State policymakers seeking to regulate the online betting industry’s use of artificial intelligence scored a win early Tuesday.

Language that could have restricted states from regulating AI was stripped from a massive legislative package pending in Congress. U.S. Senators voted 99–1 to remove the provision.

A “temporary pause” of 10 years was in an earlier version of the highly controversial One Big Beautiful Bill Act. The AI provision, introduced by Sen. Ted Cruz (R-TX) and backed by the Trump Administration, received bipartisan condemnation.

In a statement to Gambling Harm, U.S. Sen. Richard Blumenthal (D-CT) blasted the proposed moratorium on AI regulation.

“The Big Ugly Bill lets tech giants run wild without adequate protections for consumers and workers,” he said.

He said he opposed “short-sighted restrictions that close the door on states protecting their residents from AI harms.” He cited “sports betting companies’ exploitative practices that target vulnerable users and keep them hooked.”

Blumenthal is the Senate sponsor of the pending SAFE Bet Act, which proposes federal oversight of the online sports betting industry.

New York Lawmaker ‘Thrilled’ With Change

The state of New York has become a “laboratory” for AI regulation, according to one lawmaker.

New York State Sen. Kristen Gonzalez (D-District 59) told Gambling Harm in an interview Tuesday that the proposed moratorium would have “undermined” her pending legislation in Albany to restrict push notifications and text messages that encourage people to gamble.

“I’m thrilled the AI moratorium was removed from the bill,” Gonzalez said.

Gonzalez is a sponsor of NY S5537, which she said would “regulate use cases” of AI in sports betting rather than impose a ban on the technology.

She said her legislation would establish “fair and clear guardrails” around one of the problematic uses of AI by the betting industry.

“It doesn’t get in the way of positive use cases,” Gonzalez said of push notifications that could be sent to bettors exhibiting signs of problem gambling.

Legislation in Illinois (SB 2398) is more restrictive. It seeks to prohibit sportsbooks from using artificial intelligence to track wagers and create offers or promotions targeting specific bettors. Illinois-licensed betting apps also couldn’t use AI to create a “gambling product.”

Gonzalez said that sports betting operators “acknowledge that there is a problem” with growing betting addiction rates. New York allowed the launch of state-sanctioned betting apps in 2022.

She said sportsbooks have been “willing to engage” on concerns related to push notifications and text messages targeting players.

Gonzalez, who later in 2025 introduced a bill to restrict AI in betting addiction treatment, said she’s supportive of federal regulation involving the sports betting industry.

“We would love to see the federal government regulate sports betting, but until we get there, we need the power to regulate,” she said.

The sports betting-related AI bills in New York and Illinois were just two of more than 1,000 AI-related bills introduced at the state and local levels in 2025, according to NBC reporting. 

Public Health Advocacy Institute Reaction

The Massachusetts-based Public Health Advocacy Institute, which was involved in drafting the SAFE Bet Act, was pleased to see the removal of the AI-regulation moratorium.

Mark Gottlieb, Executive Director of PHAI, told Gambling Harm that he “breathed a sigh of relief” that it was removed.

“Hopefully we’ll see states start with [AI regulation] as a key minimum standard to claw back some safety” from the online betting industry, Gottlieb said.

He said that as AI technology matures sports gambling could become “more targeted and more predatory.”

Dr. Harry Levant, Director of Gambling Policy at PHAI, said microbets and in-game parlays are especially dangerous when it comes to AI.

“Microbetting can only be done with AI, turning online sports gambling into machine versus man,” Levant said. “That’s not what these states signed up for.”

As of mid-2025, 30 U.S. states, plus Washington D.C. and Puerto Rico, sanction online sports betting via licensed mobile apps or websites.

Levant said the SAFE Bet Act serves as a model or “leadership bill” that states can follow when creating their own sports gambling protection frameworks.

“We’re starting to see that the gambling industry is attempting to mislead regulators” regarding AI by claiming that it will “keep people safe” from addiction, Levant said.

While the PHAI advocates for restricting the use of AI in creating gambling products, Levant applauded efforts in New York to address push notifications.

“Any time I see an elected official taking the time to understand the product and how these are impacting constituents, I applaud them,” Levant said.

PHAI’s work to build a “public health movement” around sports betting will continue, now without the burden of a federal restriction on state-level AI regulation.

Read more: Sports Betting & Artificial Intelligence: AI Legislation Tracker