MPs have criticised a Gambling Commission decision to let the owner of Ladbrokes and Coral lead a review of online betting for VIP customers.
Carolyn Harris, chair of the All Party Parliamentary Group (APPG) for Gambling Related Harm, called it "a conflict of interest and woefully naive".
Gamblers with VIP status get some free bets and special offers as rewards for betting high stakes.
Betting giant GVC has been asked to review how VIP schemes operate.
Conservative MP Sir Iain Duncan Smith, who also sits on the APPG for Gambling Related Harm, said it was a "bizarre" decision by the Gambling Commission (GC).
He said: "The Gambling Commission needs to be reformed. This really does show you where the thinking has gone completely wrong. It's like putting the mafia in charge of looking into organised crime."
The GVC-led working group will look at how incentives such as hospitality and gifts are offered, particularly in connection with VIP programmes, and whether they comply with licensing objectives to make gambling fairer and safer.
The GC's move comes despite the regulator fining Ladbrokes Coral £5.9m in 2019 for failing to protect vulnerable people gambling large sums.
Michelle, from Surrey, told Radio 4's You and Yours that she started gambling at a stressful time when she was caring for her mother with dementia.
Michelle, who did not want to disclose her full name, was made a VIP by several websites, including Ladbrokes and Coral. VIP gamblers are often assigned a VIP manager who stays in regular contact.
She said: "You would be called quite a lot, I've got various emails that say, 'If you continue to play at this level, you will become a loyal customer.'"
"It's actually relentless. It's subtle things, they'll call and see how you are and a little pop-up box would appear on your computer: 'Hi, how are you?'"
Michelle was given football tickets by Coral, but turned them down. Afterwards, she had an email saying that as she couldn't come, they would put a £200 free bet in her account. She says: "It's a very clever way of ensuring that you're rewarded and you keep playing."
In its 2019 fine for Ladbrokes Coral, the GC cited evidence of gamblers not being protected. In one case, Ladbrokes did not check on the welfare of a customer who had lost £98,000 in two-and-a-half-years. The customer had also asked Ladbrokes to stop sending promotions.
GVC, which owns Ladbrokes Coral, said: "We continually review our incentives programme to ensure our most loyal members get a great service alongside enhanced due diligence checks to ensure that they are playing within their means." It said it took the welfare of customers "extremely seriously".
The GC said it had asked many gambling firms to oversee reviews into the sector and had set tight deadlines for them to make progress.
A spokesperson for the commission said: "There are many operators involved in this work and some of those have been subject to our enforcement activity. They are in no doubt about the need to tackle these issues at speed."