- A recent lawsuit levied against FanDuel and a VIP host is a longshot in court, but raises questions about VIP programs and interactions with customers
- Several lawyers tell Sports Betting Dime that interactions between VIP hosts, VIP customers may leave companies open to litigation
- VIP customers with several major companies noted cessation of offers and bonuses when winning, an increase in offers when losing
The interactions between VIP hosts and VIP customers may open sports betting companies up to a bevy of problems, such as increases in litigation and responsible gambling issues, that could pose serious complications for the industry, according to several lawyers and industry experts who discussed the issue with Sports Betting Dime.
Sports Betting Dime also spoke with a number of sports betting customers who are enrolled in VIP programs, or who have participated in VIP programs, with major sports betting companies about their interactions with VIP hosts and how bonuses, match deposits, free ticket offers, and other promotions are offered. Most of these VIP players agreed that the regularity of offers and promotions typically dry up, or VIP statuses are rescinded, when customers are winning, and offers increase when players are losing.
This could present problems for sports betting companies if their customers, gaming regulators, or lawyers can prove that VIP hosts are taking advantage of patrons with obvious problem gambling habits to ply them to play outside of their means.
“It’s important to acquire new players, it’s important to retain players, but it’s also important to understand that your players need to be protected. Every player you have that goes off the rails is a potential liability for your company and a potential problem for you,” Bill Pascrell III, Esq., partner at Princeton Public Affairs Group, told Sports Betting Dime.
Recent Lawsuit Opening Eyes
A recent lawsuit levied by ex-Jacksonville Jaguars employee Amit Patel, who pled guilty to wire fraud and engaging in an illegal monetary transaction after stealing millions from the NFL franchise, has raised concerns from industry experts regarding the interactions between customers and VIP hosts.
Patel is suing FanDuel in federal court, accusing a VIP host of allegedly preying on his gambling addiction. He is currently serving a 6.5-year federal prison sentence after stealing more than $22 million from the Jacksonville Jaguars to fund his gambling habit. According to the newest lawsuit, Patel transferred more than $20 million to FanDuel to finance his daily fantasy sports addiction.
According to the lawsuit, a FanDuel VIP host provided Patel with more than $1.1 million in FanDuel credit, an all-expense reimbursed trip to a Formula One Grand Prix event in Miami, an all-expense reimbursed trip, plus a suite, to the NCAA Football Championship game in January 2023, a reimbursed trip to the Super Bowl, and other lavish trips to ensure he would keep playing.
Patel was given VIP status from FanDuel and assigned a VIP host. The host and Patel allegedly communicated as many as 100 times a day between late 2021 and early 2023, and on several occasions the host would allegedly contact Patel “on a day he was not gambling to find out why he was not gambling.”
While the lawsuit is a longshot in court, according to several lawyers Sports Betting Dime spoke with, it has raised concerns for how VIP hosts may be interacting with customers.
VIP Host Interactions Raising Flags
Jason B. Wolf, an attorney with Parafinczuk Wolf in Boca Raton, Florida, told Sports Betting Dime the Patel lawsuit against FanDuel likely has little chance in court, but the alleged interactions between Patel and his VIP host were concerning.
“While caselaw is strong in most jurisdictions that gambling companies generally do not have a duty to their customers to prevent or limit their addiction, an argument could be made that the game changes when problem gamblers raise red flags and then are preyed upon by VIP hosts. Selling an addictive product – think about tobacco and alcohol – is acceptable, but shoving someone’s addiction down their throat when they have expressed concerns about their addiction could cross the line. It’s also worth noting that the allegations raised in Patel’s complaint as to the VIP host’s conduct should be taken with a grain of salt until proven in court,” Wolf said.
Pascrell agreed with Wolf’s assessment that the lawsuit is a longshot in court, but noted that operators have a responsibility to better marry the responsible gambling and revenue sides of their business.
It has become obvious in most sports betting companies, Pascrell explained, that the revenue side of the business, such as VIP hosts and commercial employees, do not interact with the company’s responsible gaming leads. This type of mindset will have to change to better safeguard gaming companies and their customers, he noted.
