AI-Powered Sports Betting Faces Calls for Safety Rules (Full Transcript)

[00:00:00] Speaker 1: Microbetting, same game parlays, make no mistake about it, are machine versus human. That's what this is. I'm not saying whether it's good or bad, but I am saying is the public has a right to understand what they're doing. And right now they don't.

[00:00:18] Speaker 2: Welcome back to Terms of Service. I'm CNN tech reporter Claire Duffy. With the Super Bowl coming up, I wanted to talk about a tech trend that has absolutely exploded in the past few years. Gambling on sports with apps like FanDuel and DraftKings. This has become a massive business. Americans bet around $150 billion in total on sports in 2024. And that means for individual bettors, there can be serious money on the line, too. I wanted to dig into how these apps work and their impact on users. So a couple of weeks ago, I invited Harry Levant into the studio. Harry is a gambling counselor, and he serves as director of gambling policy with the Public Health Advocacy Institute at Northeastern University, where he's working to bring public health reform and more regulation to the gambling industry. And look, I think Harry would acknowledge this, too. We should say that the sports betting industry is not his number one fan. They often disagree with his portrayals of their products. The Sports Betting Alliance, which represents five of the major sports book companies, says that it has more than 200 employees dedicated to responsible gaming and that 93 percent of users report that responsible gaming tools help to manage their activity. When I reached out to the companies for comment on this episode, a FanDuel spokesperson told me the company, quote, aims to set the standard for consumer protection by consistently surfacing clear, actionable information that helps customers manage their play. They pointed to features on the app such as MySpent, a dashboard that allows users to track their spending and manage their budgets, and Realtime Check-In, which prompts users to reconsider if they try to deposit more money than they usually do. DraftKings and BetMGM did not comment for this episode. Also, a note for our listeners, this episode includes brief mentions of suicide. If you or a loved one is struggling, we've included links to resources in our show notes down below. Now, on to my conversation with Harry. Harry, thank you for being here.

[00:02:20] Speaker 1: Thanks for asking me. It's my pleasure.

[00:02:22] Speaker 2: You are a gambling counselor, an advocate, a researcher, and this work is born out of personal experience, right? Talk to me a little bit about how you got introduced to sports betting and when you realized it had become problematic for you.

[00:02:36] Speaker 1: Again, thanks for inviting me. You did list a number of the titles that I wear, but there's one you left off, so let's put it out there. I am also a gambling addict in recovery. I made my last bet on April 27th, 2014, and that night nearly took my own life in the grips of that gambling addiction. The grips of my gambling addiction, I hurt a lot of people, friends, family. I had been a practicing attorney in Philadelphia for 23 years, 22 of them I remember fondly. The last year just obliterated by my gambling addiction. I made my first bet, it was a sports bet, when I was 15 years old.

[00:03:11] Speaker 2: Wow.

[00:03:12] Speaker 1: Obviously, I made my last bet when I was 50 years old in 2014. In February of 2015, I stood in a courtroom in Philadelphia. Not unusual, I'd been a lawyer for more than two decades, but this was a very different day. I was being sentenced for the financial crimes that I committed in the grips of my gambling addiction. On that day, in the presence of the court that I had betrayed, the clients whose trust I had violated, and in front of my own kids with tears going down their faces, I made a very solemn promise and vow that if I could get well, I would dedicate wherever my future took me to helping prevent, prevent being the operative word, other people from suffering similar fates to gambling addiction. Little did I know in 2015 that in 2026, we'd be looking at everyone's cell phone being a full-fledged sports book, and in many states, now a gambling casino, so it's very challenging work. It led me in 2018 back to school to become a therapist, and then in 2021, I was fortunate to be accepted into a doctorate program at Northeastern, where I earned a doctorate in public policy, and my research focuses on how we're going to make this safer, because it is completely out of control right now.

[00:04:22] Speaker 2: So it's interesting that you went back to school in 2018. In 2018, the Supreme Court also struck down the federal ban on sports gambling. Since then, 39 states, the District of Columbia, have legalized it. How have we seen the landscape of sports gambling change in just the last few years?

