Betting companies cap winners while lavishing losers with rewards

As greater scrutiny is falling on online sports betting companies for the way they offer extravagant perks to customers who are losing large sums of money, there is another question emerging about this fast-growing industry: how the companies treat their biggest winners.

States and state lawmakers have raised questions about a practice called "limiting" — a tactic sports betting platforms use to apply the brakes to gamblers who are having too much success. 

"They have to ensure that the house always wins," claims Brianne Doura-Schawohl, the director for the Campaign for Fairer Gambling. "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." 

Last week, a group of U.S. lawmakers wrote to the major gambling platforms to express concerns about the exploitation of vulnerable bettors by granting frequent losers VIP status.

"The dangling of perks — which include access to exclusive events, videos from celebrities and athletes, and tickets to the Super Bowl — distract bettors from their financial losses and encourage betting when they otherwise would not," the letter said.

Big winners, however, sometimes get the opposite treatment — their bets are often capped at under $20, and even under 50 cents at times, effectively cutting them off.

In a 2023 filing with the United States Securities and Exchange Commission, sports gambling company DraftKings explained limiting in fine print: "We follow the industry practice of restricting and managing betting limits at the individual customer level based on individual customer profiles and risk level to the enterprise."

The "sharp" bettor who can hardly bet

When Massachusetts launched sports gambling in 2023, Mike Manning signed up with every sports gambling app available. Manning — a full-time professional bettor, or what they call a "sharp" bettor — doesn't bet on intuition. He uses a mathematical approach with analytical models. 

Manning says he was winning on nearly every app. Then, one by one, the platforms began limiting his bets. On DraftKings, he said he was limited to $25 per bet. On BetMGM, he started betting $1,000-$5,000 per game, but soon, he said, he was only able to bet $5. 

Limiting caught the attention of the Massachusetts Gaming Commission in 2024. The regulator required gambling companies to answer questions and provide data on how they limit their bettors. After an investigation last year, the Commission found a trend: Winning gamblers have their betting limit decreased while gamblers who lose have their limit increased. 

"It's that whole 'ban or bankrupt' model," said Gadoon Kyrollos, a professional sports bettor whose bets are often limited. 

Manning called the disparity in treatment predatory and unfair. 

"You're exploiting the losing bettor, you're taking advantage of them, and guys like me get shown the door," Manning told CBS News.

BetMGM declined to comment.  

The number of accounts the companies limit is small. Massachusetts Gaming Commission found that 0.64% of Massachusetts betting accounts had been restricted. 

Matthew Litt, a New Jersey attorney who works on gambling cases, says the practice is legal as long as gambling companies are not discriminating against customers based on protected characteristics such as race or religion.

Massachusetts became the first state to require gambling companies to notify gamblers who had been limited and to stipulate why they were being limited. FanDuel wrote to Manning that he was restricted because of "an assessment of your overall wagering patterns and their impact on our long-term risk position…" 

DraftKings told Manning it took action "for internal risk management purposes." 

Another bettor, Michael Trevithick of Ann Arbor, Michigan, shared a betting ticket with CBS News that showed the maximum DraftKings would allow him to wager on the NBA Cup was 49 cents. 

A DraftKings spokesperson said the company "applies customer-specific wagering limits to less than 0.15% of accounts as an enterprise risk control, generally in response to activity that appears designed to exploit errors or target discrepancies in odds. These decisions are based on customer behaviors, irrespective of whether a customer is winning or losing."

The VIP who was incentivized to bet more

Chris Swett was once a highly paid South Carolina attorney, but these days he is awaiting sentencing after pleading guilty to four counts of wire fraud and four counts of money laundering in federal court. Swett stole about $2 million from his law firm to fund his gambling addiction. 

"Every bit of it went into FanDuel," Swett said

A young, successful lawyer with a growing family, Swett discovered Daily Fantasy Sports, a game in which contestants could set lineups of athletes and compete against other contestants for money on FanDuel. 

By 2019, he was wagering $5,000 to $10,000 a month Then, he says, a FanDuel employee emailed him saying anyone who spent $25,000 a month was eligible to be paired with a VIP host. The host would provide him free tickets to sporting events and complimentary entries to fantasy contests, if Swett wagered enough. 

"When they sent me to the first NFL game, I felt like a high roller," he said. 

Swett says he was in over his head, but his VIP host kept incentivizing him to bet more. 

In one email from 2020, Swett wrote to his VIP host: "I think I'm tapped out this month..." Two days later, the host offered him a 4% bonus on any new bets. 

In one two-year span, Swett says he wagered $11 million and lost about $1 million on the site. When he ran out of money, he says he set up a complex illegal scheme, defrauding his law firm and the firm's clients by submitting fake invoices for legal work. He now faces a maximum of 20 years in federal prison. 

"I take personal responsibility for everything I did, but it just seems like their system was designed to keep me playing," Swett said.

FanDuel said in a statement: 

"Every day, millions of customers use FanDuel responsibly as a form of entertainment and every customer has a robust and easy-to-use suite of tools that support informed and controlled play, including deposit limits, timeouts and the ability to easily self-exclude with a few clicks. 

"Since the time [Mr. Swett] was in our VIP program — and as part of our broader effort to foster a culture of responsible gaming and strengthen our customer protection tools — FanDuel has made significant changes to how we operate that program, including additional training for our employees, and new technologies to identify and stop problem gambling.

"FanDuel is an entertainment company — it is not a tool for professional bettors to gain an edge in play or earn a living. In the very rare instances where an individual attempts to deploy sophisticated income generation strategies, it is common for casinos and online sports betting platforms, including FanDuel, to use tools to protect our financial risk. These measures have been reviewed by multiple state regulatory bodies."

If you or a loved one needs help, the National Problem Gambling Helpline offers resources. Call or text 1-800-MY-RESET or get more information on their website. Gamblers Anonymous also has a national hotline at 1-855-222-5542.