In recent developments within the sports gambling industry, operators are increasingly leveraging artificial intelligence (AI) technologies to monitor and manage user engagement, particularly concerning the potential for problem gambling. This utilisation of AI, while innovative, raises pertinent questions about the ethical implications and the potential for misuse of personal data by sportsbooks.
In a landscape where sports gambling operates mainly under self-regulatory frameworks, concerns have emerged regarding the effectiveness of measures to ensure responsible gambling. Timothy Fong, co-director of the UCLA Gambling Studies Program, highlighted these issues by stating, “It’s really the use of AI that creates predatory scenarios, where people who are already vulnerable because of mental health issues or a gambling addiction could be manipulated or targeted without their knowledge.” This underscores a growing anxiety that the gambling sector may exploit user data to increase profitability at the expense of vulnerable gamblers.
AI's capability to personalize betting experiences is a primary focus for sportsbooks. Operators aim to engage users with customised incentives or targeted information that align with individual gaming habits. Shane Kraus, a clinical psychologist from UNLV, expressed scepticism about these developments, stating, “AI in the gambling space tailors incentives and better understands a player’s interest,” suggesting that this technology could simultaneously enhance user engagement and potentially engross them in risky betting behaviours.
Notably, SharpLink’s C4 Sports Betting Conversion engine is one such AI innovation designed to convert sports fans into bettors by creating tailored betting experiences based on individual preferences. Robert Phythian, CEO of SharpLink, noted in a guest column for Sportico that the AI technology might suggest tailored wagers, enhancing user retention and engagement. “Fans will be presented with a personalized experience based on the preferences they either explicitly state in their profile or implicitly demonstrate by their behaviour and consumption patterns,” Phythian commented.
While these technological advancements have the potential to boost sportsbook revenues, they also raise concerns about responsible gambling practices. Fong pointed out a troubling aspect of increased engagement: “The longer gamblers place bets, the more likely it could be that they develop a gambling habit, which can lead to gambling disorders.” Reports indicate that a significant portion of gambling revenue is generated from individuals with gambling issues, which, according to Fong, could range anywhere from 10% to 80% of profits.
Statistics from the Arizona Department of Gaming reflect a troubling trend in problem gambling cases. In 2021, there were 280 problem gambling calls, which surged to 512 calls in 2023, representing an increase of over 82%. A further examination of helpline data showed an alarming increase of 234% in calls related to problem gambling from July 2022 to June 2023.
Moreover, a study conducted by Dr Lia Nower from Rutgers University revealed a correlation between sports gambling and increased mental health issues, indicating that sports gamblers experience higher rates of anxiety, depression, and other substance abuse disorders compared to non-sports gamblers. The findings revealed that a minority of bettors accounted for a substantial majority of wagers placed, exacerbating the potential for harm.
Amid these discussions, regulatory efforts at both state and federal levels remain inconsistent. FanDuel CEO Amy Howe expressed support for AI's potential to mitigate problematic gambling, yet industry critics remain apprehensive about the efficacy of these claims without mandatory regulations. Brianne Doura-Schawohl, a leading policy consultant, noted the challenges posed by self-regulation, highlighting that efforts may often be tokenistic without the enforcement of comprehensive standards to protect users.
Efforts for reform are ongoing, with proposals such as the SAFE Bet Act and the GRIT Act aimed at establishing federal standards for advertising, AI utilisation, and research funding for problem gambling initiatives. However, the passage of these bills remains uncertain and faces opposition from industry representatives.
As states continue to derive significant tax revenues from sports gambling—totaling $2.5 billion in the previous year, up from $1.8 billion—there exists a complex interplay between economic interests and the necessity for safeguarding consumer welfare. With Arizona alone generating approximately $34 million in tax revenue from sports gambling in 2023, questions loom over the potential ethical conflicts inherent in balancing state revenue generation with the responsibility to protect those susceptible to gambling addiction. The ongoing dialogue surrounding AI in the sports gambling space reflects a critical juncture for both regulators and operators as they navigate the evolution of this rapidly growing industry.
Source: Noah Wire Services