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Michael Dunne: I'm Michael Dunne. Right now, it's impossible to avoid campaign commercials anywhere. That's to be expected, given how close we are to the midterms. But at the same time, it's impossible 365 days a year to avoid ads for online sports gambling. In fact, I'd bet-pardon the pun-for every Oregon governor campaign ad right now, you'd see 20 ads for FanDuel or DraftKings, and that prevalence of advertising underscores these sites' prevalence in our lives, and unfortunately, their hyper prevalence in the lives of problem gamblers. Just how bad is it? Well, today on the show, you'll hear from a ProPublica reporter who intentionally pushed the envelope of problem gambler behavior and found out that big-time sports gambling sites are built to pour gasoline on that addiction fire. Jake Pearson, investigative reporter for ProPublica. Jake, thank you, thank you so much for coming on and talking with us.
Jake Pearson: Thanks for having me.
Dunne: I've enjoyed hearing and reading about your investigative report, even before we begin, I kind of want to ask it. It must have been a fun conversation to go to ProPublica and say, "Hey, can I have $22,000 that I'm pretty sure I'm going to lose gambling?”
Pearson: Listen, this was an all-timer pitch. It is not lost on me that this does not happen in a career once, let alone twice. So, I fully, fully recognize that this was unique, and that I am not going to push my luck ever again. I think this is as good as it gets.
Dunne: I would have loved to see your expense report. That would have been fun. But let's talk about the serious implications of this story. First of all, what was the inspiration? Why did you want to do this?
Pearson: You know, you cannot sort of function in society these days without getting hit over the head with a gambling ad for sports. And if you add in the rise of prediction markets, you're getting hit in the head twice. It is sort of all-consuming. It's ever present, and it is not just about sports anymore. It's totally culture. Both prediction markets and traditional online sports betting companies are big political players. They're spending money to influence our elections. The youth, the kids, you know, the target demo are fully on board. And so, for me, it felt like we had to at ProPublica, where our mission is to sort of write about powerful institutions and people. That this was an area of coverage that we hadn't sort of dipped our toes into, but that it was a conversation that was important for us to be part of. And the question was, what could we bring to the table? Was there a way that ProPublica and its brand of sort of investigative reporting in the public interest could illuminate the conversation, could bring to the fore the issues of public interest in a way that sort of advanced things and added sort of value in that in that dialog?
Dunne: Yeah. So, tell our audience how did you set this up? How did you bring us behind the curtain and kind of you know show us how you began investigating this?
Pearson: My pitch was sort of simple, but you know at the core of the online gambling business model, which obviously is to make as much money as possible, right? The big players in the space are publicly traded companies with revenue growth targets and all the rest. But also, they say, and I think, believe that they have a duty to make sure that their customers do not become gambling addicts. And there is a tension in that dynamic. And so, I suggested to my bosses that we test the system that is in place, the sort of guardrails that the industry prescribes, which are called responsible gaming tools and safety nets. And I proposed, and somehow, they were convinced to let me sort of tap the brain trust powers of people much smarter than me-actual recovering addicts, professional sports betters, addiction specialists, academics, people who have more knowledge about how this world works-to sort of effectively guide me on what a problem gambler would look like to the companies based purely off the betting behavior, right? Because gambling addiction obviously infects your real life and manifests in troubling and concerning ways that I couldn't emulate and didn't try to. But what we could control was how our betting behavior and the patterns of our betting would present themselves to the companies, and what that would tell them about the type of customer we were.
Dunne: Okay, so the company didn't know who Jake Pearson was, but understood what kind of bets you were placing, how often, and perhaps even how silly or dangerous.
Pearson: Right, and so I mean, obviously, there's no hide the ball here. I mean, I use my name, my information. I disclosed that I was a reporter when they asked me my line of work. But yes, to your point, you know, these companies are kind of like tech companies in as much as they collect incredible amounts, reams and reams of data about their users, right, and so they know everything. They're knowing when we're playing, when we're scrolling on the app, what we're visiting, what we're looking at. Not unlike you know their counterparts in social media and you know tech companies’ writ large. So marrying sort of that that data tracking with the sort of telltale signs of problematic gambling behavior, we thought would be a way to sort of communicate to them that I was struggling in all different kinds of ways over the course of a 10-week journey, where I sort of put myself on this increasingly problematic trajectory.
Dunne: Okay, I'm thinking back to the famous documentary "Supersize Me," where Morgan Spurlock said every time he went to a McDonald's, they said, "Hey, would you like to supersize that?" He would. That was part of his strategy. Was part of your strategy like: "I'm gonna do all of the sort of problem gambling things that problem gamblers do?"
