Excerpted from the WSJ …
Casinos have developed detailed behavioral profiles of many of their customers, based in part on information gathered though loyalty-card programs that can track slot-machine play and other-gambling activity.
The casinos use this information to tailor marketing offerings, particularly to the small minority who make up the bulk of their revenue base.
It’s called predictive analytics, and casinos have been on the leading edge.
Here’s the rub …
Studies have estimated that between 25% and 50% of casino revenue comes from problem gamblers … folks addicted to gambling.
An Australian study concluded that just 2.3% of loyalty-card holders at one gambling club produced 76% of holders’ slot-machine losses, and estimated that 41% of all slot-machine losses in Australia come from problem gamblers.
For casinos, that may be good … for the gambling addicts, it’s obviously bad.
Here’s a twist …
Researchers believe that the very data casinos used to customers ‘betting habits can be used as a tool to reduce the intractable problem of gambling addiction.
Algorithmic computer models can spot and warn people with high risk profiles similar to the way geneticists have invented tests to predict cancer risk
The new research essentially turns the industry’s own data, often used in connection with loyalty cards to identify and pamper the best customers, on its head.
The models vary, but in general they look for risky betting patterns such as intensive play over long periods, significant shifts in behavior, or chasing losses—betting more heavily in an attempt to recoup prior losses.
Depending on the system, flagged gamblers may be given education tools or a detailed analysis of their behavior, or in rare cases be barred from playing.
Casino executives so far have generally resisted the science … They argue no one can predict a gambling addiction, and that they can’t be held liable for such behavior in any case.
“Is it McDonald’s obligation to decide you have a problem because you have a tendency to eat high-calorie lunches? You could take this to ridiculous extremes.”
Yeah, but bar owners have been found partly at fault for serving visibly intoxicated patrons who cause drunken-driving accidents.