[00:04:41] Speaker 1: Very interestingly, in that opinion called Murphy versus the NCAA, Murphy being the then governor of New Jersey, Phil Murphy, the Supreme Court specifically notes that Congress remains free to regulate this, but if they don't, every state can do what they want. So now you're correct, 39 states, District of Columbia, Territory of Puerto Rico, but more than that, the product has fundamentally changed since 2021. In 2021, the NFL led the way by coming up with a business model to sell its real-time data to the gambling industry. This launched something called micro-betting and same-game parlays and prop bets at levels we had never seen before. That's what is hurting people. It's a fundamentally different and inherently dangerous new form of gambling product.

[00:05:31] Speaker 2: And we've also seen the emergence of all of these apps, as you said, where people can bet from their couches. How has that changed sort of the prevalence of using and participating in sports betting because people don't have to go to a casino to do this?

[00:05:46] Speaker 1: It's been completely normalized, is the word that I use. And understand that we have known as a matter of science that gambling is an addictive product, just like heroin and opioids and tobacco and alcohol and cocaine. But with every other addictive product, think about them for a minute. People watching this podcast, every other addictive product, government seeks to regulate the advertising, the distribution, the promotion, the speed of consumption. Makes sense to keep people safe. As you point out with your question, with online gambling and apps immediately accessible on your phone, state governments have become a partner in speeding this up. So what we have, we have normalized and now we deliver a known addictive product at light speed in partnership between the gambling industry, the sports leagues, media and the tech companies. And people have in their palms of their hand this addictive product. It's quite different and it's quite dangerous.

[00:06:44] Speaker 2: Do we have any idea how common addiction is in this sports betting world?

[00:06:49] Speaker 1: That's probably the single most asked question that I hear. I respectfully want to rephrase it a little bit because from a public health perspective, we don't want to wait until people are addicted. Addiction is a diagnosis in DSM. What we want to do is prevent harm. So respectfully, I believe the question is how much harm is taking place. And we don't have studies on that yet because this product is so new and still developing. But what we do know, both from heavily peer-reviewed research from Europe and research that's finding its way here, that for every person who struggles with a gambling issue, eight to ten other people in their orbit are also suffering gambling-related harm. So it's not how many people are addicted, it's how much harm is taking place in the country. And it's a much, much bigger number than the gambling industry suggests. What's the harm look like? So the great misnomer here is that gambling addiction only causes financial harm. Financial harm is just a tip of the iceberg that you see sticking out of the water. Harm related to gambling disorder is anxiety, depression, co-occurring substance disorder, housing security, loss of job, loss of career, loss of educational opportunities, significant rise in domestic violence, bankruptcy filings, foreclosures, obviously loss of finances, and worst of all, I saved this for last for a reason. The correlation between gambling addiction and suicidal ideation is greater than any other addiction. One out of every two people who struggle with gambling will contemplate suicide. One out of every five will make an attempt.

[00:08:32] Speaker 2: Wow.

[00:08:33] Speaker 1: It's very scary.

[00:08:34] Speaker 2: Yeah, that is very scary. I want to sort of back up a little bit and talk about how this works. I think a lot of people have at least seen the ads for gambling apps because they are everywhere. There's advertising for gambling apps. You cannot see it. Amazing. For people who aren't very familiar, give us an overview of the kinds of things that we see people betting on, and you touched on this because it's not as simple as, I think this team is going to win the game over that team, right?

[00:09:00] Speaker 1: Great question. Great point. This is no longer our grandparents' sports gambling, where traditional sports gambling, you would bet on the winner and loser of the game. You might bet on the total points in the game. Those bets would take three hours to decide. Interestingly, there's a great video clip of Governor Murphy making the very first sports bets in New Jersey in June of 2018, and Governor Murphy bet on the New Jersey Devils to win the Stanley Cup in 2019. It was a bet that would take 11 months to decide. By the way, he lost. Now betting takes place every 11 seconds or faster. So this is what's called micro betting. It's betting on, for example, the length of the next play in the football game, the speed of every pitch, the result of every single shot in a basketball game, the speed and accuracy of every serve in a tennis match, constant repetitive action, combined with what they call same game, or now in football, they call them same drive parlays. How many things can you combine into one bet as quickly as possible? And again, this is where the real danger comes in, because we're talking about an addictive product that has been normalized. The idea of betting on the speed of every pitch in a baseball game, the human brain's not built for that kind of consumption of an addictive product, but that's what we have. And there's starting to be more and more of us on the public health side raising awareness. And I'm not here to give a gambling education. I could do that. But for everyone to understand, a same game parlay or same drive parlay, you combine different things you want to wager on into one bet, but everything that you predict has to happen. It creates the illusion of you can bet a little and win a lot.

