Will U.S. Casinos Adopt an Algorithm That Could Identify Problem Gamblers?

We're not holding our breath.

Harvard researchers have come up with an algorithm that could identify problem gamblers. But will we see this being used to help gamblers who frequent area casinos anytime soon? I doubt it, not when casinos make so much money off addicts.

On Saturday, the Wall Street Journal reported on new tool that could flag possible problem gamblers through data obtained by a casino loyalty card. Using what Sarah Nelson, a Harvard Medical School professor, calls the “Sports Bettor Algorithm 1.1,” researchers can identify who might have a gambling problem by looking at “risky betting patterns such as intensive play over long periods of time, significant shifts in behavior or chasing losses — betting more heavily in an attempt to recoup prior losses,” according to the WSJ. The algorithm has already been tested on data provided by government-run casinos outside the U.S.

But here in the good ol’ US of A? Casino operators are passing, and trying to discredit the research. “Is it McDonald’s obligation to decide you have a problem because you have a tendency to eat high-calorie lunches?” asked Gary Loveman, chief executive at Caesars Entertainment Corp. and a guy who made his name in the industry by pioneering casino data mining.

Of course this isn’t surprising. Casinos make money off the desperate. It’s easy to laugh off an Iowa housewife who sued Caesars Entertainment for her gambling losses, but as outlined in This American Life, Caesars — and, really, any casino — runs a sophisticated marketing operation that identifies gamblers based on how much they lose, and then plies them with perks to keep them coming back — perks like “first-class plane tickets or trips on charter planes, free meals, a five-bedroom suite at the Palazzo in Vegas for her and her family and her friends with a hot tub off every bedroom. Limos, free Champagne, clothing, special golf trips for her husband.” The more she lost, the more they gave (and she lost the lawsuit, too).

I’ve written about the Jersey Shore since 2007. I couldn’t leave Atlantic City out of my work entirely, but I could never bring myself to discuss things like who had the best poker room or the loosest slots, so I tried to focus on attractions for non-gamblers like myself, things like restaurants and spas and nightclubs.

But even as I tried to see Atlantic City as a sexy, luxurious beach town for anyone over 21 with its Jimmy Buffett concerts and $50 cheeseburgers and outrageous suites that could sleep my entire extended family, I couldn’t shake the feeling that none of it was really for me, but instead perks for gamblers who, if they spent enough money, had all these things thrown at them to make sure they kept spending.

Nowhere is this more obvious than at Revel, which went from a luxury resort that just so happened to have a casino to just another smoke-filled slot parlor. Revel doesn’t even have a poker room anymore. Slots just make more money.

Casinos have been touted as the answer to economic despair, and that argument is being made for adding another one in Philadelphia. But look at what’s happening in Pennsylvania: In July, nine of Pennsylvania’s 11 casinos posted slot revenue losses. Harrah’s in Chester — which was supposed to bring money! and jobs! and prosperity! to a blighted city! — saw a 14.6 percent dip. In 2012, Harrah’s took “Chester” out of the name and replaced it with “Philadelphia,” and unless it’s really well hidden, I haven’t seen any of that promised additional economic growth along Delaware Avenue since Sugar House landed. And most damning, Atlantic City gaming revenue has fallen off a cliff, and the city itself is still mired in crime and poverty, 35 years after the first casino opened.

Then there’s where casino revenues come from: the pockets of people who walk into casinos, or are driven there by limo as was the case for Kim McGuiness, who was profiled by the WSJ. She says she was given a casino host and a $100,000 credit limit when she started gambling more after the death of her husband. She lost more than $1 million. Gambling addicts are also more at risk for, obviously, bankruptcy and poverty, but also depression, additional substance abuse and suicide, and families of gambling addicts are more likely to suffer domestic violence and child abuse. Who pays for that? You and me, in increased costs in social services.

It wouldn’t be hard for casinos to use this new formula to try to ID gambling addicts — just analyze the same data they already collect through customer loyalty cards that they use to determine who gets the free flights and limousine rides. Then they wouldn’t have to sue customers for gambling losses, like they are McGuiness.

The National Council on Problem Gambling estimates that six to eight million adults in the U.S. are problem gamblers and that two million are pathological gamblers. Yes, this is a free country, you can do just about whatever you want, and not everyone who steps into a casino is hooked. I certainly wasn’t, and I’ve been dozens of times.

But that doesn’t makes it okay for casinos to prey on those who show clear signs of gambling addiction, and then use that information to entice them to lose more.

So, casinos, how about at least testing out the algorithm? Even McDonald’s is required to tell us what’s in our hamburger, and they still sell more than 2.3 billion of those a year.