Pearson: Yeah, correct. So, for the first week of my betting, I was totally unremarkable. Right? I was a just for fun, 20 bucks here, 30 bucks there. I was just a you know I'm in New York. The Knicks were just starting the playoffs. You know the Yankees. My kid loves the Yankees, so I was just sort of building my profile of a New York super fan just for fun. And then on Game Three of the first round of the Knicks Hawks playoff series, I escalated. Right, I ratcheted things up by, for the first time, really engaging in what's called loss chasing, which is sort of what it sounds like. It is putting more money down after you've lost at increasingly long odds to basically try and recuperate what you've tanked, right? So instead of just going to bed and sleeping it off, you double down, and then when those bets don't pay out, you place even more bets, right? And then, of course, that's how you dig a deeper and deeper hole. So, I lost, just over the course of one evening, after the Knicks lost in that game three, I threw another $750 on the Cavs when they lost. It's late, the West Coast games were still going. I threw $500 on the Nuggets. They lost, so over the course of one evening, I'd lost $1,800 after being a you know $20 here, $30 there, better for a week. The very next day, I'm on a train to Penn Station to go to this conference at Northeastern Law on online gambling and sort of the reform movement, headed by sort of the most preeminent sort of gambling reform advocates and academics in in the country and elsewhere. During the closing remarks of that symposium, an email pops up in my inbox, and it's from DraftKings, and it's saying, "Congratulations, Jake! Welcome to the VIP showcase". In other words, the company had flagged me as a lucrative loser, right? And I was getting an invitation to sort of this exclusive subset of customers who are tracked as potential VIPs— people that they can offer exclusive bets and perks to because they have calculated we're going to be valuable to them over the long term.
Dunne: Wow, wow! Okay, I'm old enough to remember when gambling was something you had to go to a place to gamble-a sports book or a bookie or something like that is convenience really kind of the I don't know accelerant to this potential wildfire of online gambling is obviously there really aren't any I guess there still are sports books but let's face it I'm holding one right in my hand it's my phone.
Pearson: Yeah, so in the business they talk about latency, right? And so, what the phone and the apps have created is like no latency. There's no barrier to getting in the action and ripping as much as you want to rip. And you know, to your point. Brick and mortar casinos require you to get in your car, go explain your absence, right? That's not the case with a casino in your pocket, and there are certain types of bets that go even further. So, one of the bets that I was advised to really lean into, in which I availed myself of, are called micro bets, and so these are individual bets on specific actions in a game. So, like for example, what the next point is going to be in a tennis match, or what the next pitch is going to be at a baseball game, and you can and I did put like crazy sums on fast, fast action, and it is the most akin to a slot machine, right? And we know that slots are widely recognized as one of the most addictive forms of gambling, in large part because they set, they settle so quickly, right? A pitch is thrown, or reverse it. You place your bet, a pitch is thrown, you get your result. That's quick, quick action. It's sort of the fastest thing you can get to a slot machine on the app. And when I did those multiple times, but including once at a Yankee game that I went to with a friend, you know, I lost a lot. The next day, did a bunch of parlays. I lost a lot, and when I say a lot, like hundreds and hundreds of dollars, $6,7,8, $100. I got a sort of a pop-up warning from the company. This is a responsible gaming reminder. They seem to have noticed something about my betting pattern that prompted this notification, which I could dismiss away very easily, just sort of with a click or an I understand. Hours later, I got a promotion from DraftKings for micro betting, live pitch, live plate appearances at a baseball game. In other words, the very thing that I had done that prompted me to lose so quickly, and was hit with an RG reminder afterwards. For I was then, you know, hours later, getting a promotion to pursue more of those very bets, so it's sort of like a whiplash as a customer, right? Am I being, is this something that I should be careful of, or is this something that I should partake in?
Dunne: Wow, wow! So, you reached out to the companies. What did they tell you? What did they say about their process, about their intent, that sort of thing?
Pearson: Right. So, I reached out to both FanDuel and DraftKings. Most of my experiment was on DraftKings because I did not get VIP status at FanDuel, even though I sort of repeated the same sets of behaviors and patterns on both platforms. And in an interview with the chief responsible gaming officer at DraftKings, you know, she defended their responsible gaming program. She said that they are doing a lot of work to educate customers. They've trained all 5000-plus of their employees on responsible gaming. To them, it is an essential part of the business model, and that you know some of the instances that I brought up, she said, were not necessarily discordant. In other words, when I put myself on certain limits, you know, when I limited how much time I could spend on the app or how much I could deposit, and then a half hour later got promotions, you know, push alerts telling me about these promotions to bet. She said, you know, that there was nothing sort of wrong with that because betters who put themselves on limits should also get the same sort of promotions that other customers get. In other words, you shouldn't dis-incentivize a customer just because they've set a limit, right? So, in the view of the company, my experience and the prompts that I got was an example of the system working the way it was intended, and my takeaway from the experience was that the sort of user design and the promotions to keep going sort of far outweighed or overmatched the speed bumps that these sort of pop-up reminders play in the course of you know someone like me who's going off the deep end.
Dunne: I mean, obviously the government legalized it. Is there now talk about the government trying to rein this in? Is this being this something that's being talked about on Capitol Hill? Does it need to be talked at different state houses, kind of, what as far as you know, what is the status on maybe looking at something where the government steps in and says, okay, the companies are not necessarily ratcheting back the problem. Maybe we need to step in right?
