From Total Rewards to MySpace

When we look back at it, data mining might be the biggest transformation of gambling to take place in the 1990s. On one level, it’s about reducing the human factor–interaction between casino managers and players to determine the players’ comping levels–to a software program. On the other, it’s about the growing sophistication–and power–of computers.

So when I read this article in New Scientist about the Pentagon tapping into the web’s social networks to learn more about people, I got to thinking that savvy casino marketers might not be far behind:

New Scientist has discovered that Pentagon’s National Security Agency, which specialises in eavesdropping and code-breaking, is funding research into the mass harvesting of the information that people post about themselves on social networks. And it could harness advances in internet technology – specifically the forthcoming “semantic web” championed by the web standards organisation W3C – to combine data from social networking websites with details such as banking, retail and property records, allowing the NSA to build extensive, all-embracing personal profiles of individuals.

Americans are still reeling from last month’s revelations that the NSA has been logging phone calls since the terrorist attacks of 11 September 2001. The Congressional Research Service, which advises the US legislature, says phone companies that surrendered call records may have acted illegally. However, the White House insists that the terrorist threat makes existing wire-tapping legislation out of date and is urging Congress not to investigate the NSA’s action.

Meanwhile, the NSA is pursuing its plans to tap the web, since phone logs have limited scope. They can only be used to build a very basic picture of someone’s contact network, a process sometimes called “connecting the dots”. Clusters of people in highly connected groups become apparent, as do people with few connections who appear to be the intermediaries between such groups. The idea is to see by how many links or “degrees” separate people from, say, a member of a blacklisted organisation.

By adding online social networking data to its phone analyses, the NSA could connect people at deeper levels, through shared activities, such as taking flying lessons. Typically, online social networking sites ask members to enter details of their immediate and extended circles of friends, whose blogs they might follow. People often list other facets of their personality including political, sexual, entertainment, media and sporting preferences too. Some go much further, and a few have lost their jobs by publicly describing drinking and drug-taking exploits. Young people have even been barred from the orthodox religious colleges that they are enrolled in for revealing online that they are gay.

New Scientist Technology – Pentagon sets its sights on social networking websites

Harrah’s doesn’t have a MySpace page yet, but I would guess that that would be the first step in a casino getting involved in social networking. From there, marketers could measure the zeitgeist by seeing who’s linking to who, and create incredibly targeted promotions. In a few years, flashmob events could become incorporated into traditional marketing stratgies (giveaways, slot tournaments).

Not coincidentally, I’m just finishing up Joel Garreau’s Radical Evolution, and I think that the potential impact of emerging technologies on the gambling world is worth considering.

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