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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:03.124)
Artificial intelligence is putting sportsbooks under the microscope, while Canada's regulated gambling map could about to change dramatically. In the US, allegations that DraftKins use AI to target loose embedders are raising questions about where personalized marketing ends and player protection begins. Well
With regulators weighing new restrictions, could this become a turning point for how the industry uses AI? Meanwhile, in the big white north, the recent opening of Alberta's iGaming market has shaken up Canada's landscape as it heads towards a wider regulated market? Or are political and regulatory divisions set to slow things down? We will question that and try to answer it on today's episode of iGaming Daily.
Brought to you by Optimove, the creator of positionless marketing and number one player engagement solution for iGaming and Sports Vetting Operators. I'm Fernando Nodmi, the manager for SBC, and I'm joined by the great Tom Nightingale. Tom, how are you today?
Tom Nightingale (01:48.98)
I'm very well, thanks for yeah, we'll we'll certainly try to answer these questions. It's pretty it's it's pretty big stuff both north and south of the border in North America at the moment. So there's certainly plenty to talk about.
Fernando Noodt (02:00.097)
Yeah, absolutely. And we're gonna start talking about the US, where things have have gotten a a bit sketchy to for some. some allegations going going over. what do we know about them? about these allegations? I mean that that DraftKings use AI to identify losing betters and target them with promotions. And why do you think this has become such a significant issue for for the industry?
Tom Nightingale (02:28.775)
Yeah, so I mean there's a couple of things sort of going on in on on this front in the US at the moment. Like I'll start with the the DraftKings thing. So for anyone who's not aware, there were a couple of very, very detailed reports, one in the New York Times, one in ProPublica, I think. talking to a lot of ex employees of DraftKings about how they use AI and machine learning. And basically the crux of these articles, certainly the New York Times one, was that DraftKings sort of
allegedly built a sort of machine learning model that analysed customer data patterns like betting activity, win, you know, win-loss rates, how likely they were to stop gambling, how likely they were to continue gambling or resume gambling if they were sent a, you know, set promotional offers and you know inducements to sort of stay engaged on the platform. and the upshot w was allegations that
DraftKings sort of used AI and this machine learning system to kind of hone in on gamblers who lost more, both in terms of, you know, win-loss rate and in terms of dollar amount, and sort of provide them with a lot of promotions and inducements to to carry on, to carry on betting. there was talk of like the score sort of ranking and you know, scoring customers based on their habits and how they might respond to.
to to promotional offers and sort of stuff. And it has just s opened Pandora's box a little bit in terms of, you know, we we know, let's be honest, as an industry, we know that it is in online sportsbooks' best like their best interest as a business to keep betters engaged on the platform, keep them coming back. we also know that AI is
Changing things rapidly. I cannot, I don't think I'm not I I don't want to speak for you, Fur, but I'm certainly not an e expert in AI and machine learning. It's moving, it's evolving very, very quickly. Obviously it is being obviously it's being used. No, well, and o obviously it's being used, right, by online gaming operators the same way it's being used by businesses in all kinds of industries. But obviously the the these reports have really sort of turned up the spotlight, if you will. Like the spotlight is shining very brightly now.
Fernando Noodt (04:34.731)
Yeah. I don't think you need to be an expert. No no
Tom Nightingale (04:55.105)
On just how sports books are using AI and how it, you know, either supports or maybe compromises responsible gaming efforts, you know, how it may or may not place vulnerable people, like people with known gambling struggles, that sort of stuff, how it might place them in more danger of sort of returning to gambling habits, that sort of stuff. So I mean it's become a very big conversation in the last
couple of week well, few weeks I think since these reports came out.
Fernando Noodt (05:29.131)
And actually we had a very special guest at SBC Summit, which was Michael Jordan. But together with Michael Jordan was DraftKing CEO Jason Robbins, who actually strongly defended the company's responsible gambling culture. So how convincing was he? or or was his response in the face of the recent reports?
Tom Nightingale (05:51.442)
Yeah, I mean, you know, he's obviously gonna be def be be somewhat defensive of of of of his business practices. You know, I'm not gonna sort of I'm not gonna cast aspersions either way on why, you know. But what I will say is that, you know, he one of the things he said at SB Summit Jason SBC Summit Jason Robbins was, you know, he rejects and categorically rejects any implication that DraftKings marketing practices improperly target customers.
And w I think what the company said is that, you know, they are directed towards customers who demonstrate sustained and engaged, you know, sustained engagement and use of our platform, not towards customers based on their losses.
