FTC Begins Probing Sportsbooks Like FanDuel and DraftKings

Federal Trade Commission officials have begun probing online sportsbooks such as FanDuel and DraftKings. Three sources familiar with the matter told the Washington Sun the review will probably center on allegations of deceptive and misleading advertisements.

The Sun describes online sports gambling as a $167 billion industry, so even a preliminary federal look carries weight for operators and bettors alike.

What the FTC Probe of Online Sportsbooks Covers

The evaluation is still in its early stages, and it hadn’t been reported before the Washington Sun’s story. Both political appointees and career FTC staffers are involved, according to the Sun.

Based on the Sun’s sourcing, the review is expected to look at online sportsbooks, with FanDuel and DraftKings named as examples, allegations of deceptive and misleading advertising, and adverse effects on users, per one source, including documented increases in suicide, hospitalizations and bankruptcies.

That last point matters. It suggests regulators may weigh real-world harm to gamblers alongside the advertising practices themselves.

Advertising Allegations Behind the Scrutiny

The probe follows a string of damaging reports about how sportsbooks market to their customers. As the Sun noted, The New York Times reported last month that DraftKings targets losing bettors with promotions that encourage more gambling. The Times cited more than 40 employees.

FanDuel has faced its own accusation. It allegedly delivered a personalized Bryce Harper video to a gambler who was $1.5 million in debt.

Jon Schweppe, a former FTC senior policy adviser under Chair Andrew Ferguson, now works at the American Principles Project. He has argued it is “time to put the online sportsbooks in the hot seat,” comparing them to Big Tobacco, Big Tech and Big Pharma.

Schweppe still drew a line on how far that should go. “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,” he said.

Monica Vaca, a consumer protection attorney who spent more than 20 years at the FTC, said the allegations fall within the agency’s wheelhouse. She noted the FTC could use its subpoena authority and civil investigative demands. “This has been the bread-and-butter work of the agency for decades,” Vaca said.

How FanDuel, DraftKings and the Industry Responded

Both companies denied wrongdoing. A DraftKings spokesman said the FTC has not sent it a Civil Investigative Demand, which is a kind of subpoena. FanDuel said it had not heard from the FTC, and an FTC spokesperson declined to comment.

Joe Maloney, president of the Sports Betting Alliance, pushed back on the criticism with three points. He pointed to the Responsible Online Gaming Association (ROGA) code of conduct. Maloney also cited Nielsen Ad Intel research, commissioned by the AGA, on 2024 TV commercial spending, and referenced a Progressive Policy Institute study on credit scores in regulated-betting states.

The Nielsen research found sportsbooks made up 0.8% of TV commercial spending in 2024, compared with 1.4% for alcohol. The Progressive Policy Institute study found credit scores in regulated-betting states were in line with national trends.

Why Kalshi and Polymarket Are Expected to Be Left Out

Prediction markets such as Kalshi and Polymarket aren’t expected to fall under the review. Experts are divided on whether that exclusion makes sense.

Prediction markets argue their products are event contracts. The line is blurry, though, because sportsbooks now host prediction markets too, such as FanDuel Predicts.

These platforms are drawing heat on Capitol Hill anyway. Sen. Richard Blumenthal (D-Conn.) announced legislation to police platforms like Kalshi, part of a broader Senate push to rein in prediction markets. Lawmakers have also probed prediction markets over insider trading.

Advertising is a flashpoint here as well. In June, The Wall Street Journal reported that Polymarket flooded social media with deceptive videos from paid creators. That fits a pattern of senators targeting prediction market ads aimed at teens.

Political Pressure on Sports Betting Is Building

Online sports betting exploded after the Supreme Court struck down the federal ban in 2018. The regulated US sports betting market now counts tens of millions of active users.

Young men are a core audience. A February poll by the Siena Research Institute and St. Bonaventure University’s Jandoli School of Communication found about half of men ages 18–49 have an active online sportsbook account.

Sportsbooks have fiercely resisted regulation. Both parties have embraced the industry for its tax revenue and political donations.

The Trump administration has taken a hands-off approach so far. This summer, the White House promoted an ad for Stake during the UFC event on the South Lawn.

A growing chorus of social conservatives, however, is alarmed by gambling’s effect on young men. One source told the Sun that younger Republican appointees are more aware of the dangers, describing a “generational divide.”

Why the FTC Probe Matters for Sports Bettors

Nothing changes for bettors today. The review is preliminary, DraftKings says it hasn’t received a Civil Investigative Demand, and FanDuel says it hasn’t heard from the FTC.

Still, deceptive advertising sits squarely in the FTC’s traditional lane, and the agency has subpoena tools if it wants to dig deeper. Any case would likely zero in on the ads and promotions sportsbooks use to win and keep customers. Prediction markets, for now, sit outside this review but remain in Congress’s crosshairs.

For sports bettors, the takeaway is simple: read every promo’s fine print, and watch how your sportsbook markets to you while Washington does the same.