Massachusetts Regulator Askes Sportsbooks for Info on AI Use

Bay State regulators hope sportsbooks will share more details on how they use Artificial Intelligence.

The Massachusetts Gaming Commission (MGC) has sent out letters to all regulated online sportsbooks, requesting information on the topic. The letters include over 70 questions that could help shape new policies. The letters ask that sportsbooks submit their responses by November 3. 

The MGC made it clear that operator participation is voluntary, but it hopes operators will at least answer some of the questions.

Is AI Targeting Losing Bettors?

The letter covers a wide range of AI-related topics, but it focuses heavily on how AI is used for marketing. The MGC wants to know how these tools know who to target for bonuses, promos, and other marketing materials. It also asks who sets the parameters for AI marketing tasks and how they are monitored.

These questions echo a growing concern from lawmakers over the last few weeks. They fear sportsbooks may use the cutting-edge tool to target bettors who lose consistently and try to slow their wagering. This would include bettors who are struggling with compulsive gambling and may finally be trying to address the issue.

Given the continued growth of problem gambling, regulators like the MGC are looking for answers.

DraftKings Scandal Brings Pressure

On September 19, the New York Times released a stunning report regarding DraftKings’ use of AI. After an investigation, reporters found that the sports betting giant was using AI to send promotions to players who lose the most. This includes free bets, odds boosts, and other offers designed to keep these bettors wagering.

In the bombshell report, the Times quoted a former DraftKings analyst who confirmed the algorithm viewed bettors suffering from addiction as the best possible “investment.” 

DraftKings has strongly denied these allegations, but the MGC and Michigan regulators have promised to push for transparency on the use of AI in sports betting.

Will Sportsbooks Respond?

While sportsbooks are eager to prove their innocence, there is reason to wonder if they’ll engage with the MGC and other regulators on the topic. 

Two years ago, the MGC asked sportsbooks how and when they limit bettors. This followed allegations that sportsbooks restricted casual bettors on hot streaks, sometimes dropping their max bet to below $1. It asked operators to attend a roundtable to discuss the issue, but all active sportsbooks refused.

Several other states have pressed for information on bet limiting, but operators have rejected them at every turn.

Operators' most common excuse is that sharing the information would risk their confidential competitive practices. This could also apply to AI, with sportsbooks finding different ways to implement the new tech.