NYT claims DraftKings used AI to target consumers likely to spend more

• The New York Times took on DraftKings, suggesting that the company would target consumers likely to lose more money and flood them with promotional incentives
• The allegations have been rebuffed by DraftKings, with the company arguing that it remains committed to minimizing harm
• DraftKings has been known to develop machine-learning models that can flag risky behavior and lead to early intervention

The New York Times has published an expose in which it claims that DraftKings, one of America’s largest sports betting and casino companies, has leveraged the power of AI to determine which players should receive promotional incentives.

NYT targets DraftKings in new reporting of company's consumer practices

While this should not be an issue by itself, the reporting claims that DraftKings created a term known as "elasticity" to try to gauge how much more a gambler is likely to spend. DraftKings data analyst Jayden Butts argued that DraftKings was trying to figure out how to best spend its promotional budget.

In other words, the company was looking to target players who are more likely to spend overall. The New York Times revealed that six former employees also regretted having taken part in a technology that allowed DraftKings to target its promotions.

A DraftKings employee told the New York Post that it was "as predatory as it sounds," and that matters simply boiled down to: "if you lose more, we give you more, so you keep playing more." DraftKings argued that the entire report was based on a false premise that it portrayed routine promotional reinvestment practices that were common across consumer-facing industries as scandalous.

"And it asks readers to accept, on the word of a few former employees, that DraftKings should not have evolved our development efforts from an unvalidated, early-stage data model to a regulator-informed, evidence-based responsible engagement system," a DraftKings spokesperson said, commenting on the report.

Various employees comment on internal practices and developments

The representative further argued that DraftKings has invested heavily in ensuring that it leverages responsible engagement as a linchpin of its business operational model. The New York Times was able to find and contact individual gamblers who attested that they were "flooded" with promotional incentives, including Bryan Biehl.

DraftKings did not return a request for commentary on the Biehl story to the New York Times. However, other employees, such as former DraftKings data scientist Nestor Hernandez, attested that the company was indeed building the tools to predict harm and intervene early.

Hernandez told the publication that the machine-learning model would analyze deposits, withdrawals, and efforts to chase losses to alert the company to risky behavior and act accordingly. However, this project may have been shut down since Hernandez worked at the company, employees cited by the New York Times said.

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