Betting on an algorithm – regulator maps AI’s rapid rise in gambling 

A key Australian online gambling regulator has detailed how artificial intelligence is being embedded across the wagering industry, providing a snapshot of the impact of technology on reshaping gambling services.

The Australian Communications and Media Authority says its review, titled AI and interactive gambling: sector developments report, was commissioned to examine how AI is used in online platforms accessed by Australians

It revealed how quickly technology is reshaping wagering services, concluding AI systems offer potential benefits such as identifying problem gambling and suspicious betting activity.

But the report also warns that the use of AI presents regulatory challenges and risks.

“While AI can be applied to support player safety, its commercial deployment may prioritise increased engagement and revenue generation over harm minimisation,” the report said.

“Stakeholders have raised concerns that, in practice, some applications of AI, such as promoting gambling, may intensify harmful gambling behaviours.”

Among the examples cited in its latest occasional paper is Sportsbet, which has introduced an AI-powered chatbot to resolve customer queries without human intervention.

More than a third of Sportsbet chat enquiries are handled entirely by the system, claiming an accuracy rate of about 94 per cent.

The regulator also highlights Tabcorp as a major player in this space, with the ASX-listed company partnering with Mindway AI to deploy behavioural analytics tools that monitor player activity and identify users vulnerable to problem gambling, enabling targeted interventions and support measures.

Conversely, the report says that AI is increasingly being used to detect fraud and protect the integrity of wagering platforms, with operators using systems that analyse vast volumes of transactions and user activity in real time to identify and confirm suspicious behaviour.

Without specifically citing the third-party use of accounts known in the wagering industry as “bowlers”, ACMA says bookmakers have the technology to flag anomalies such as unusual betting patterns, irregular login activity, or rapid withdrawals.

AI is also being used to strengthen identity verification, with systems analysing documents and biometric data to detect fake accounts and prevent users from operating multiple accounts in breach of platform rules.

The paper highlights that this real-time monitoring capability is a key advantage of AI, allowing operators to respond immediately to possible risks rather than relying on retrospective reviews.

There are systems available to detect potential issues, such as payment fraud, money laundering, and automated account abuse.

“Specialised fraud detection platforms … can scan thousands of transactions per second, providing wagering providers with continuous monitoring capabilities that are not possible with manual processes,” the report said.

The ACMA says there has been an increase in the use of AI in responsible gambling frameworks, particularly in jurisdictions such as Sweden, the UK and Denmark, where operators are legally required to detect and respond to signs of harmful gambling behaviour.

Studies cited in the report show that AI models can identify behavioural patterns linked to gambling harm, and several providers have publicly stated that they use such systems to analyse player activity and recognise early warning signs.

These systems can track indicators such as increasing bet sizes, longer gambling sessions or changes in betting frequency, using this information to build risk profiles and identify users who may require intervention.

Once certain thresholds are reached, AI-driven systems can trigger a range of responses, including automated alerts encouraging users to take breaks, setting betting limits, restricting access to high-stakes products or directing individuals to support services.

Unlike traditional approaches that rely on human judgement, these interventions can be applied automatically and consistently, allowing for immediate action at scale across large user bases.

The report curated evidence that regulators are also exploring the use of AI for oversight, with Spain’s gambling authority developing a system that will analyse dozens of behavioural and transactional indicators across licensed operators to provide real-time monitoring of gambling activity.

However, the authority cautions that the same technologies used to detect harm and prevent fraud can also be used to drive engagement and increase spending, highlighting the complex role AI is likely to play within the industry.

“While AI can be applied to support player safety, its commercial deployment may prioritise increased engagement and revenue generation over harm minimisation,” the report found.

“Stakeholders have raised concerns that, in practice, some applications of AI, such as promoting gambling, may intensify harmful gambling behaviours.”

The findings form part of the regulator’s broader emerging technologies research program, which aims to improve understanding of how innovations such as AI are changing online gambling, communications and media.

According to the report, AI systems in wagering environments can process large volumes of user data, including betting histories, transaction records, and behavioural patterns, to build predictive models that anticipate customer actions and preferences.

These models are then used to personalise the user experience, tailoring betting offers, promotions, and recommendations to increase engagement and encourage repeat activity.

The ACMA said that recommendation-style algorithms, widely used in other digital industries, are now being adapted for gambling services, where they suggest bets based on a user’s past behaviour and inferred interests.

Its findings are set against the backdrop of Australia’s existing regulatory framework, which was legislated well before a boom in online wagering.

It is based on the workings of the Interactive Gambling Act 2001 and does not directly address many of the emerging challenges associated with AI-driven systems.

The occasional paper format allows the authority to explore these issues without prescribing immediate regulatory changes, instead contributing to ongoing policy discussions.