Online Betting Apps Reward Losing Bettors While Limiting Winners

Key Highlights

Online sportsbooks face growing scrutiny over VIP rewards that may encourage problem gambling and betting limits that restrict successful customers, drawing criticism from bettors and fair-play advocates alike. A recent report from a CBS investigation has highlighted the scope of the issue.

VIP Perks Draw New Questions

U.S. lawmakers are seeking answers from major gambling platforms about VIP programs that offer perks such as exclusive events, celebrity and athlete videos, and Super Bowl tickets, raising concerns that the rewards may encourage vulnerable customers to keep betting despite mounting losses. Sen. Richard Blumenthal (D-CT) sent letters to BetMGM, Caesars, DraftKings, Fanatics, Kalshi, and Polymarket on Oct. 22, asking each operator to answer VIP-related questions by Nov. 5. Those questions include how they market to VIP users and the use of AI in personalized promotions. This follows a Massachusetts probe into DraftKings’ use of AI in September.

At the same time, another practice is drawing attention: limiting successful bettors. Platforms can sharply reduce the amount some winners are allowed to wager, sometimes to less than $20 and, in some cases, to under 50 cents. “They have to ensure that the house always wins,” noted Campaign for Fairer Gambling director Brianne Doura-Schawohl. “I would argue it’s not fair, and what makes it more unfair is all of the pervasive advertising tells us all that we can win.”

DraftKings disclosed in a 2023 filing with the Securities and Exchange Commission (SEC) that it follows an industry practice of setting customer limits based on individual profiles and risk to the business. This is hardly a surprise to sharp bettors; there are many posts on Reddit and other community forums with claims of sportsbook “limiting.” New York has an active bill in the Assembly Committee that aims to prohibit online sportsbooks from limiting the size and frequency of deposits or wagers of authorized sports bettors because the bettor obtains financial benefit or due to the bettor’s wagering activity.

Winning Bettors Hit Tight Caps

Full-time professional Massachusetts bettor Mike Manning signed up for every sports betting app available when the state launched sports gambling in 2023. He said he uses math and analytical models rather than intuition, and that he was winning on nearly every app before limits began appearing. Manning said DraftKings cut him to $25 per bet, while BetMGM reduced wagers that had started between $1,000 and $5,000 per game to just $5.

Massachusetts regulators examined the issue in 2024 and later found a pattern: winners saw their betting limits lowered, while losing gamblers saw theirs raised. The Massachusetts Gaming Commission said 0.64% of Massachusetts betting accounts had been restricted. In 2026, Massachusetts became the first state to require sportsbooks to notify restricted customers within 48 hours and provide a specific reason for the decision. Attorney Matthew Litt says the practice is legal unless companies discriminate based on protected traits such as race or religion.

These concerns surface as gambling addiction searches continue to rise throughout the U.S.

A Gambler Says Incentives Kept Him Playing

Former South Carolina attorney Chris Swett is awaiting sentencing after pleading guilty in federal court to four wire fraud counts and four money laundering counts. Swett said he stole about $2 million from his law firm to feed a gambling addiction, and that every bit of it went into FanDuel. He said a FanDuel employee told him in 2019 that customers spending $25,000 a month could be paired with a VIP host, who offered tickets and free fantasy contest entries if he wagered enough.

Swett said that after he told his host in 2020, “I think I’m tapped out this month,” the host offered a 4% bonus on new bets two days later. Over two years, he wagered $11 million and lost about $1 million. FanDuel said it changed the program and added responsible gaming tools.

This was the second high-profile, VIP-related incident in South Carolina in two years. In 2024, former Jacksonville Jaguars financial manager Amit Patel was sentenced to 6.5 years in prison for stealing more than $22 million, including about $20 million he wagered through FanDuel. Patel later sued FanDuel for $250 million, alleging its VIP program exploited his gambling addiction through betting credits, gifts, and trips to major sporting events. A federal judge referred the case to arbitration in May 2026, leaving his allegations unresolved.