Casinos are using AI for even greater advantage
Illustration: Sarah Grillo/Axios
Casinos and gambling websites, already adept at tilting long-term odds in their favor, are getting a leg up from technology that could inject even more certainty into their profit calculations.
The catch: Experts worry that tweaks nudging gamers to play more — and bet bigger — could propel some toward excess and addiction.
The big picture: AI and data analytics are making it easier to forecast even the most uncertain outcomes. As we reported Monday, technology firms have built a massive new economy on the ability to accurately predict people's behavior.
- For marketers, this means unprecedented access to the tiny, personalized levers that are most likely to get you — yes, you! — to buy or do something.
- If you're being sold ice cream, no big deal. But for the millions of people with gambling problems, a lot can ride on a $50 offer for free play or a comped hotel stay — perfectly tailored and timed to hit home.
"For youth or players with serious gambling problems, the negative impacts of AI-based marketing and gambling operations can be devastating and even life-threatening," says Keith Whyte, executive director of the National Council on Problem Gambling.
What's happening: Where pit bosses once kept tabs on players and doled out offers by feel, technology is now supercharging marketing and promotions that best influence each individual gambler.
- Casinos are "tracking everything you do," says Andrew Engel, general manager for gaming at DataRobot, an AI startup. "They know how much you're in for, how much you play, how long you play, what types of games you like to play."
- They've been collecting information for decades, mostly through longstanding loyalty programs. "It's a hell of a lot of data," says Anthony Chong, CEO of data analytics startup IKASI.
Details: To entice people to spend more, casinos use their troves of data to tweak every aspect of the gambling experience — from marketing and casino layout to the incentives and freebies that get people through the door and then keep them inside. And a world of vendors has popped up to help:
- IKASI lets casinos predict who will spend big — or lose big — and target them with the right incentives to keep them playing. The startup says it's working with regional casinos as well as a big chain with 20-plus locations.
- Optimove allows casinos to fine-tune marketing campaigns, and lists giant chains like Caesars and MGM among its clients.
- DataRobot lets non-experts use AI for behavioral forecasting, helping small casinos catch up with the giants. It can also tell them how to rearrange machines and table games for maximum profit.
"From a public health perspective, this is a big concern," says Silvia Kairouz, director of the Lifestyle and Addiction Research Lab at Concordia University in Montreal.
- "The vast majority of gamblers gamble with a budget," says James Whelan, co-director of the Institute of Gambling Education and Research at the University of Memphis.
- But for the minority prone to gambling problems, targeted marketing "can be destructive," Whelan says.
Casinos themselves are tight-lipped about their marketing and data science. Several declined interviews or didn't respond to requests from Axios.
- But a look at what U.S.-based companies are doing in Macau, Asia's gambling mecca, offers a hint of what's next.
- There, casinos are using hidden cameras, facial recognition and AI analytics to gauge gamblers' play and tailor incentives for each, Bloomberg reports.
What they're saying: Casino defenders say the worries are overblown, and that analyzing playing data can help problem gamblers rather than hurt them.
- "I don't believe that more efficient offers are just all of a sudden going to trigger problems for large numbers of people," says Alan Feldman, a former MGM executive who chairs the Nevada State Advisory Committee on Problem Gambling.
- Several companies, like BetBuddy and Mr Green, say they can automatically flag problematic gambling habits based on dozens of risk factors and intervene.
- "The industry is constantly exploring new and emerging technologies, like artificial intelligence, to gain a deeper understanding of our customers and provide the right resources for our customers to enjoy our products in a responsible manner,” says Elizabeth Cronan of the American Gaming Association.