[00:10:50] Speaker 2: And talk a little bit about that, how the apps know what the odds are. How do they determine how likely it is that you're going to win, how much you could win?

[00:11:01] Speaker 1: Great question. Actually, what they're determining is how big an edge they want to keep for themselves. But all of this, when we're dealing with micro-betting and same game parlays, is done with the use of artificial intelligence. No longer do we have a bunch of people in a smoke-filled room setting point spreads. Micro-betting is constant, nonstop. So what the AI algorithms do, they're actually, in a way, capitalizing on and trying to predict human behavior. How much do we have to offer people to get them to take this wager and keep a significant cut for ourselves? It's all AI generated. Micro-betting, same game parlays, make no mistake about it, are machine versus human. That's what this is. I'm not saying whether it's good or bad, but I am saying is the public has a right to understand what they're doing. And right now, they don't. DraftKings, about a year and a half ago, bought itself a company called SimpleBet. It's an AI company that takes sports data and turns it quickly into nonstop gambling opportunities. DraftKings bought them. They own that technology. The NFL, I am not singling out the NFL. This just happens to be Super Bowl time, and it's the sport most commonly linked with gambling. I don't get very many Christmas cards from Commissioner Goodell, but so be it. The NFL sells its data in real time to a company called Genius Sports. Genius Sports turns that data around, sells it to the gambling industry. This is done with every sport you can think of, from auto racing to golf, all the major sports. In the aggregate, we believe that the gambling industry spends billions of dollars a year just to acquire the data. This enriches the leagues. Governor Charlie Baker, head of the NCAA, recently sold NCAA data to Genius Sports. So the gambling companies are spending, in the aggregate, billions of dollars. And herein lies the problem. They're not selling any products at the marketplace. After spending billions of dollars just to acquire data, and billions more for the AI to convert the data to gambling opportunities, they have only one way to get that money back. And that is to get the public to gamble more often on more highly addictive and highly profitable products, and keep the public in constant action. That's the design model. And I hope to educate athletes because I fundamentally believe that players, when they understand what's happening in communities, in fan base, will pull back and say, wait a minute. We don't want our data harming people like this. Let's slow this thing down. Let's get this thing fixed. People can enjoy it, DraftKings can make money, but not at the expense of the harm they're presently causing. That's the public health model.

[00:14:08] Speaker 2: What are some of the features of these platforms that facilitate that, getting people to use them more often?

[00:14:15] Speaker 1: If I'm doing my time conversion right, I think there's Australian Open tennis matches taking place right now as we record this. I could take my phone out of my coat, we could lay it right here and you could see it. Absolutely correct. Wow. The odds open up instantly with every single serve in those tennis matches. And it's true with every sport. The action never stops. One of my patients likes to say, I could wake up at 3.30 in the morning. There was always something to bet on somewhere. That's the business model.

[00:14:45] Speaker 2: We've seen the sports betting apps roll out responsible gaming tools, deposit limits, reminders for users to check in how much they're spending, budgeting tools. They also will say, look, we run PSA ads about gambling addiction resources. What is your take on that? Are those measures, it sounds like they're not sufficient given that your work continues.

[00:15:05] Speaker 1: They're an incorrect, fundamentally wrong and ethically flawed approach. Let's take a quick look at what responsible gaming, which is what the gambling industry has a term they coined in the early 90s. At its core, responsible gaming puts the entire onus on the individual. And then the industry says, well, for those poor, unfortunate few, because they suggest it's less than 1%, for those poor, unfortunate few, we in the industry will put up money to pay for their treatment. It's the moral equivalent of big tobacco saying, let us do whatever we want with our cigarettes, market them any way we like, as long as we pay for chemotherapy and hospice. Responsible gaming is an ethically flawed model that has no place in the world of online sports gambling. Public health approach says, wait a minute, here's what we're going to do, because responsible gaming pulls people out of a river after they're drowning. Public health says, let's regulate with appropriate guardrails. Let's make this product safer and prevent the harm before it occurs. Let's put the onus on government and the industry by regulating the product and the speed of the product, rather than, okay, well, you can always self-exclude. I have the privilege of working with a lot of patients and a lot more who contact me. People don't walk into a gambling counselor, they crawl into a gambling counselor. By the time you use a self-exclusion tool, the harm that you and your family have suffered is often irreparable. That's the RG model.