That does kind of con contradict what ex-employees of DraftKings suggested in these reports in in mainstream media. Look, I mean my problem here is that or one of my problems here is that a lot of it is kind of semantics or spin either way. Like y y you know, DraftKings saying that their marketing practices and AI are directed towards customers who demonstrate sustained engagement and use on their platform.
Like my argument is unless you're like a really sharp better, speaking as a very casual better, I'll be right I'll be honest right now, the longer I spend on a sport online sports book, the more money I am likely to lose. That is just a fact. And I do not think I'm alone in that thing. So so so so my my problem there is obviously the official stance is gonna be that, you know, they they they offer sportsbooks, not just DraftKings, you know.
All sportsbooks offer promotions to users and I'm I'm pretty sure that the vast majority of them, if not all of them, by now are using some kind of AI or machine learning to personalize offers for people. I you know, that doesn't I can't let's not pretend to be shocked by that. I guess the question for the industry now is just sort of where is that line and when does it when does it go from fun and hey, here's you know, here's a bonus bet to get you back in the action. When does it cross that line and become
Tom Nightingale (08:00.084)
You know, we've heard we've heard some sort of federal lawmakers in the US use words like predatory. when does it become problematic? And I would argue that when it does become problematic is if you are targeting people. The win-loss thing is a a bit grey area for me. Cause a lot you know, like I said, unless you're sharp, you probably lose more than you win, or about fifty-fifty or whatever. But where it would become problematic for me, I think, from my position, is is if it's
people who have known struggles with gambling activity, or people who have tried to limit their own activity, if you are then contacting them, either via AI or via human interaction, to encourage them to gamble again, yeah, I would say that's a problem, right?
Fernando Noodt (08:46.049)
Yeah, absolutely. And I can I can I couldn't agree more with you there. I think I have never tested the withdrawal process in any sports book at all. Like ever every time I play a I I lose everything I play. Of course, in betting should be part of an entertainment portfolio for people, like it should be only entertainment and you should only put in money that you're willing to lose there. that's th that's obvious so far.
Tom Nightingale (09:11.273)
And that's the and and that's the thing, right? Like I say the longer I spend on a sports book, the more I lose. But I am a very, very, very, whatever you want to call it, casual, boring, low stakes better. You know, when I say I'm losing money, I'm losing sort of ten dollars here, ten dollars there, which that's my prerogative, right? Whereas it becomes an issue when if that l amount of money escalates, or like you say, if you'll go beyond your if you're sort of if you're gambling beyond your means.
Fernando Noodt (09:23.18)
Yeah, same.
Fernando Noodt (09:27.403)
Is it?
Tom Nightingale (09:40.278)
and you're sort of in this cycle where you actually you would like to stop and you can't stop and you've got sports books encouraging you to do it, then obviously that's kind of a different a different game altogether, right?
Fernando Noodt (09:50.274)
Yeah, absolutely. And I think that and and I'm I'm not saying that any sportsbooks are doing this, but you should definitely not be targeting people that are trying to to put themselves on self-exclusion list or or or putting limits on their on their on their betting. But at this point sportsbooks should be able to identify problematic patterns problematic betting patterns. So if you're targeting those betters that are
Having a a tendency to lose a lot a lot of money, then it's definitely a problem for for for any sports book. Of course I'm not I'm not pointing fingers here. But this situation has naturally sparked different reactions across the United States, with the states of Massachusetts and New York taking different approaches to this. can you tell us more about what what happened there?
Tom Nightingale (10:43.879)
Yeah, so I mean these are just two Massachusetts and New York are sort the two probably most prominent timely examples of this. But I would say that it it is somewhat indicative of a wider re-evaluation, I guess, of how online game like licensed online gaming operators are using AI and technology and how they are contacting customers and you know, and then the obviously the DraftKings thing, this was already concern lawmakers and regulators in a lot of states, but obviously the the DraftKings thing, there's also a fan jewel.
Fanjul's been caught in its own sort of controversy about the use of a video of Bryce Major League Baseball star Bryce Harper that was on posted on Cameo and then it was sent to it was allegedly sent to a user of FanJul who had, you know, more than a million dollars in losses and was trying to pull back and, you know, that sort of stuff. So like to your point, it's not just the DraftKings situation, but New York and Massachusetts are two good examples recently, 'cause what
Massachusetts and and the Massachusetts Gaming Commission, for anyone who doesn't really know, are one of the sort of firmer gaming regulators, I would say, a bit more proactive in holding operators to account for various things. And what they did is they wrote to all of their licensed online sports books asking them to essentially detail how they use AI in activities like marketing and promotions, customer outreach and engagement, how they use AI and machine learning to evaluate.
