High Court rules against ‘parasitic’ online ad profiling

Sky Betting & Gaming (SBG) has been found guilty of breaching data protection law after a High Court judge ruled it had exploited a problem gambler’s personal information to build a “parasitic” profile for marketing purposes, in a move which it is claimed could have major implications for the online ad industry.

The player in question, who reportedly lost more than £45,000 over 10 years, made the case that the Flutter-owned operator should have been aware he was a problem gambler and therefore should not have enabled his data to be used for third-party marketing.

This is despite claims on SBG’s website that it “never shares data with companies outside of its group for them to use for their own marketing”.

The claimant found out how his data was collected and used after making data subject access requests (DSARs) to a number of gambling operators and other third parties.

One of the key issues alleged by the claimant, who was represented by Ravi Naik, legal director at law firm AWO, was that sensitive information had been exploited in order to build a unique customer profile. The sensitive data at the centre of the claim included factors like the player’s mental health and struggles with gambling addiction.

Naik argued that, aside from using the basic data necessary to operate its services, SBG aggregates data on customers’ gambling and other online behaviour and generates its own ‘data points’ for each user, such as their favourite time of day for gambling or whether they are a “high value” customer.

Evidence in the case showed that at any one time, each individual is assigned around 500 data points that are continuously updated by real-time data. These are in addition to data received from third parties like Signal (83 different data points) or Iovation (19,000 data points).

These data points are then used by the business, in particular its marketing arm, to segment its customer base for marketing campaigns and to build “propensity models”, algorithmic models that predict users’ future behaviour.

SBG takes gambling behaviours and turns them into code. For example, one of the models disclosed in evidence would predict the likelihood that a customer who bets on sports outside of matches will also bet during matches – a model used by the marketing team to predict who in the customer pool will be more likely to be receptive to encouragement to do so.

Other models would predict the propensity of a bingo customer to play side games, or flag “abnormally high activity customers” in relation to a specific product or game to enhance offers to them.

As a result of SBG’s profiling and targeted marketing campaigns, the claimant received a flood of marketing emails enticing him with bonuses, offers to try new products, or reminders of how much he could (but did not) win. His intense gambling, as the Court recognised, fed this marketing like a self-fulfilling prophecy.

These were part of the profiling efforts of Sky Bet between 2017 and 2019, which were heavily criticised by Justice Collins Rice, although he did acknowledge that the industry had evolved its methods since then.

In his summary and conclusions, the judge stated: “The profiling was parasitic on the obtaining of the data and the ultimate delivery of the marketing, and had no other standalone purpose so far as he was concerned; it necessarily discloses no distinct basis for lawful processing.

“The acceptance that SBG had no legitimate interest in profiling for personalised marketing to problem gamblers without their consent, in circumstances in which I have concluded that that is exactly what they did here, stands as its own conclusion.

A further hearing will determine the remedies the claimant is entitled to.

AWO, meanwhile, insists the ruling could have major implications for the online advertising industry as a whole, by raising the prospect that not only SBG, but also other gambling companies, have been illegally profiling thousands – if not tens of thousands – off their vulnerable customers for years.

Ravi Naik stated: “The judgment is an unalloyed victory, recognising what our client has always maintained: he did not and could not have consented to being relentlessly tracked and intimately profiled by SBG in order to encourage him to gamble sums which he could not afford. He was – and remains – shocked and dismayed at the extent of SBG’s data collection and profiling.

“Hopefully this judgment will reduce harm to vulnerable people by serving as a warning to online gambling companies – and others involved in the online advertising system – that they must comply with the law in their marketing practices.”

An SBG spokesperson said: “We fundamentally disagree with this judgment. We have made significant changes to our controls and processes over the past six years as part of our ongoing investment behind safer gambling and will continue to do so.”

However, the judgment also reinforces a reprimand given by the Information Commissioner’s Office to SBG’s parent company in September 2024, as a result of submissions made by AWO on behalf of Clean Up Gambling. The ICO’s investigation had found that a pixel embedded within the Sky Bet website had facilitated the setting of approximately 40 third-party marketing cookies without users’ valid consent.

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