Mukunda Calls It 'Warped Entrepreneurship' as DKNG Slips 2%

Yale School of Management lecturer and Bloomberg Opinion contributor Gautam Mukunda said "we are in an era of warped entrepreneurship" after a New York Times investigation found DraftKings Inc. built a machine-learning model scoring customers by how much they would lose per free bet or bonus, with DKNG trading at 19.18, down 2.09%, as of 18:46 GMT on Sept. 30, 2026.

DraftKings Inc. (DKNG) built a machine-learning model that ranked its customers by how much money each one would lose for every free bet or bonus credit handed to them, according to a New York Times investigation. The finding has put the sportsbook at the center of a question that has followed online gambling since legalization: whether the industry's growth math depends on the people least able to afford it.

The shares were trading at 19.18 as of 18:46 GMT on Sept. 30, 2026, down 2.09% on the day from a previous close of 19.59, with an intraday range of 19.15 to 19.74. The stock sat at the low end of that range while the broad market held up — the S&P 500 (SPY) was up 0.32% at $766.65 and the Nasdaq 100 (QQQ) up 0.69% at $742.99, though the Dow 30 (DIA) was off 0.41% at $510.79.

What the model was built to predict

The mechanics matter more than the label. A promotional credit is a cost to a sportsbook, and the return on that cost is the net revenue the recipient generates afterward. A model that scores customers by expected loss per bonus is, in plain terms, a targeting tool: it tells the marketing system where a dollar of free play converts into the most dollars back.

The uncomfortable part is who ranks highest under that logic. A data analyst quoted in the investigation put it bluntly, saying "the best investment would be a problem gambler." That is not a moral claim; it is an arithmetic one, and that is precisely why it is a regulatory problem. Any system optimized purely for expected loss will surface compulsive bettors at the top of the list without ever being told to look for them.

Mukunda's argument: rules as protection for the well-behaved

Gautam Mukunda, a Bloomberg News Opinion contributor and lecturer at the Yale School of Management, framed the episode as symptomatic rather than isolated. "We are in an era of warped entrepreneurship," he said, speaking with Bloomberg Markets.

His prescription is worth separating from the usual anti-business reflex. Mukunda argues that regulation aimed at predatory capitalism protects good companies — the firms that decline to run the most extractive playbook and then find themselves losing share to competitors who do. Where conduct rules are absent, the operator willing to push hardest sets the industry's floor, and everyone else either follows or shrinks. Rules, on this view, are less a tax on enterprise than a referee that lets restraint survive.

The second half of his argument is about talent allocation. Mukunda contends that regulation can steer entrepreneurs' abilities toward socially beneficial ends. The engineers who built a loss-prediction model are, by any measure, capable people. The question he raises is what determines which problems capable people are pointed at — and his answer is that the incentive structure, not individual virtue, usually decides.

Where the risk actually sits for the shares

Sports betting in the United States is licensed state by state, which means the exposure here is not one decision but many. Each regulator that has granted DraftKings a license has its own responsible-gaming conditions, its own advertising and promotional rules, and its own authority to open an inquiry, impose conditions, or fine. A finding that a licensee systematically modeled customer losses to aim promotions is the kind of fact pattern that invites parallel reviews rather than a single ruling.

Three channels are worth watching:

• Promotional restrictions. If regulators limit how bonuses can be targeted, the efficiency of customer acquisition falls, and marketing spend has to rise to hold the same growth.
• Mandated interventions. Requirements to flag and cool off high-loss accounts would cut directly into revenue from the heaviest users — the cohort the industry's economics lean on.
• Legislative attention. The investigation hands lawmakers in states weighing new gambling rules a concrete example, which tends to shift debates from abstract harm to documented practice.

None of that shows up in a quarterly print immediately. But it changes the multiple investors are willing to pay, because it raises the probability that the current promotional model is legislated into something less profitable.

A pattern the market has seen in other industries

Businesses that monetize attention or compulsion tend to face the same sequence: rapid legal expansion, a period in which optimization runs ahead of oversight, an investigation that makes the internal logic public, and then rules written in reaction to that logic. Tobacco, payday lending, opioid distribution and high-fee consumer credit all passed through versions of it. In each case the costly moment for shareholders was not the headline but the regulatory regime that followed, because it permanently reset unit economics rather than temporarily denting sentiment.

Online sportsbooks have grown on a combination of state-by-state legalization, aggressive promotional spending and data infrastructure sophisticated enough to price both games and customers. The first two are now largely built out. The third is what the New York Times findings put under a microscope.

What to watch next

The near-term signals are procedural: whether individual state gaming commissions open formal reviews, whether DraftKings makes any change to how promotional targeting works, and whether attorneys general treat the modeling as a consumer-protection matter rather than a licensing one. Congressional interest in a federal responsible-gaming standard would be a larger development, since it would apply one rulebook across every state where the company operates.

For now, the 2.09% decline on the day is a modest reaction relative to the scope of what the reporting described, and it came against an equity backdrop that was mostly higher. That gap — between a documented practice and a two-point move — is the part of the story still unresolved. Markets price regulatory risk when a regulator acts, not when a reporter publishes.

Key facts

• DKNG price: 19.18, -2.09%, as of 18:46 GMT Sept. 30, 2026
• Previous close / day range: Prev close 19.59; intraday 19.15–19.74
• Finding: Machine-learning model scored customers by expected loss per free bet or bonus
• Commentator: Gautam Mukunda, Bloomberg Opinion contributor and Yale School of Management lecturer

Frequently asked questions

What did the New York Times investigation find about DraftKings?

The investigation found that DraftKings Inc. built a machine-learning model that scored its customers according to how much money each one would lose for every free bet or bonus credit they received. The finding raised concerns that the company was effectively targeting problem gamblers, since such a model ranks the most compulsive bettors as the most profitable recipients of promotions.

Who is Gautam Mukunda and what did he say?

Gautam Mukunda is a Bloomberg News Opinion contributor and a lecturer at the Yale School of Management. Commenting on the DraftKings findings, he said "we are in an era of warped entrepreneurship," and argued that regulations aimed at predatory capitalism could protect well-behaved companies while steering entrepreneurs' talents toward socially beneficial ends.

How did DraftKings stock react?

DKNG traded at 19.18 as of 18:46 GMT on Sept. 30, 2026, down 2.09% from a previous close of 19.59, with an intraday range of 19.15 to 19.74. The stock sat near the low of that range while the S&P 500 was up 0.32% and the Nasdaq 100 up 0.69% on the day.

Why would a model like this attract regulators?

U.S. sports betting is licensed state by state, and each regulator imposes its own responsible-gaming and promotional conditions. Evidence that a licensee modeled customer losses to aim bonuses is the kind of fact pattern that can trigger parallel reviews across multiple states, potentially leading to restrictions on promotional targeting or mandated interventions for high-loss accounts.

What is Mukunda's argument that regulation helps good companies?

His point is that where conduct rules are absent, the most aggressive operator sets the industry's competitive floor, forcing restrained rivals either to copy the practice or lose market share. Rules act as a referee that allows restraint to survive commercially, rather than functioning simply as a tax on enterprise.

What should investors watch from here?

Key signals include whether individual state gaming commissions open formal reviews, whether DraftKings alters how promotional targeting works, whether state attorneys general treat the matter as consumer protection, and whether Congress moves toward a federal responsible-gaming standard that would apply uniformly across every state where the company operates.

Sources

• “We Are In an Era of Warped Entrepreneurship,” Says Makunda — Bloomberg Markets

Photo: Firmbee · Pixabay Content License — source