“Responsible gaming can be our Achilles heel. It’s the seminal issue. We’re one newspaper headline away from the whole industry crashing down, because politicians and regulators can come across with some very intrusive regulations that can be much more reactive than they are proactive,” he said.
Add in the fact that sports betting operators often base VIP host pay, and potential bonuses, on the amount of handle their clients bring into the books can lead to a lack of responsible gambling safeguards for patrons, Brianne Doura Schawohl, founder of a consulting group that specializes in problem and responsible gambling issues, told Sports Betting Dime.
VIP hosts enticing customers to frequently deposit funds to increase their own bonuses and pay, while also potentially ignoring clear addiction issues, may lead to consequential problems for the sports betting industry as a whole, she said.
“This is the biggest risk to the viability and the current regulation infrastructure that exists for the industry as we know it. The amount of harm that happens in these programs, I believe, would be catastrophic if it really was aggregated and came to life,” she said.
The issue is also being noticed on the federal level, as U.S. Senator Richard Blumenthal (D-CT) reached out to eight sports betting operators earlier this year ahead of the 2024 NCAA March Madness tournament to encourage them to use their customer data to curb problem gaming habits, rather than reward them with promos from VIP hosts.
“Rather than leveraging data collected on users to identify those who may be gambling beyond their means, and then intervening to help, gambling companies instead use this data to entice frequent gamblers – including problem gamblers – to continue placing bets. A common practice engaged in by major sports betting websites assigns VIP Hosts to frequent bettors. These are customer representatives whose job it is to provide those high-value bettors with promotions and credits to entice them to continue gambling, often at their own financial peril,” he wrote.
It’s clear, he noted in his letter, that these marketing practices are abusive and cannot coexist with responsible gaming strategies.
Sports Betting Companies Defend VIP Programs
Sports Betting Dime spoke to dozens of customers who shared details of their VIP experiences with DraftKings, FanDuel, Caesars Sportsbook, Fanatics Sportsbook, BetMGM, ESPN BET, and Bally Bet, to better understand how interactions work between patrons and hosts.
Several of these companies reached out to Sports Betting Dime to advocate for their VIP programs and their dedication to responsible gambling.
Jeff Lowich, Vice President, VIP and Retail Experiences at FanDuel, said the company has invested heavily in regular and mandatory education programs for VIP account managers covering responsible gambling, Know Your Customer regulations, and anti-money laundering techniques.
He stressed that FanDuel’s approach to its VIP program is rooted in customer service and prioritizes responsible play, compliance, and building professional relationships with customers “that emphasizes playing within their means.”
Host compensation, he confirmed, is not based on customer handle or activity.
“FanDuel account managers are not compensated based off commercial metrics or customer activity. Each account manager’s compensation is tied to service goals in three key areas: responsible play, compliance, and training that improves their performance as service-driven professionals,” he told Sports Betting Dime.
DraftKings Chief Customer Officer Shawn Henley told Sports Betting Dime that DraftKings’ “Dynasty Rewards” program follows a similar model to other companies that rewards customer loyalty.
He noted the company strives to provide customers with the necessary responsible gambling tools to play within their means.
“Our business is rooted in fun and entertainment, and we are committed to providing all players, regardless of their gaming budget, with tools they can use to enhance their ability to play responsibly,” he said.
A PENN spokesperson, speaking on behalf of ESPN BET, told Sports Betting Dime that PENN’s commitment to responsible gambling is embedded throughout “all aspects of our organization, including our VIP program.”
“PENN team members, including player-facing employees, receive training on RG policies and procedures, and as part of our ongoing RG evaluation process, our RG team conducts regular education sessions with our VIP team, including real-life reviews of player interactions. The VIP program also includes a series of manual and automated checks and alerts to help identify any instances of irresponsible play, supplemented by input from the VIP team. Additionally, the RG team proactively flags and reviews VIP player accounts to ensure those players are using our services responsibly.”