People's gambling behaviour and whether or not they make decisions based on, you know, like how much a gambler has lost in the past, this sort of thing. So it's all this, you know, they've asked for responses in writing from all of their licensees. and I think the particular interest there is not just how you use AI, but you know, do you one of the questions was, I think, you know, do you does it do operators use AI or similar technology to make decisions about?
players based on their gambling activity and then make decisions about how they how the operator markets to those players based on that player's activity. You know, so are you using AI to identify a gambler that is losing more than another gambler? And then is AI it is AI with or without human intervention then, you know, offering them bigger bonus offers or more incentives to come back, right? And then New York has done a
Tom Nightingale (13:05.139)
broadly similar thing where New York's gaming regulator voted recently this month to advance proposed new rules that would really sort of restrict how sportsbooks can use AI. I'm pr I think I'm right in saying it would ban licensed sports bank operators from using AI and algorithmic profiling and this sort of stuff for the purpose of tailoring better betting recommendations to customers based on their data. So like New York, if anything has gone maybe
a step further, instead of just asking sportsbooks to explain themselves, it has said we we already do not think that you should be allowed to do this. that's kind of the context in New York is it's kind of a wider thing where New York's government New York's governor asked the gaming regulator to sort of really review use of AI and technology and stuff for gambling, the with the main the main framing there being protecting, making sure that underage people can't access sportsbooks and that sort of stuff.
But this AI piece and this marketing piece has kind of been pulled into that conversation. New York was already talking about it already, but I suspect the DraftKings and the fan jewel stuff and, you know, all this all this wider conversation that's bubbled to the the surface in mainstream media has probably had an impact in further pushing that conversation forward, you know?
Fernando Noodt (14:22.071)
And of course you can read the details about both both initiatives in Massachusetts and New York on SVC Americas.com. So make sure you go to the to the website and check this out and of course subscribe to the newsletter, not only SBC America's newsletter but all SBC media newsletters to keep up to date with the global gaming news on a daily basis. But before we move on to Canada, Tom, I wanna ask
Do you think this controversy will have sportsbooks change the way they use AI, or will it primarily lead to tighter controls over operator practices?
Tom Nightingale (15:03.677)
I think it may be a mix of both. I mean again I don't wanna I don't wanna pr I don't wanna seem like I'm saying that this this this scrutiny of AI use and stuff started from zero with the DraftKings reports. Like, you know, this was already being looked at by a lot of states. it has definitely accelerated the conversation. Like there's another notable thing recently where like the Lou the Louisiana gaming control board voted to DraftKings were up for licence renewal.
part of the standard sort of process and they voted to basically issue them a conditional license for a period of four months, but delay a final decision on their sort of the renewal of their permanent license because in w one of the reasons was that they want to look further into how their licensees are using AI and stuff. So, you know, regulators are really shining a light on this now. So are legislators, like lawmakers at both the state and the federal level in the US are concerned with this this stuff.
So, you know, it's definitely gonna lead to some form of change. I think some of it will be operator led, s in a similar vein to how all the major online gaming operators or a lot of the major online gaming operators in the US sort of voluntarily stopped accepting credit cards, partly because they knew that that was being looked at very closely by regulators. So it was an opportunity to sort of get out in front of it, I think, and make that change voluntarily, without being before you're told to do so. I imagine that sort of thing might happen. But I mean
Gaming operators are going to continue to use AI for a variety of things, right? And the problem is it's evolving s AI is evolving so fast that operators and companies are ch sort of trying to get ahead of it or at least keep up with it and see how it can be used for the benefit of their business. And then the flip side of that, of course, is that like regulators and have to
try really hard to keep up with the pace to make sure that they are all constantly aware of the risks and the threats and exactly how you should be using this developing tool. So I mean it's gonna be an ongoing conversation. It'll be one that'll be it'll be one that'll be interesting to watch across the US and beyond, I think.
Fernando Noodt (17:06.311)
No we are sorry. And we are way past our our our our mark, but we're gonna do a very quick outbreak because we have to take a very short flight to Canada and discuss what the situation is up there. We'll be right back.
