Casinos began to collect and analyze large amounts of data about their patrons before internet corporations became famous for consumer monitoring, largely because gaming was one of the few industries before the internet became mainstream whose customers interacted with a computer for a significant portion of their time in the establishment. As one trade journalist noted in 1990, gambling machines have been transformed from stand-alone games into networked “electronic surveillance devices.” Approximately 70% of gamblers use a loyalty card, which allows the casino to track their action with great specificity. Loyalty cards record the value and result of every bet made by a gambler, the when she takes breaks from the machine, and what she eats and drinks while playing and on break. The amount of data collected through loyalty programs exceeds the capability of any human to comprehend, and so, like their counterparts in technology, casinos us behavioral analytic software to analyze the data of their patrons. One company that stores and analyses user data for casinos boasts that casinos gain nearly 20% additional revenue within eight months of using its software.

All gambling games are zero-sum. Any increase in revenue for the casino is a decrease in the money its patrons have. A supporter of casinos could argue that while gambling transactions are zero-sum in terms of money, they are positive sum because people receive entertainment from the experience of gambling. While this is true of many casual players, repeat players do not play for entertainment. Natasha Dow Schüll, whose book Addiction by Design served as the primary inspiration for this essay, has found in her ethnographic research that machine gambling addicts play in order to enter the “machine zone,” a “trancelike state that ‘distracts from internal and external issues’ such as anxiety, depression and boredom.” For repeat slot machine players, the absorbing experience of play is an end in itself—the behavior is “autotelic,” but unlike many forms of autotelic activity, such as enjoying friendship or achieving athletic excellence, the autotelic behavior of machine gambling immiserates its participants.

Many if not most of these people who gamble in order to enter the machine zone cannot afford to lose the money they are putting into slot machines, and the information that is being collected about them through loyalty programs is used against them. Rates of gambling addiction have soared since the spread of slot machines, and this is not by accident. Gambling addiction is not the trait of an individual, but rather the product of the addict and the gambling apparatus. 96% female video poker addicts and 80% of male video poker addicts only play video poker and find no particular attraction in other forms of gambling. Indeed, Slot machines, unlike several other forms of casino gambling, have been molded with the aid of behavioral analytics to maximize profit of casinos, and the creation of gambling addicts is usually the most profitable strategy for casinos. The philosophy of contemporary slot machine design is “player-centrism.” In the words of one designer, “The more you customize your machines to fit the player, the more they play to extinction; it translates into a dramatic increase in revenue.” The massive amounts of data collected about the preferences of customers is combined with operant conditioning to create an environment in which otherwise normally functioning people can easily become addicted to slot machines.

The use of behavioral analytics by casinos to increase revenues suggests the malicious nature of directed advertising by retailers. Not every transaction entered into by two agents is mutually beneficial and the increase in the number of transactions as a result of “better” advertising does not necessarily increase social welfare. When someone responds to the directed marketing of Amazon and buys with one click, she often engaged in a similar sort autotelic and self-destructive behavior as the machine gambler but of a lesser degree. The slot machine designer and the market both want to satiate desires before as they crop up and before a person has the opportunity to engage in rational thought about the transaction. Directed advertisements of Amazon create an irrational impulse to buy and the retailers have the virtual infrastructure in place to allow consumers to act on those impulses before they are able to think rationally about whether they would prefer x dollars or y consumer product. This results in shopping being more about the satisfaction of impulses than the sale of goods, and in the end the shopper is left with something of little value, just as the gambler is left with nothing of value after mathematical necessity has extinguished his gambling budget.

-- AlexanderGerten - 01 Feb 2016