Customers Say Offers Come in Fast When Losing, Dry Up When Winning
Sports Betting Dime put out a call to sports betting users to discuss their experiences in VIP programs. Dozens reached out to share their experiences, but most were hesitant to allow their names to be published as to avoid the stigma of being labeled as a compulsive gambler.
While usually not the policy of Sports Betting Dime to quote those who do not wish to allow their full names be published, we decided it was prudent to allow for this story. To balance the anonymity of these customers, we also decided to not link the names of the specific sports betting companies to the experiences the customers shared.
Most of the experiences were described as positive, with VIP hosts offering courteous customer service and displaying a non-pressured approach to promos and gambling. However, what was clear from the majority of customers we spoke with is that promos and offers typically come in at far higher rates when the VIP is actively losing money compared with when they were winning.
“Do you get more messages and offers when you’re losing? That’s 100% true. Do the deposit matches come when your account is at zero, or when you’ve lost quite a bit? Blatantly yes,” said Isaac Rose-Berman, an avid sports bettor and sports betting writer with an extensive VIP profile across several sports betting operators, and one of the few sources who allowed us to use his full name.
It’s common, he noted, for VIP hosts to continually engage with their clients to keep them playing and keep them depositing as much as they can. It’s no secret that the vast majority of players on a sports betting platform will lose more money in direct correlation with how long they play.
And it’s not just about the amount of bets VIP hosts are concerned with, but the types of bets customers make that can determine the status of their VIP accounts. A customer engaging often in same game parlays, which have a high profit margin for sports betting operators, will be encouraged to keep playing them from VIP hosts by being offered more match deposits or promos geared to those types of bets, he said.
“It’s less about the winning, per se, as opposed to the types of bets you’re placing. It’s obvious if you’re a losing gambler. I think for most people like that if they go on a hot streak, hit a random seven-leg parlay, their account won’t be cut off or ghosted by a VIP host. It’s the opposite; they’ll be presented with more offers to lose it all back,” he told Sports Betting Dime.
Some customers don’t seem to mind the arrangement and are well aware of why the VIP offers are coming in.
John from Illinois told Sports Betting Dime that his relationship with his VIP host is “great,” as he’s been offered free company merchandise, free bets, and even an all-expense paid trip to Las Vegas for he and his wife based off his sports betting activity. He made sure to stress that his host never pressured him into gambling more than he was willing to do so on a given week.
But he’s not naïve as to why the offers are so generous.
“Having a host is great, but also bad because you gamble a lot and lose. For instance, my host at (operator) would send me merch like hats, hoodies, a vacation bag, also on my birthday they would give me a couple hundred in credit to gamble with. When I had a host at (operator) they would send me for dinners and I would get profit boots and stuff like that, but until one weekend I took them for $10,000 and they basically banned me,” he said.
Hosts are “cool people,” he said, but knows why they’re so nice to him.
“I’m a losing gambler. I love parlays, it’s basically a sports betting version of a slot machine, so they love players like me. They throw plenty of perks my way for me to stay with their book,” he said.
Win Too Much and You May Be Out
However, quite a few customers we spoke to for this story were not as understanding of the relationship. Winning and losing, and how it affects the rate of promotional offers, and even VIP status itself, was a common complaint. Adam from Massachusetts shared a text to Sports Betting Dime from one of his VIP hosts where it was made abundantly clear that he had won too much the week before to be considered for any promos, a recurrent source of frustration for many VIP players.
Nick from Virginia, who told Sports Betting Dime that he runs several sports betting accounts, multiple for himself and one for friends that live in a non-sports betting state, are treated wildly different based on their results. The account he runs for friends is currently down about $12,000 on the year and receives near constant offers from its VIP host, while most of his own personal accounts have been stripped of their VIP status due to his win rates.
“I’ve been in this space for multiple years now. My friends’ account is getting $2,000, $3,000 plus free bets from their hosts, and they’re turning it around putting it all on one parlay. They’re not even blinking an eye. If you bet and lose money like them, the operators will give you thousands of dollars to just play around with. It’s very obvious.”
