Digital Wager Wire highlights the most significant events affecting the domestic and international sports betting and gaming industries each week throughout the year.
Key Takeaways
- Massachusetts has assembled a task force to investigate its gaming operators’ AI use after a New York Times report raised concerns about DraftKings’ promotional practices.
- DraftKings has denied using AI to encourage addictive gambling, arguing that it strictly follows the responsible-gambling rules established by the MGC.
- MGC’s review will encompass all licensed sportsbooks, and its goal is to determine how AI and machine learning are used for promotions, customer analysis, and to identify risky gambling behavior.
Times Report Crowns DraftKings
A New York Times investigation into DraftKings’ promotional practices has caused the Massachusetts Gaming Commission to examine artificial intelligence and machine learning by licensed sports betting operators.
MGC Chairman Jordan Maynard said the commission has asked Executive Director Dean Serpa and his staff to speak with DraftKings and get additional information about the technology mentioned in the New York Times report. The commission has not found DraftKings to be in violation of any rules in Massachusetts.
According to The Times’ investigation, DraftKings employed machine-learning technology to analyze customers’ betting activity and determine which individuals were more likely to continue betting after receiving promotional offers. The newspaper also said the company used an “elasticity” measure to estimate how much additional betting could result from a promotion.
The report included statements from former DraftKings employees about technology that could potentially encourage harmful gambling behavior. The newspaper also said efforts to use similar technology to identify customers who might need intervention had been dropped.
DraftKings has denied the allegations. The company said it is working to be compliant with Massachusetts sports betting rules and rejected the suggestion that it uses artificial intelligence to make its offerings addictive.
MGC Ahead of the Game
Massachusetts has already passed regulations regarding the use of automated technology in sports betting. Under MGC rules, operators cannot use customer data to offer promotions via algorithms, machine learning, artificial intelligence, or similar systems when the operator or its vendor knows, or reasonably expects, that the technology could make the gambling platform more addictive for consumers.
As part of their responsible-gambling programs, sportsbooks also must analyze customer information and submit at least twice a year to the commission reports about behavioral trends and efforts to minimize potentially harmful gambling.
The commission’s review won’t stop at DraftKings. Regulators plan to look at how other licensed operators are using AI, too, Maynard said. Sportsbooks often use customer data and machine-learning tools to detect signs of risky gambling behavior and design responsible-gaming interventions.
“We need to find out the facts on the ground, with no disrespect to The New York Times, but also recognize that this is a very important issue with gaming and gaming regulation,” Commissioner Paul Brodeur said. “This is something that is true across any retail experience, anything that is customer-facing.”
The MGC has already been looking at the wider role of AI in the gaming industry. A study through the University of Nevada, Las Vegas’ International Gaming Institute looked at the technology’s use in areas including promotions, customer acquisition, responsible-gaming tools, and player health. The study found a disconnect between the fast pace of development of AI and current governance practices and suggested establishing an AI task force.
That task force, created by the MGC under Executive Director Dean Serpa, is now in place to help assess how operators are using the technology. The review comes as policymakers in other jurisdictions also examine the relationship between AI, gambling promotions and responsible gaming.
