In 1998, economist Gary Loveman quit his teaching job at Harvard Business School to join a casino in Las Vegas. It was a first step in a series of events that would redefine the way casinos gather and profit from data about their customers.
In the just-published book “What Stays in Vegas,” Adam Tanner, a fellow at the Harvard Institute for Quantitative Social Science, takes a tour of Caesars Entertainment, which Loveman has built into the biggest gambling company in the world, thanks in part to its loyalty program.
Tanner spoke to Nidhi Subbaraman of the Globe’s BetaBoston site about how casinos gather data — and respect the privacy of their customers, unlike many other industries.
Why Las Vegas?
Firstly, a lot of public data is gathered there.
More people are married in Las Vegas than anywhere else. There are more cameras in Las Vegas in a private space than anywhere else in the United States.
Casinos and particularly the company I looked at in more depth — Caesars Entertainment, which is the world’s largest casino company — have been very clever about their marketing to gather data about people and also give rewards in return for taking your data.
How do casinos track customers?
Once you have a loyalty card, you’ll use that when you sit down at a slot machine, or when you go to a gambling table, sit down at a restaurant, buy tickets for a show.
Anything you do in the public spaces at a casino, they’re going to be tracking and following. And they’ll know with great specificity that you gambled and won $217 dollars in the last 93 minutes, or lost $217 in the last 93 minutes.
What’s unique about the way casinos use or collect data?
So the casino model is one that is more transparent and rewards you more if you choose to share it. If you do give data about yourself, you’re going to be rewarded based on how much you play, with a free meal, hotel rooms, other perks such as concert tickets.
But you can go to the casino and gamble completely anonymously. You don’t have to join a loyalty program. If you think that’s important to you, you can avoid giving up any data about yourself.
The reason why I am interested in this model is that in many cases today, other businesses do not give you the choice. They gather data about you; they do not tell you.
Often they do not give you the choice to opt out. And often you don’t have a specific benefit for participating in the sharing of your data. Also, [casinos] don’t share data about you beyond their company. And that’s also a big difference.
Addressing privacy, one of your characters tells you: “Creepiness changes over time. Over time you will accept it. It is not going to go away.” Do you agree?
I think it’s a two-way street. I think people will come to accept some practices and be more liberal about sharing information.
But at the same time I think there’s going to be more sensitivity on certain kinds of privacy issues, certain kinds of information, as people come to better understand what kinds of information companies are gathering about them.
My bottom line is that people should know what kind of data gathering is going on by companies and then decide for themselves what they are comfortable with doing.
After studying this industry, what left the strongest impression on you?
As a business person, it makes very good sense to know your customers well.
But as a consumer, you may not want business to know everything they can about you.
So there may be a natural tension in terms of what’s best for businesses and what’s best for consumers.
Looking forward, what issue or technology is going to affect how these businesses work in a fundamental way again?
At this present time, you can buy lists of women who’ve watched porn in the last six months, or men who suffer from erectile dysfunction.
As you build marketing profiles of people, what is the line marketers should be wary before they cross?
I think we should engage in that discussion.
Is it OK to gather data about shopping preferences?
But what if you move into religious preferences, or sexual orientation?
That’s what I’m trying to do with this book: help bring about this discussion, to see what services they’re comfortable sharing data with and what services they’re not.