Loss Predictions Shaped DraftKings’ Betting Promotions
A New York Times investigation says DraftKings promotions were steered to customers predicted to lose more, while safeguards for at-risk bettors stalled. The post Loss Predictions Shaped DraftKings’ Betting Promotions appeared first on ReadWrite .
In 2023, DraftKings developed a machine-learning model that analyzed customer betting records to determine which gamblers were more likely to engage with promotions by betting – and losing – more, according to a New York Times investigation published on September 19. This practice, which drew on internal documents and insights from dozens of former DraftKings employees, raised concerns among some staff about the potential harm to problem gamblers.
The model worked by assigning each customer a score based on their betting habits, with higher scores indicating a greater predicted loss for every promotional offer sent to them. DraftKings data analyst Jayden Butts was tasked with testing the model during his first year on the job, with the goal of prioritizing free bets and bonuses for customers who were deemed most likely to lose money.
The underlying logic of the model was akin to finding the best financial investment, with problem gamblers potentially qualifying due to their propensity to lose. Six former employees claimed that DraftKings has since continued to fine-tune its data science techniques to direct promotions towards these high-risk gamblers in order to encourage even more betting.
However, four other former employees stated that DraftKings had blocked or dismissed an attempt to use a similar technology to predict which customers might be developing a gambling problem based on their betting activity. The issue of predictive data science in the gambling industry is a growing concern, as companies strive to maximize promotional returns while simultaneously avoiding detection of at-risk bettors.
This tension between optimizing promotions and flagging problem gamblers has been a central focus of the investigation. The story highlights the broader tension in the industry, with congressional pressure on FanDuel's VIP program and calls from the MLB players' union to ban personalized sportsbook marketing. As a result, the investigation concludes by questioning whether regulators will take action against DraftKings' own promotional algorithms, particularly in light of the company's recent revenue decline.
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