[00:16:46] Speaker 2: What safety measures should be in place here?

[00:16:49] Speaker 1: I am very fortunate and privileged to, along with my colleagues, Professor Richard Danard and Professor Mark Gottlieb at PHAI at Northeastern, we're working directly with Senator Richard Blumenthal and Congressman Paul Tonko from New York, Senator Blumenthal from Connecticut, and the Safe Bet Act, which we helped write, is pending in both the Senate and the House. The Safe Bet Act does not outlaw sports gambling in any way at all. Rather, what it does is it creates minimum federal safety standards. It says, states, you want to make it safer? Go ahead and make it safer. But here are the minimum standards. And if I may, I'll tell you just a couple of things that are in that act. One is something called affordability checks. Affordability checks is not the government telling you how to spend your money. Government's not putting its hand in your pocket. It's simply saying to the gambling operators, look, if you're going to take more than $1,000 of action in a night or $10,000 in a month, you have to run an affordability check, just like a bank would if it were going to loan that amount of money. Why? I recently had to hospitalize a 21-year-old man who had lost over $70,000 to one of the gambling companies in three months after his 21st birthday. This same person, with suicidal ideation, had gambled over $70,000, lost it, and was working 20 hours a week, making $8.50 an hour. It's $200 a week. Why should gambling companies be permitted to take $71,000 from somebody who makes $200 a week? College students with no jobs. We need to have affordability checks. That's one. Number two, we need to limit the number of deposits a person can make in a day. What gets people in trouble is constantly depositing, chasing their losses. Number three, Safe Bet Act has what's called a whistle-to-whistle ban. Bet all you want before a game starts. But this in-game micro-betting, where the odds are constantly changing, the chasing of action, that's not for recreational purposes. That's designed for people to get hooked. I'm going to severely restrict the use of artificial intelligence. The public needs to understand that this is machine versus man. That needs to be regulated, and true odds need to be disclosed. You asked earlier. The Safe Bet Act would say, every time a bet is placed, a parlay is placed. DraftKings, FanDuel, MGM, they've calculated what the odds against winning are. Safe Bet Act says you have to disclose those odds to the person, to the gambler, and if the gambler then wants to back out of the bet, they have the right to do so. A ban on credit card deposits. Why should people be permitted to gamble money they're borrowing at 30%? These are just some of the protections, and I'm very pleased to say that in Massachusetts, Senator John Keenan has introduced at the state level a bill called the Better Health Act to bring these regulations to Massachusetts, and in New Jersey, Senator Paul Moriarty and Assemblyman Dan Hutchinson have introduced a bill to ban in-game micro-betting. There's traction coming. This is what you see in a public health movement. It's here, and we're not going anywhere. We're going to get this regulated to keep people safe.

[00:20:10] Speaker 2: I'm curious, part of the motivation for states in terms of legalizing this is the tax revenue from the gambling companies. Many of the states say they make a lot of money from this. What is your thought on the cost-benefit analysis for states there?

[00:20:29] Speaker 1: Two-fold answer. I've said, continue to say I'm in favor of legalization, so I'm not going to get into the economic debate. That's for an economist to have, other than to point out, you used a word that I won't use. I'll use it one time so we're clear. You used the word revenue. I consider revenue to be an inappropriate term, so I'm going to call it what it really is. These are public losses. What the gambling industry calls revenue and what the state calls ... Darn, I used the word again ... are actually losses of the public. The states are taking a percentage of that money, but let's be clear. Every dollar lost is a dollar that can't be spent elsewhere in the economy of that state. I am very empathetic to elected officials at the state level who have to balance budgets in extraordinarily challenging times. I understand the need to do that, but we shouldn't be doing it on an addictive product. Should it be taxed? Absolutely. Let's get it regulated first and figure out what the appropriate tax rate is, because what we're going to start seeing is gambling companies finding ways to pass the increased tax back to the public, because again, all that money comes from only one place, so what you call rur, I call what it really is, the losses of the public. Again, I'm for it. It would take an economist to tell you whether it's really profiting anyone. I suspect that it may not be.

[00:21:58] Speaker 2: We've seen some very high-profile sports betting scandals in recent years where athletes and coaches have been penalized, in some cases charged criminally for gambling or working with people betting on their own sports. Do you think that we'll continue to see more of this if the industry continues to be regulated at the level it currently is?