Hmm I'm about
Tom Nightingale (17:23.113)
Skip the skip the the ads thing if you want. We'll just talk about iGaming expansion 'cause we're running over.
Fernando Noodt (17:28.429)
Okay. Co yeah yeah. You mean the b Bill S tw two eleven, right?
Tom Nightingale (17:35.825)
Yeah, like question nine, just just scratch it. We'll just talk about expansion because I realize that we're we're we're running long already, so I'll I'll shorten it.
Fernando Noodt (17:41.238)
Yeah yeah we're yeah let's try to keep this under the twenty five minute mark. And we're back with more iGaming Daily here together with Tom Nightingale, our expert in Canadian matters. So or at least c gambling Canadian matters matters. I I don't know, Tom, if you would cons no on Canadian matters, okay. But this is iGaming Daily, thankfully, so we're gonna
Tom Nightingale (18:01.219)
Yeah, not all Canadian matters, no.
Fernando Noodt (18:08.663)
Keep it to iGaming. So it's been a while since we last discussed Canada and Alberta launched his his its i gaming market back in July. So Tom, how has the experience been so far in Alberta and what could it mean for potential expansion of the industry in Canada in in other provinces?
Tom Nightingale (18:27.335)
Yeah, listen, since we last talked about Canada, a lot has happened. I mean, Alberta, the the the big headline from Alberta really, which opened c it's commercial eye gaming market in July, is that the the first few months in Alberta have sort of been a lot faster than Ontario was. When Ontario opened for in twenty twenty two as the first province, there was no blueprint really for it. No province had done it before. Everyone was kind of feeling there was an e a strong re unregulated market prior to regulation.
But everyone was sort of working it out on the fly. Alberta's had a l just has taken a lot of the lessons from Ontario, right? A lot all most of the operators, if not all of them, most live in Alberta. And there are, by the way, there are now more than 30 operators running more than 50 licensed sites already after three months of the market. Like that's way ahead of Ontario's rate. And it's partly because Alberta had all these lessons to draw from Ontario, right? And all these all these operators that are in Alberta.
Have been there and done that already in Ontario. The sis the rules are very similar. So it's not surprising to me that Alberta's really been a very quick ramp up. And honestly, that market seems to be we don't know, we haven't had any public data yet. I think we're expecting the first sort of revenue report from the from the iGaming Agency to come out any day now, really. but anecdotally at least it seems like everyone has kind of just hit the ground running in in in Alberta. We've heard operators like BetMGM talk about their really fast start in the province. So
I think it's just proof of concept that you know, Canada have been and done this with Ontario, Alberta took a lot from Ontario, and there's a blueprint to follow now for regulated eye gaming if provinces choose to do so.
Fernando Noodt (20:07.607)
And actually the Canadian Gaming Association believes that most of the country would have regulated commercial eye gaming within three to five years. So I guess following that blueprint there, they could see that happening. But how realistic do you think that forecast is? particularly right now with discussions taking place in in Atlantic Canada and British Columbia?
Tom Nightingale (20:28.999)
Yeah, I mean those were very those were comments that Canadian Gaming Association president and CEO Paul Burns made on a Canada focused panel at SBC Summit in Lisbon recently. And it's interesting, right? You know, we've gone there were no, you know, Canada legalized single event sports betting in twenty twenty one. Ontario opened the first regulated commercial online gambling market in twenty twenty two. It took four years, for a second province to get off the ground with Alberta, and that was, you know, 'cause you have to sort of pass a bill in Parliament that
provides the legal basis to you know the legal basis to do this and then you have to obviously work on your regulations and that sort of stuff. we heard a lot even before Alberta opened that Alberta, you know, two provinces is very different to one in that there is a pattern there. It's proof of concept, like I said, that this model can work in other provinces. It's not just Ontario specific, you know. so yeah I'm but I mean that that that forecast from the CGA was very interesting that you think some
most of the country could have regulated eye gaming within three to five years. how realistic that is, you know, I would depends what you mean by most of the country, doesn't it? I think a couple more provinces is is at least having properly started down the road. Maybe the market's not open, but at least, you know, taking firm steps towards doing it. Because we've seen recently, you know, Quebec is a big one.
Fernando Noodt (21:44.085)
Okay, okay, okay, okay, okay, okay.
