or VIP customers would effectively set a national advertising standard in an industry that has always been regulated state by state.
The bigger shift is political. Sports betting used to have support from both parties because it brought in tax revenue and political donations. Now Democratic senators are sending letters, a Republican-led FTC is reviewing advertising, and a former Ferguson adviser is comparing the industry to Big Tobacco. Criticism of the industry is now coming from both parties.
FAQ: FTC Sports Betting Review
Is the FTC investigating DraftKings and FanDuel?
The Washington Sun reports the FTC has started an early review of online sportsbooks focused on DraftKings and FanDuel. The FTC hasn’t confirmed it, and neither company has received a Civil Investigative Demand.
What is the FTC reviewing?
Most likely deceptive and misleading advertising, according to three sources. Research on gambling-related suicide, hospitalizations and bankruptcies is also expected to be considered.
Are Kalshi and Polymarket part of the FTC review?
No. The Sun reports that prediction markets are not expected to be included.
Could the FTC ban sports betting?
No. The FTC regulates unfair and deceptive business practices, not whether gambling is legal. It could, however, restrict how sportsbooks advertise and market through consent orders.
