Jun 27, 2019

Axios Future

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Today's Smart Brevity count: 1085 words, a < 5 minute read.

What else should we write about this summer? Hit reply to this email or message me at steve@axios.com, Kaveh Waddell at kaveh@axios.com and Erica Pandey at erica@axios.com.

Okay, let's start with ...

1 big thing: The new gambling stakes

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, Kaveh reports.

But 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.

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.

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.
2. Death of the conglomerate

Photo: Hulton-Deutsch/Corbis/Getty

Millions of jobs may vanish as conglomerates are forced to kill their traditional business model to survive a new technological age and chaotic geopolitics, says the head of Europe's largest industrial company.

What's happening: Joe Kaeser, CEO of Siemens, tells Axios that a manufacturing revolution is upping the challenge to the world's biggest companies, forcing them to focus only on products or services in which they truly excel.

  • "Traditional conglomerates have no future. On average, they are average. And today, average means mediocrity, and that's the target of the 4th industrial revolution," Kaeser said.
  • Technologies like 3D printing mean "you can deliver any item at the cost of mass production."

The big picture: The new geopolitics of nationalism and protectionism — the "I'm first" movement most loudly voiced by President Trump — are part of what's making conglomerates obsolete. They can no longer casually operate across dozens of countries under the assumption that everyone will accept such cosmopolitanism.

Siemens, for instance, has divided itself into three distinct divisions based on its perception of its strengths — industrial, health care and power and energy arms. Now it must localize production everywhere it sells, and establish political connections as well, Kaeser said.

  • It won't be possible to build complete facilities everywhere. Instead, today's multinationals will have to persuade countries that it's okay to establish a digital "brain" in the U.S., for instance, that will instruct advanced plants in individual countries what to manufacture and how.
  • "It's the opposite to what we are used to," Kaeser said. "A global value chain, where different countries get specialized with different parts."
3. Correcting Halliburton's taxes

Photo: Igor Golovniov/SOPA/LightRocket/Getty

Last night after the Democratic presidential debates, a couple of the major media outlets corrected Sen. Cory Booker on a claim that Halliburton paid "nothing in taxes" last year.

  • Citing a story I wrote in February, based on Halliburton's 10-K filed with the Securities and Exchange Commission, they reported the company would pay $19 million in taxes.

Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, emailed this morning to say that I was reading the below section of the 10-K backward. Rather than paying $19 million in taxes, Halliburton declared it was owed a $19 million refund.

See first line under "Current income taxes," p. 50, Halliburton's 2018 10-K

Gardner explains:

"'Current Federal [taxes] looks at first glance like a positive number, but if you look at the text above the table, they specify that they are presenting the numbers the opposite way from what you normally see. A tax benefit (that is, a negative number) looks like a positive number, and a tax provision (that is, a positive amount of tax) is presented with parentheses around it, in a way that makes it look negative."

I apologize for the error.

Halliburton did not respond to a request for comment.

4. Worthy of your time
Expand chart
Data: Federal Reserve; Chart: Chris Canipe/Axios

What really happened to MH370? (William Langewiesche — The Atlantic)

U.S. factory activity is sinking fast (Dion Rabouin — Axios)

More millennials are dying "deaths of despair" (Jamie Ducharme — Time)

The Catholic Church and Duterte's war on drugs (Adam Willis — VQR)

Extreme robotics (The Economist)

5. 1 fun thing: A new date-night perk

Photo: Getty

Several fancy, white-tablecloth restaurants are coming out with a new offering for diners: Enjoy your food while we take care of your kids, Erica writes.

Gone are the days of mini-coloring books and crayons at the dinner table, reports WSJ. Now 5-star establishments are adding movie theaters, tours or play rooms to keep the kids occupied while the parents uncork the red wine.

  • Kingbird, in D.C.'s Watergate hotel, gives kids tours of the hotel suite where burglars planned the DNC heist — and a free ice-cream sundae.
  • Grand Cafe in Minneapolis offers free movie screenings for its young patrons while the adults dig into boozy brunch.