[00:22:21] Speaker 1: You mean not properly regulated is what I would say. You said over the last few years, actually, we've seen it within the last 10 days, a huge college betting scandal. First, every person who's been charged is innocent until proven guilty. Second, are we going to see more? Without question. It's already happening everywhere. These are just the ones that have been caught. The gambling industry and the sports leagues say, well, we're the ones policing. No. What's happening is because this has been so normalized, and in the most recent scandals, it's all micro-betting. These are individual events within games and contests that you weren't betting on before. This is all brand new. It's already happening everywhere. These are just the ones that have been brought to the public's attention. Again, everyone's charge is innocent until proven guilty, but a lot of these people who got caught up in the most recent NCAA one, these are effectively kids. These are people who were at their prom in June, and in the fall, in October, they're on basketball courts or football fields competing where people are spending hundreds of millions of dollars gambling on them.

[00:23:33] Speaker 2: Really? Zooming out a little bit, I just wonder how you think about how this is changing, how people consume sports, the culture around sports, which has been such a big part of American life.

[00:23:46] Speaker 1: Sports historically have belonged to the American people, passed and enjoyed by grandparents to parents, to children, to siblings, are part of our culture. That's no longer the case. Sports have become the equivalent of a nonstop slot machine. Sports have sold their collective souls for the billions of dollars of revenue just by selling their data, and what it has resulted in is a normalization. I'll give you, to me, the most glaring example. I recently moved to Boston to a Red Sox game this summer, Fenway Park. Is there anything more iconic than the big green monster, the left field wall of Fenway Park that now has on it a Giraffe Kings and Bet MGM logo? You take your nine-year-old to Fenway Park for their first baseball experience, the first thing they're going to see on that wall is MGM and Giraffe Kings. We saw this before with tobacco.

[00:24:49] Speaker 2: For people listening, are there red flags that they should look out for in terms of identifying if somebody in their life is struggling with a gambling addiction? Are there commonalities that you see among the patients that you treat?

[00:25:03] Speaker 1: First, we mentioned earlier the risk of suicide, and I think it's important to anyone who may be contemplating self-harm, pick up the phone, go on your phone, dial 988, pound 988, National Suicide Prevention. To anyone who's out there struggling, help is available. The three most important words you can ever say are, I need help. For family members and friends of someone you think is struggling, I have a couple of things to suggest. The first is, we have learned in mental health over the years, have a discussion. Go to your loved one, go to your partner, go to your friend, ask them if they are struggling. I can't guarantee you each person will be honest, but I will tell you, no one wants to struggle in silence. Open a dialogue. If you're concerned, what are you watching for? Constant preoccupation on an electronic device while a game is going on. Bills that fall behind. Money that's being withdrawn from accounts, retirement accounts, college accounts, places you would never think to be taking money, liquidating a 401k. Becoming overly excited by individual plays. And a person who only wants to talk about wins and never wants to talk about losses. These are some of the red flag warning signs. One of the worst problems and one of the reasons that we need a prevention first approach, unlike alcohol and drugs, there are no visible manifestations. I can't drink $1,000 of vodka in a night. I will fall down or worse. You can wager $1,000 with one click of your finger. So a dialogue with family members. And if there's a great reluctance, if you see someone gaslighting, putting it back on you, how dare you ask me about this? That's another warning sign. People who are enjoying it for entertainment are happy to talk about it. So those are a few that people can look for.

[00:27:02] Speaker 2: What is your therapeutic approach when patients come to you?

[00:27:06] Speaker 1: First, I very much believe in the power of group therapy for gambling disorder. Gambling is a very isolating thing. And the responsible gaming model makes it worse. Because it suggests, well, all your friends are doing it, all your family, everyone, what's wrong with them?

[00:27:24] Speaker 2: There's these tools right here. You should be able to use them.

[00:27:25] Speaker 1: So everyone comes in. What's wrong with me? So getting people together in a small group is very efficacious. We work to take a nightmare and turn it into recovery because recovery is not a destination. Recovery is a journey. You live it every day. And when it can become meaningful to you, now all of a sudden, it's a fair fight again.

[00:27:46] Speaker 2: Yeah. Well, Harry, thank you so much. I really appreciate your time. And I think this is such an important conversation. So I'm grateful.

[00:27:52] Speaker 1: I'm at your disposal at any time. I thank you. And I thank CNN for bringing attention to this.