Share This Article
The integration of Artificial Intelligence (AI) into online gambling platforms has revolutionized the industry, offering enhanced user experiences, improved risk management, and streamlined operations, but what legal obligations arise?
This technological advancement introduces a complex array of legal obligations that operators must address to ensure compliance and mitigate potential liabilities. This article delves into the multifaceted legal landscape surrounding the use of AI in online gambling.
1. Compliance with the EU AI Act
The European Union’s AI Act establishes a comprehensive legal framework for the usage of AI systems. Online gambling operators utilizing AI must assess the classification of the AI systems they are willing to use on the basis of the level of risk of the relevant application and consequently comply with the obligations provided under the AI Act. High-risk AI systems are subject to stringent requirements, including rigorous data governance, transparency measures, and continuous monitoring to ensure safety and compliance.
Example: An online gambling operator deploys an AI-powered risk scoring tool to detect potentially problematic gambling behavior (as required for instance under the new regime provided by Italian law) and prevent fraud. Because this system affects users’ financial standing and access to services, it may be considered high-risk under the AI Act. The operator must implement extensive documentation, human oversight mechanisms, and undergo conformity assessments before deploying the tool.
Likewise, some AI systems used on online gambling platforms might be qualified as prohibited AI systems since for instance they exploit players’ vulnerabilities. In this respect, it is crucial to perform a prior assessment to avoid the risk of an erroneous classification of the AI system. The matter is quite urgent since the provisions of the AI Act on the prohibited AI systems are already applicable and you can read about it HERE.
2. Adherence to Data Protection Laws
AI systems in online gambling often process vast amounts of personal data, necessitating strict compliance with data protection regulations such as the General Data Protection Regulation (GDPR). Operators must ensure that AI-driven data processing activities are transparent, secure, and respect user privacy. This scenario may include obtaining explicit consent from users or properly identifying the alternative legal basis e.g., legitimate interest that shall be adequately supported, implementing robust data security measures, and providing clear information about how AI systems utilize personal data.
Example: An online gambling operator uses an AI system to analyze user behavior for personalized game recommendations. The system collects and processes users’ location, game preferences, time spent playing, and transaction history. Under the GDPR, the operator must inform users about the data being collected, the purpose of processing, and ensure that adequate safeguards, such as data minimization and encryption, are in place. Bearing in mind that the most relevant fines issues so far for the usage of artificial intelligence systems come from data protection authorities, operators shall address the matter very carefully. You can read on the topic the decision recently adopted by the Italian privacy authority against DeepSeek available HERE.
3. Addressing Algorithmic Bias and Fairness
The potential for algorithmic bias in AI systems can lead to unfair outcomes, such as discriminatory practices in user interactions or game results. The AI Act allows for the processing of sensitive personal data to detect and correct such biases, provided appropriate safeguards are in place. Operators must implement measures to identify, assess, and mitigate biases in their AI systems, ensuring that outcomes are fair and non-discriminatory.
Example: An AI tool used to detect bonus abuse patterns unintentionally flags players from a specific region more frequently due to biased training data. This results in unfair account suspensions. To comply with the AI Act and anti-discrimination laws, the operator must retrain the AI model with more representative data and implement periodic bias audits. In this respect, it should be considered that, if an AI system is substantially customized to fit the needs of an operator, the latter might be requalified as provider of the AI system with the consequential applicability of the more stringent obligations under the EU AI Act. You can read more on the topic HERE.
4. Establishing Robust AI Governance Frameworks
Effective AI governance is crucial for managing the compliance risks associated with AI deployment in online gambling. Operators should establish internal committees comprising legal, IT, compliance, data, and cybersecurity experts to oversee AI-related risks. These committees are responsible for policy approvals, vendor management, and integrating AI into existing risk structures. Only if an operator has set specific internal governance rules, it can limit the risk that its employees are using AI systems that have not been previously approved and might jeopardize the business of the company. At the same time, banning any usage of AI systems would foster employees to still use them through for instance private computers.
Example: A gambling platform uses AI chatbots for customer service, including handling self-exclusion requests. Without proper oversight, the chatbot incorrectly denies a self-exclusion request due to an NLP misinterpretation. A robust AI governance framework would require human escalation protocols and regular training data reviews to ensure the chatbot functions reliably and ethically. You can read more on how to establish an AI governance framework HERE.
5. Ensuring Transparency in Automated Decision-Making
Gambling operators must provide users with meaningful information about the logic, significance, and potential consequences of automated decisions made by AI systems. This transparency is essential for compliance with data protection laws and for maintaining user trust. While protecting proprietary algorithms is important, operators cannot use trade secret protections to withhold information required by regulations.
Example: An AI system automatically adjusts user betting limits based on behavioral patterns. A user whose limit is suddenly reduced challenges the decision. Under the GDPR, the operator must provide a clear explanation of the logic behind the automated decision and offer an option for human review. On the topic, you can read the article available HERE.
6. AI Related Intellectual Property Legal Risks for Gambling Operators
The use of AI in generating content or making decisions in online gambling raises questions about intellectual property rights. Gambling operators must ensure that AI-generated content does not infringe upon existing copyrights and that they have the appropriate rights to use such content. Additionally, clear policies should be in place regarding the ownership of AI-generated works to prevent potential disputes.
Example: A gambling operator uses a generative AI tool to create unique promotional artwork, game themes and images of athletes. If the tool is trained on copyrighted content without proper licensing, the operator may face copyright infringement claims. The operator must ensure transparency from the AI provider about training data and secure appropriate content usage rights. On the topic, you can read on the applicability of the copyright text and data mining (TDM) exception for AI training available HERE.
With the usage of AI systems that is quickly shifting from pilot projects to operations, gambling operators must proactively implement compliance. This includes mapping existing AI systems, assessing their risk levels, implementing necessary controls, and staying informed about evolving legal requirements. Early preparation can prevent costly adjustments and ensure seamless integration of AI technologies within the legal framework.
While AI presents significant opportunities for innovation in online gambling, operators must diligently address the associated legal obligations. By implementing comprehensive governance frameworks, ensuring compliance with data protection laws, addressing algorithmic biases, and preparing for forthcoming regulations, operators can responsibly harness AI’s potential while safeguarding user interests and maintaining regulatory compliance.
You can read more on the legal issues relating to the usage of artificial intelligence systems HERE and don’t miss DLA Piper’s Gambling Laws of the World Guide available HERE.