In recent days following media coverage about how DraftKings might use artificial intelligence to target losing bettors, state regulators are asking more of their sports betting licensees.
Regulators in Massachusetts and New York took steps in recent days in a bid to gain insight and oversight in how operators use AI and machine learning in their marketing practices.
Massachusetts regulator requests AI details from sportsbooks
The Massachusetts Gaming Commission (MGC) announced Wednesday that, at the request of commissioners, it asked sportsbooks to explain themselves.
Executive Director Dean Serpa sent letters on Oct. 9 to all of the state’s licensed sportsbooks, asking them to detail how they use AI in activities including marketing and promotions, customer outreach and engagement, and evaluation of gambling behavior indicators.
The commission wants written responses by Nov. 3 to numerous questions, including:
- Does the operator use AI such as algorithms or similar technologies to make decisions about players or cohorts related to marketing, promotions, or customer engagement?
- Does the operator use data like a person’s losses, wagering frequency, or other betting behavior as a factor in any marketing or promotional decision?
- Does the operator use AI to predict a patron’s likely future betting activity or to tailor promotions to the user?
- Can the system trigger a promotion or marketing communication based on a player’s recent bets, losses, deposits, or other account activity?
- Does the operator use machine learning to determine which marketing strategy is most likely to get a player to bet more?
- Does it alter its marketing to a user based on the user’s predicted lifetime value, profitability, or likelihood of generating future revenue?
- Does the operator consider a user’s risk indicators before allowing them to receive targeted promotions? Does the operator ever use potentially harmful gambling behavior as a factor that makes the user more likely to receive a promotion? If not, how is that controlled?
- How much human oversight and involvement is part of these processes? Can AI systems trigger marketing or promotions without human intervention?
MGC vowed to look into AI after DraftKings reports
Serpa sent the letter after MGC Chairman Jordan Maynard said at a Sept. 24 MGC meeting that the regulator would begin evaluating how operators use AI for their Massachusetts customers.
Maynard added at that time that the MGC also plans to interview representatives from each operator in-person as it looks to inform potential future regulations.
“These A.I. technologies are evolving rapidly across our society, and we share the concern over their application,” said Maynard.
Massachusetts regulators moved in the wake of reporting by the New York Times and ProPublica which suggested that DraftKings used the technology to analyze player activity and target losing gamblers with promotions that encouraged them to wager more.
Speaking at SBC Summit in Lisbon in late September, DraftKings CEO Jason Robins defended his company’s approach.
“I think a lot of people — and it’s frustrating for us — look at us and say, you’re motivated by the wrong things,” he said on a keynote panel. “‘You don’t want people to bet within their means, you want to take advantage of people.’ That could not be farther from the truth. Every single person in the company will tell you that it’s not at all what we want. That’s the worst possible thing for our company, for our industry.
“The important thing for us is to make sure that we’re doing the best we can. But the problem I think we often face is not everyone perceives it that way. Some people don’t give us that benefit of the doubt. They think that we are motivated by the wrong things, which is a tough part of being in the industry.”
New York commission finalizes AI control proposals
Meanwhile, regulators in the largest online sports betting market in the U.S. also have concerns.
In a New York State Gaming Commission (NYSGC) meeting on Friday, commissioners unanimously voted to advance a package proposal that would implement new AI-related measures for sportsbook licensees.
The suggestions include banning mobile sports betting operators using AI and algorithmic profiling to personalize promotions and make tailored betting recommendations to individual customers based on user data. It would also prohibit them from offering promotions that are intended to increase spending, revenue or engagement.
Customers would be able to consent to such activities if they wish. Otherwise, those practices would not be allowed.
In addition, a separate approved proposal would require sports betting licensees to identify users who may show signs of problem-gambling behavior and to designate a person to engage with those players about responsible gambling tools and resources.
“The mobile sports wagering industry has long maintained that they consider integration of responsible gaming practices a significant element of their business,” said chair Brian O’Dwyer during the meeting. “I believe these proposed rules provide an opportunity for the industry to illustrate its commitment by working together to share the data necessary to make sure that this doesn’t happen
“The industry is on notice by me and this commission that they need to solve this problem … If the industry does not address it, then we will address it and they may not like the solution that we come up with.”
The NYSGC and New York Gov. Kathy Hochul first announced pre-proposal rules for comment in March. The governor called on the regulator to do more to address problems such as underage gambling and how sports betting operators market to at-risk customers.
The commission approved substantially revised versions on Friday. Those revamped rules will be put to another round of public comment before being brought back before the commission for a possible vote.
Sportsbook AI use a state, federal talking point
Other states such as Maine and Maryland recently indicated they intend to take a closer look at how online gambling companies use AI.
“The Gambling Control Unit is monitoring the use of AI locally and nationally, but at this point there are no Maine laws or rules specifically addressing its use,” a spokesperson at the Maine Gambling Control Unit told local media. DraftKings is one of two licensed online sportsbooks in Maine’s tribal-tethered online sports betting market, alongside Caesars.
Meanwhile, the officer of Maryland Gov. Wes Moore recently announced a set of “AI principles” that include a note on protecting at-risk gamblers.
“The Administration will work with the legislature to prohibit gambling operators from using algorithmic and non-algorithmic means to identify and target users showing problem-gambling patterns, and to restrict late-night and post-loss wager solicitations,” reads a line in the announcement.
Federal legislators also share concerns. A bill co-sponsored by Sen. Richard Blumenthal (D-CT) would ban the use of AI to monitor betting activity and target them with customized promotions. Blumenthal and some fellow members of Congress also quizzed FanDuel over a video of MLB star Bryce Harper sent to a user with a known history of gambling struggles.