Pearson: So part of the reason that we launched this experiment is that there is this sort of conversation, this debate that's bubbling up across the country in states like Colorado and Massachusetts, Ohio, New Jersey, elsewhere. That since the Supreme Court sort of paved the way for the mass legalization of sports betting in 2018. Have sort of come to reconcile with the aftermath, and it's both a lot of tax revenue, but a lot of costs. And the the issue is that there are 39 states and D.C. that have legalized sports betting, which means that there are you know about 40 different regulatory frameworks for legalized sports betting, and there is an entirely different framework for the prediction markets, which are blowing up as you and I talk here today. Right, there's a federal framework that has even fewer consumer protections baked into them, and so a lot of states are grappling with this. Right? Do we go too far. What should the limits be? And there is an even broader national conversation, although I think a lonely one for folks in the reform movement, which is like: should there be a one-size-fits-all? What should there should there be a baseline minimum standard? What should that look like? The debate is happening. The prospects for clarity, I think, remain dim.
Dunne: Okay. Do you have any numbers or contextualization about how big a problem this is becoming? Do we have any numbers about how many people are becoming problem gamblers online?
Pearson: Yeah, we have. You know, it would be better if we had better numbers. What we have are a lot of survey results and studies. So, for example, Sienna, the Sienna Research Institute, this year found that about a quarter of active sportsbook account holders said that they'd lost enough on a bet that they'd have trouble meeting their financial obligations, right? So, about a quarter, and we know that a lot of Americans, and especially dudes, have accounts. So, Sienna found that nearly a quarter of all Americans and half of men ages 18 to 49 say they have an active sportsbook account. We know generally from research that somewhere between one and 3% of gamblers have a problem, are problem gamblers, or can become problem gamblers. The number of gamblers that display problem tendencies is even higher. The math on that means that there are millions and millions of people out there who are either problem gamblers are displaying problem gambling tendencies, and we know that as an addiction, gambling comes with extra dangerous symptoms, including suicidality. Right, it is most associated with suicide out of all the addictions. It is a hidden addiction. The mounting stress of financial loss and you know concealing from loved ones plays a really dangerous role for folks. So, it would be better if we had more data. The federal government spends exactly $0 to study this, but we do know generally some of the facts, some of the some of the shape of the issue.
Dunne: Okay, you know, getting back to what the companies told you, this is probably a philosophical question, and so if it's too out there, tell me so. But you know, obviously, a lot of things in American society build on something that came before, and I'm thinking of alcohol companies. I mean, they market their product, and sure, at the end of commercials, it might say something like "Please drink responsibly." And these companies say, "Please gamble responsibly." But I mean, you know, I guess a cynic would say, "Well, if alcohol companies can sell as much beer as they want, you know, shouldn't these companies be allowed to, unfortunately, hook as many people into problem gambling as possible?" Is there a moral responsibility here when you know you're doing something that has you know I think most sentient people could realize yeah if you drink too much that's a problem if you gamble too much that's a problem as well?
Pearson: No, it's this is the space we live in, right? So, like we know that vice products, there are generally a small number of users who account for a large share of both consumption and problem, right? We know this about these things, but remember, you know, like Joe DiMaggio used to hawk cigarettes, right? Ronald Reagan used to be a pitchman for cigarettes. We don't allow that anymore. Sure, we know that there are social costs. So just because you yourself become an addict doesn't mean that the harm of your addiction of that addiction is contained to you, right? There are ripple effects that cost people emotional and societies fiscal prices to to to address this thing. So, look, alcohol ads have some rules and restrictions on them, right? You don't ever see somebody actually drinking the beer. I mean, reasonable people can disagree on whether or not that's effective, but we do put some limits in place, and we know in other countries that they put limits. Place on gambling, whether it's whistle to whistle, or even you know in the UK they used to be sponsors on on football, soccer player jerseys, right? Like that doesn't happen anymore. So we know that kids watch sports. We know that kids idolize sports heroes. There is a plausible public policy argument for considering that as a factor, so yeah, there is of course personal responsibility here, and I don't think anybody argues that there isn't. But there are large societal costs, and collective decision making and debate about those costs is what we traditionally do in this country.
Dunne: Yeah, Jake. My last question for you is: as I understand it, this experiment isn't over. You're, I think, ProPublica is kind of asking for people to volunteer who have online accounts to sort of share their data. Is that correct?
Pearson: Yeah, we would love it for folks who have been on the apps to visit us and upload your data. We've made it very easy. We're obviously collecting a lot, and anything we do will be rooted in sound science. But we are very interested in looking at trends, at looking in promotions, at looking at user activity, and for anybody out there who is interested in this topic or has thoughts, you know, all our contact information is easily gettable on the website ProPublica.org. Search for sports betting, and please do be in touch.
Dunne: I think it's a very important piece. You did, Jake Pearson, investigative reporter for ProPublica. Really appreciate your time today.
Pearson: Thanks for having me. This was fun.
Dunne: That's the show for today. All episodes of Oregon On The Record are available as a podcast at klcc.org. Monday on the show, you'll hear from a very young local entrepreneur who's created a nonprofit that builds cool and fun-looking mobility devices for young children in need of help who don't want to be confined to a scary and stigmatizing wheelchair. I'm Michael Dunne, host of Oregon On The Record. Thanks for listening.