Jay from New York, who estimates he bets more than $5 million a year across several sportsbooks, told Sports Betting Dime he’s never “felt pressured” to bet more from a VIP host, but has definitely been “encouraged” to do so more when he was losing.
He described his interactions with a VIP host at one of the major operators as frustrating, as his VIP status was stripped and the host blocked his number after he experienced too much success over a several month period.
“Over the course of the next few months, I start running the account up with profit and she ghosts me. My account no longer accrues rewards points. And now I have no communication with her, and now my account is completely limited in most markets. She even eventually blocked my number,” he said.
However, Jay said during a down point in November 2023 when he lost quite a bit of money from the account, the VIP host stepped up her rate of offers and “came flying in when I was on a downswing.” He shared a text from the host during this down period that showed the eagerness to provide him with free event tickets if he was going to deposit again “soon.”
He also shared an experience with a separate sports betting operator that stripped him of VIP status due to “running up nearly $10,000 in profits” with his account. He decided to reapply for VIP status with the operator, but was told that “analytics” determined he was not eligible.
No Tickets For You
One VIP user out of Ohio described the details of an incident he had with a VIP host with a major sports betting operator that saw offered tickets to a Cleveland Browns game taken away without warning or an alert.
Nate told Sports Betting Dime that a VIP host offered him two free tickets to a 2023 week 11 NFL game between the Cleveland Browns and Pittsburgh Steelers. The tickets were offered to him on Oct. 19, 2023, for the Nov. 19, 2023 matchup.
“They reached out to me first, offered me two free tickets to a Browns or Bengals game of my choice. I’m a big Steelers fan, and the Steelers were playing the Browns. I was very excited to go,” he said.
The VIP host confirmed and reserved the tickets for him after he agreed to attend the game.
He continued to play with the sportsbook for the next few weeks, but heard nothing after the initial ticket offer and confirmation. In late October, after a moderately successful span of betting, he noticed that his account had been restricted. He could no longer bet more than $15 for any event on the platform.
However, he received no official notice from the sportsbook regarding any changes to his VIP status or limits to his account, nor anything about his tickets.
He reached back out to the VIP host on Nov. 13, 2023, asking when he would receive the tickets and if a parking pass would be available for the event.
The VIP host informed him that a decision had been made by the operator’s trading team to “restrict your action and that removes you from our VIP program and hospitality benefits.” The host informed Nate that the tickets had been rescinded for the game and an email had been sent to him from the trading team on Oct. 22, 2023, informing him of changes to his VIP status.
The problem? Nate says nobody from the trading team ever actually sent him email about changes to his VIP status. He claims he never received any emails from the VIP host updating him on the changes either.
“They knew for almost a month that they were going to take those tickets away from me. Nobody told me. It’s insane, nobody was going to tell me about it. I know exactly what they were doing. It’s completely predatory, and if I was losing there was no doubt in my mind that I would have been at that game,” he said.
He sent an email back to the host asking for an explanation, explaining that he had arranged for a hotel and sitting services for his dogs. His VIP host said they would attempt to recoup any costs to him for his troubles in the form of bonuses for the sportsbook, but he ultimately declined the offer.
While negative customer service experiences in the VIP programs are frustrating, they can also raise serious concerns for responsible gambling efforts in the industry.
VIP Hosts and Responsible Gambling
While VIP programs for gamblers are certainly not a new feature (they’ve existed in brick-and-mortar casinos for decades), the relatively new feature of being able to place bets 24-hours a day from your phone and having VIP hosts emailing and texting patrons offers is not conducive to a responsible gambling environment, Doura Schawohl said.
Add in the fact that some companies compensate VIP hosts based on how much handle their clients play each month, and it further muddies the responsible gambling landscape. While she declined to note which operators compensate their VIP hosts in this manner, Doura Schawohl said she had spoken with a number of hosts across several major sports betting operators that have confirmed they receive compensation and bonuses in this manner.
