Officials at the Federal Trade Commission are probing the $167 billion online sports gambling industry, which has been celebrated by the White House but faces mounting skepticism from some conservative activists.
The FTC’s interest in online sports gambling is expected to focus on online sportsbooks such as FanDuel and DraftKings — probably on allegations of deceptive and misleading advertisements, three sources familiar with the matter said. Both political and career staffers at the agency have been involved in reviewing online sports books, the sources said, though the evaluation is in its early stages.
The review, which has not been previously reported, is not expected to include the “prediction markets” such as Kalshi and Polymarket.
Online sports betting has exploded since the Supreme Court struck down a federal ban in 2018. About half of men age 18 to 49 have an active account with an online sportsbook, according to a February poll by the Siena Research Institute and St. Bonaventure University’s Jandoli School of Communication. Researchers have documented increases in suicide, hospitalizations and bankruptices among users. These adverse effects are expected to be part of the agency’s review, one of the sources said.
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The Trump administration has so far taken a hands-off approach with the industry, and the White House even promoted an advertisement for Stake, which offers sports betting, during the UFC event held on the South Lawn this summer. But the administration is facing a growing chorus of social conservatives alarmed by its effect on young men.
While the FTC’s review remains preliminary, any investigation of the sports books would have major consequences for an industry that now has tens of millions of active users. Online sports gambling companies have fiercely resisted regulatory efforts, and they have been embraced by both Democratic and Republican officials for providing large amounts of tax revenue and political donations.
But there are some signs the tides are changing. Jon Schweppe, a former FTC senior policy adviser under 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,” said Schweppe, who is now part of the American Principles Project, a right-leaning organization. “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.”
The New York Times reported last month that DraftKings targets losing bettors with promotions that encourage more gambling, citing interviews with more than 40 employees. FanDuel has faced similar accusations, including a recent charge that it delivered a personalized video of MLB star Bryce Harper to a gambler who was $1.5 million in debt.
One advocacy group claims that in sports betting, 86% of revenue comes from 5% of players.
Both companies have denied wrongdoing. A spokesman for DraftKings said the FTC has not sent it a Civil Investigative Demand, a kind of subpoena issued by the agency. FanDuel declined to comment, as did a spokesperson for the FTC.
Joe Maloney, the president of the Sports Betting Alliance, told The Sun that the Responsible Online Gaming Association’s code of conduct “represents a commitment by ROGA’s members to uphold a set of consistent marketing standards that advances consumer protection.” He also pointed to Nielsen Ad Intel research commissioned by the American Gaming Association that found the sportsbooks accounted for 0.8% of spending on television commercials in 2024, while alcohol ads accounted for 1.4%.
Maloney also strongly pushed back on claims that online sports gambling contributed to increases in suicide, hospitalization, and poor financial outcomes. He pointed to a study by the centrist Progressive Policy Institute that found that legalized sports betting “has not produced the widespread financial fallout that critics feared.” That study found credit scores in states with legal sports betting have been in line with national trends.
One of the sources familiar with the matter said a growing number of younger Republicans have become acutely aware of the danger posed by sports gambling.
“There’s a real generational divide on this: A lot of the older officials don’t get what the big deal is,” they said. “But younger appointees really get it. They get that the sports betting enterprise now is fundamentally different and wiping out entire families.”
Experts are divided on whether prediction markets such as Polymarket and Kalshi should be excluded from an FTC probe of sports betting. While those platforms allow users to win money by guessing the outcome of games, they have argued that they do not amount to gambling and are “event contracts” similar to options trading on the stock market.
The prediction markets say the price of sports trades on their platforms is set by the public, reducing the incentive for misleading promotions, and argue that sportsbooks make money only when the house wins, creating an incentive to hook addictive gamblers. Complicating the landscape, however, are newer prediction markets hosted by sportsbetting companies.
Others have been skeptical of those claims. Sen. Richard Blumenthal (D-Connecticut) has announced legislation to police platforms like Kalshi, arguing the prediction markets offer “services that are substantially the same as betting, wagering, gambling and sports gambling.”
In June, The Wall Street Journal reported that Polymarket had flooded social media with deceptive videos by paid creators who appear to be getting rich on the platform, when none of the winnings were real.
Monica Vaca, a consumer protection attorney who practiced for more than two decades at the FTC, said the allegations fall squarely within the agency’s wheelhouse and would justify opening an investigation of all the platforms involved. The FTC could use its subpoena authority and civil investigative demands to get information from the companies and find out what happened.
“This has been the bread-and-butter work of the agency for decades,” Vaca said. “The FTC has an extremely broad jurisdiction over the marketplace.”
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