The Massachusetts Gaming Commission (MGC) is set to investigate the application of artificial intelligence by DraftKings and other licensed sportsbooks. This inquiry follows a report from The New York Times that raised concerns about the use of machine learning to tailor betting promotions to specific customers.
MGC Chairman Jordan Maynard announced on Thursday that Executive Director Dean Serpa and the commission staff will engage with DraftKings, based in Boston, to delve into the details of their AI and machine-learning strategies. It is important to note that the commission has not accused DraftKings of any misconduct.
Maynard stated, “The commission is aware of a report from The New York Times regarding the use of AI and machine learning by an operator. These AI technologies are evolving rapidly across our society, and we share the concerns over their application.”
The New York Times reported that DraftKings utilized machine learning to scrutinize betting patterns and pinpoint customers likely to continue gambling and losing after receiving promotional offers. The investigation, which included interviews with over 40 former employees and an analysis of internal communications and customer betting data, also highlighted that DraftKings employed an “elasticity” metric to gauge how much additional money a customer might wager following an offer.
Six former employees expressed their worries to The Times about the potential harm this technology could inflict on individuals struggling with gambling addiction. Furthermore, the report indicated that initiatives aimed at using similar technology to identify gamblers in need of intervention had been put on hold.
In response to these allegations, DraftKings firmly denied any wrongdoing, asserting that it adheres strictly to all Massachusetts sports betting regulations and rejects the notion that it engages in practices that could lead to addictive gambling. The company stated, “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.”
Massachusetts law prohibits the use of customer data for promotional purposes through automated systems, including AI, if such practices are known or expected to enhance the addictive nature of a gambling platform. Operators are also required to report biannually on their analysis of customer behavior to promote responsible gambling and address potentially harmful behaviors.
According to an MGC spokesperson, DraftKings has submitted these reports, although the spokesperson declined to share them with The Times. Non-compliance can lead to fines or even the suspension or revocation of licenses. Notably, the commission has not previously enforced actions related to AI.
The MGC's inquiry will encompass all licensed sportsbooks. Promotions for both new and returning customers may differ based on betting activity, loyalty, account history, and prior promotional engagement.
This review builds upon the regulator's ongoing examination of AI. A study commissioned by the University of Nevada Las Vegas’ International Gaming Institute last November explored the role of AI in promotions, player acquisition, responsible gaming tools, and player health. It identified a “governance gap” between technological advancements and current company practices and regulatory frameworks.
The study recommended the formation of an AI task force, which the MGC has since established under Serpa to assess DraftKings’ operations.
Commissioner Paul Brodeur emphasized the importance of understanding the facts, stating, “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.” He added that any further actions or policy decisions would be made by the Commission if deemed necessary.
Similar scrutiny is emerging in other states as well. Maryland Governor Wes Moore has called for legislation to prevent gambling companies from using algorithms and other methods to identify and target users exhibiting problem-gambling behaviors. Additionally, proposed federal legislation seeks to ban the use of AI for monitoring betting activities.