“When they are compensated, rewarded, and incentivized to get these players to play more, and their compensation is predicated on their handle, that’s the story as far as I’m concerned,” she told Sports Betting Dime.
Look no further, she said, to the Wall Street Journal report from earlier this year that detailed how a VIP host took advantage of a psychiatrist with an obvious gambling addition for more than six-figures in sports betting losses. It puts the entire sports betting and gambling industry in a poor light, when the host is obviously trying to milk the gambling addicted patron out of as much money as they can.
“For me, when I see things like this, a compensation model that is celebrating and rewarding something that is a known criteria for a very serious problem, it is not unreasonable to then assert that the industry is enabling addiction,” she said.
But what can be done? For starters, Doura Schawohl said the industry should pull back the curtain on how VIP hosts are compensated and how patrons receive, and lose, their VIP sports betting statuses.
Hosts should absolutely not be compensated or rewarded based on incentivizing their patrons to chase losses and deposit funds more frequently, she said.
“If these VIP hosts are instead rewarded on sustainability and affordability of their clients, that’s a great start. Look at parts of the FanDuel model, where customer service agents are rewarded when their patrons use responsible gambling tools. That’s something I can get behind,” she said.
Increased transparency in how offers are provided to VIP patrons is a good step as well. Good communication as to why patrons receive the rewards they receive, and how they can achieve new offers and opportunities that aren’t based on winning or losing, would take the mystery and predatory nature out of the VIP programs, Doura Schawohl said.
While most of the sports betting operator VIP program details are still shrouded in secrecy, gaming regulators are beginning to take notice of the complications and want answers.
State Gaming Regulators Taking Notice
At least one state is looking to pull back the curtain on VIP programs. The Massachusetts Gaming Commission recently approved a plan to request data from their seven licensed online sportsbooks to determine the percentage of players being limited, how many players are being limited that exhibit winning behavior, and how many players are being treated as VIPs and exhibit losing behavior.
It’s the first request from state regulators in the country for data regarding how players are limited and how many patrons are qualified as VIPs that exhibit losing behavior.
The course of action stemmed from two roundtables the MGC hosted with sports betting customers, industry experts, responsible gambling advocates, and sports betting operator representatives in the commonwealth on the practice of limited customers.
The MGC’s data request will be the first to potentially shine a light on just how many patrons are being limited and the factors that have gone into the decisions to do so. Based on this data, which is expected to come in the never several weeks, may lead to new regulations in the commonwealth on how operators can limit customers.
Look for other states to likely follow suit when operators eventually provide the MGC with the data they have requested and if any new regulations are approved as a result.
VIP programs are a common marketing strategy used by sports betting operators to attract and retain high-value customers. These programs offer perks such as exclusive bonuses, personalized customer service, and invitations to special events. While VIP programs can be lucrative for both the operator and the player, there are potential risks associated with them that operators should be aware of.
One of the main risks of VIP programs is the potential for problem gambling. High-value customers who are part of VIP programs may be more likely to develop a gambling addiction due to the increased incentives and rewards they receive. Operators need to be vigilant in monitoring the behavior of their VIP customers and providing resources for responsible gambling.
Another risk of VIP programs is the potential for fraud and money laundering. High-value customers may use their VIP status to circumvent regulations and engage in illegal activities such as match-fixing or insider trading. Operators need to have strict protocols in place to prevent fraud and ensure compliance with anti-money laundering laws.
Additionally, VIP programs can create a sense of entitlement among high-value customers, leading to conflicts with other players and negative publicity for the operator. Operators need to carefully manage their VIP relationships to ensure that all customers are treated fairly and that the integrity of their sports betting operations is maintained.
In conclusion, while VIP programs can be a valuable tool for sports betting operators, they also come with potential risks that need to be carefully managed. By implementing responsible gambling measures, monitoring for fraud, and maintaining transparency in their VIP relationships, operators can mitigate these risks and ensure the long-term success of their business.
