The Massachusetts Gaming Commission (MGC) will examine how DraftKings and other licensed sportsbooks use artificial intelligence, following a New York Times investigation into the use of machine learning to target customers with betting promotions.
MGC Chairman Jordan Maynard said Thursday that Executive Director Dean Serpa and commission staff would engage with Boston-based DraftKings to “understand the specifics” of its AI and machine-learning practices. The commission has not determined that DraftKings committed any wrongdoing.
“The commission is aware of a report from The New York Times regarding the use of AI and machine learning by an operator,” he said. “These AI technologies are evolving rapidly across our society, and we share the concerns over their application.”
The Times reported Saturday that DraftKings used machine learning to analyze betting records and identify customers most likely to continue gambling and losing, after receiving promotional offers. Its investigation, based on interviews with more than 40 former employees, internal communications and customer betting records, also reported that DraftKings used an “elasticity” metric to estimate how much more a customer might wager following an offer.
MGC Chairman Jordan Maynard
Six former employees who worked on the systems told The Times they were concerned the technology could harm people struggling with gambling addiction. The newspaper also reported that efforts to use similar technology to identify gamblers who might require intervention had been sidelined.
DraftKings rejected the allegations, saying it “works diligently to comply with all Massachusetts sports betting regulations and vehemently denies the suggestion that we do anything to make our offerings addictive.”
“DraftKings does not use A.I. to target anyone based on losses and does not market to customers based on indicators of potential problem gaming,” the company added.
Massachusetts prohibits using customer data to provide promotions through automated systems, including AI, that are “known or reasonably expected” to make a gambling platform more addictive. Operators must also report at least twice annually on how they analyze customer behavior to promote responsible gambling and mitigate potentially addictive behavior.
DraftKings has submitted those reports, according to an MGC spokesperson, who declined to provide them to The Times. Violations can result in fines or license suspension or revocation. The commission has not previously taken enforcement action involving AI.
The MGC said its inquiry would extend to all licensed sportsbooks. Promotions for new and returning customers can vary according to betting activity, loyalty, account history and previous promotional use.
The review builds on the regulator’s existing examination of AI. A study commissioned through the University of Nevada Las Vegas’ International Gaming Institute and released last November examined AI in promotions, player acquisition, responsible gaming tools and player health. It identified a “governance gap” between technological advances and existing company practices and regulatory guidelines.
The study recommended creating an AI task force, which the MGC subsequently established under Serpa and will now use to evaluate DraftKings’ operations.
“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.
“Any further action or policy-making can then be determined by the Commission when or if appropriate,” Maynard said.
Maryland Gov. Wes Moore
Scrutiny is also emerging elsewhere. Maryland Gov. Wes Moore has called for legislation preventing gambling companies “from using algorithmic and other means to identify and target users showing problem-gambling patterns,” while proposed federal legislation would prohibit using AI to monitor betting activity and target customers with individualized promotions.
Sen. Richard Blumenthal, a Connecticut Democrat and co-sponsor of the federal bill, said gambling companies “are relentlessly and tirelessly taking advantage of vulnerabilities, simply to make more money.” He said The Times’ investigation “provides graphic and powerful proof of what their business model is.”
FanDuel, DraftKings’ largest competitor and another Massachusetts operator, said it uses machine learning and other technology to identify signs of harmful play and protect customers, but did not address whether or how it uses AI for other business purposes.