Tom Nightingale (21:51.112)
You mentioned Atlantic Canada. just we had there's we had coverage on Canadian gaming business in recent days about what's going on in in Atlantic Canada. New Brunswick has said official you know, has said sort of explicitly, we are exploring options for regulated online gambling. Currently, Atlantic Lottery Corporation is shared by the four Atlantic provinces as the government gaming operator, and that has the kind of monopoly on authorised online gambling. I think there is a recognition that that
Fernando Noodt (22:07.255)
Mm-hmm.
Tom Nightingale (22:20.817)
that system doesn't really work fully effectively. Like Atlantic lotteries say that they have thirty-five percent of their own market, which means that sixty two-thirds of, you know, online gambling activity in that region is on unregulated sites. That's not really workable, right? And this is one of the problem one of the main problems that Ontario and Alberta cited as a need to, you know, bring in people like DraftKings and VanJoule and BetMGM, give them licenses, make them play by your rules.
take tax money you know, take tax money off them. so it's not surprising to me that other provinces are looking at what Ontario and Alberta have done. With the caveat that it does bring problem gambling risks and stuff like that. You know, there's there is a balance. But in terms of, you know, revenue creation, curbing the unregulated market and bringing everything under control, it works, you know, really frankly. So I'm not surprised that other provinces are like the Atlantics are
A are looking at that and thinking maybe that works for us.
Fernando Noodt (23:21.783)
And you actually mentioned Quebec, where has mer it it has emerged recently as a as a potential next market for Canada after some politicians voiced their support for a private licensing model. So how significant is this shift in political thinking in Quebec and what makes it an especially interesting prospect in Canada?
Tom Nightingale (23:43.048)
Yeah, I think Quebec is a good place to finish. You know, there's so much going on in in in Canada right now. The Quebec one is really interesting. Paul Burns from the the Canadian Gaming Association, who we've already, you know, on the same panel at SPC Summit, he admitted that that came out of the blue was were his words as a real surprise. And it's partly because Quebec until now, the Quebec government has been very, very kind of protectionist of, you know, Lotto Quebec has the monopoly on online gambling. They have really, really, really in that province not, at a government level, not been open.
To changing that model. But we saw a massive change in the political landscape with the election. You know, the ruling party were pretty much wiped out, no seat, you know, lost all their seats. Parti Québecois now won the election and will make up a minor will make up a minority government. Both they and the Liberal Party, who are the official opposition, have expressed support for regulated eye gaming, similar to New Brunswick, for the same reason. we need to curb this unregulated market.
Let's bring it all in-house. Let's take, let's take control over activity that is already happening, as was the case in Ontario and Alberta. and let's do it for the best of our province. Quebec is a bit, you know, at a high level, Quebec is a bit different because, you know, it's French first French language first. it's the second biggest province by population. So the op and there's a lot of, you know, a lot of unlicensed gambling does go on in Quebec. So the opportunity is there, but
'Cause of the political makeup, 'cause of the French language thing, various reasons, like I think it would be a l we heard this on the panel, I think it'd be a a a a much bigger task than, you know, Alberta basically didn't quite copy and paste Alberta, but took a lot took a lot from Ontario, sorry, Alberta when it opened. Quebec, I think, would do things quite differently. and then just the French language thing, right? You can't just sort of pretty much
Fernando Noodt (25:13.053)
Okay.
Tom Nightingale (25:37.949)
copy and paste everything over as an operator from Ontario to Alberta, you know, they did that. You can't really do that with Quebec. You're gonna have to have French language specialists, as the local, you know, provincial and local rules and make political makeup are much, much different. so I wouldn't expect anything to happen soon in Quebec, but frank the what's the the reason it's made headlines is that the party who are now in power have said they support this idea. That was unimaginable.
Fernando Noodt (25:43.117)
Okay.
Tom Nightingale (26:05.115)
under the previous government, really, before the election. So such a big political change has really sort of I would say opened the door to what might come down the road, but we're we're still a ways away from anything actually happening there for sure.
Fernando Noodt (26:18.849)
We'll have to hashtag wait and see what happens in Canada, whether it's Quebec, Atlantic Canada, British Columbia. We'll see where the next iGaming com commercial iGaming market opens. But there's quite a few storylines to follow in in Canada, so make sure you are subscribed to Canadian Gaming Businesses newsletter. And of course follow iGaming Daily on social media and subscribe on your preferred podcasting platform. We'll keep an eye on both the US and
and Canada and we have a very insightful talk here with Tom. So Tom, thank you very much. Thank you very much Donald for producing this episode. I'm Fernando Not and to our listeners out there we'll see you in the next one. Goodbye.