Will AI Make Gambling Safer or More Addictive?

The rapid adoption of AI is now widespread across virtually every key industry sector including the Gaming Industry. With seemingly everyone talking about the potential gaming applications for AI, the analysis to date definitely leans towards optimism with a number of pundits concluding that AI will be a net positive for both gaming operators and the government agencies tasked with maintaining robust regulatory compliance and consumer protections.

For government regulators, the primary driver behind AI adoption is the potential the technology offers to embolden the current industry trend towards proactive player protection. Designed to ensure that bettors can gamble safety without risking catastrophic financial hardships, proactive player protection expects operators to identify at-risk gamblers early on in their customer journey to prompt effective data-driven intervention strategies. Evolving responsible gaming from reactive to proactive seeks to avoid gambling escalation behaviors through various account, deposit, and behavioral control mechanisms. While compliance is maintained via the threat of large regulatory penalties, the approach is also gaining natural momentum amongst operators keen to retain a more stable customer base made up of bettors with more sustainable risk profiles. The model is also being driven by the customers themselves, especially younger generations who expect modern operators to have a social conscience and will leave those deemed as exploitive should the operators’ values fail to match their own.

Proactive player protection is a key pillar of Responsible Gambling, the modern regulatory vision that seeks to mitigate the negative consequences of gambling addiction by guiding more sustainable bettor behaviors whereby online gambling becomes comparable to more benign disposal income entertainment options.

It is in this arena where AI offers the greatest potential for government gaming regulators to foster robust consumer protection, as follows:

Potential AI Wins for Government Regulators

• Identifying At-Risk Bettors
  AI algorithms capable of analyzing massive datasets in real-time can proactively detect wagering patterns and behaviors indicative of problem gambling. Moreover, machine learning capabilities equip AI models to consider numerous factors in tandem, including player risk profiles, betting activity patterns, and financial transactions, to proactively flag at-risk bettors most in need of timely interventions and gaming limits. As a result, those bettors demonstrating a high propensity for gambling addiction can be routed to safety net resources, often before they seek help on their own.
  
  
• More Accurate Age Verification
  AI equipped age verification systems can vastly improve verification accuracy. Analyzing player IDs, detecting counterfeit documentation, and leveraging facial recognition capabilities to confirm age and identity, AI can greatly reduce the number of minors accessing gaming products.
  
  
• Improved Fraud Detection
  Today’s more sophisticated fraudsters can leverage technology to the fullest extent, deploying bots and other covert digital techniques to target online gaming providers. An AI equipped fraud detection system empowers government regulators to respond to these cyberthreats via big data analysis of betting patterns, duplicate account detection, and financial transaction irregularities. As facial recognition machine learning improves, these capabilities can also be applied to detect fraudsters seeking to cheat, collude, or launder money in live gaming settings.
  
  
• Detection of Attempted Cheating and Game Manipulation
  Large gambling syndicates have the resources necessary to fix matches and/or influence the behavior of the overall gaming economy by targeting several operators in unison. AI provides the capabilities to proactively detect such attempts by analyzing global betting activity to flag suspicious betting patterns indicative of large-scale collusion or match manipulation. Unlike traditional investigation and enforcement techniques, AI can mitigate such attempts in real-time greatly reducing the potential damages to the overall gaming economy.
  
  
• Personalized Customer Support
  Utilizing deep learning capabilities, AI can create nuanced player profiles, simultaneously leveraging in-depth analysis of player behavior, language processing and sentiment analysis, to adapt support interventions for the utmost efficacy. From personalized messaging and account limits to temporary or permanent self-exclusion tailored to the individual needs of the bettor, AI can be used to empower more precision for customer support and consumer protection.
  
  
• Improved Enforcement with Reduced Overheads
  Finally, a key consideration for today’s government regulators is the capabilities of AI to manage the time consuming data analysis that is now prevalent across every phrase of government gaming regulation from licensing and compliance, to investigation and enforcement, to policy regulation and stakeholder reporting. By freeing up agency staff from the time-consuming work of data retrieval and analysis, modern gaming regulators are empowered to progress a more proactive and innovative agenda that prioritizes improved player safety and consumer protection as a consistently achievable outcome.

In addition to the improved capabilities for Responsible Gaming initiatives, much of the initial hype surrounding AI adoption in the gaming sector concerns the opportunities AI affords to improve both the user experience for bettors and the operational capabilities for gaming providers.

Potential AI Wins for Operators (and Customers)

New Betting Products

AI greatly increases the abilities of gaming providers to manage risk in real-time. This will enable operators to greatly increase the selection of niche, exotic wagering opportunities available to digital bettors. From cryptocurrency speculation to auction betting where players can bet on the maximum bid achieved, to trend wagers wherein bettors can prognosticate the most likely to emerge emerging social media trends, AI will equip modern gaming operators to greatly expand their product offerings whilst mitigating against excessive risk exposure.

Player Lifecyle Optimization

A key focus for all gaming operators is the maximization of player value. This is accomplished by:

• Reducing player churn
• Increasing player activity, loyalty, and sustainability
• Maximizing individual player value
• Retaining high value customers

AI can simultaneously facilitate the achievement of all these objectives by proactively optimizing every aspect of the customer journey from initial signup and gameplay to ongoing loyalty mechanisms and support interventions.

Via powerful machine learning algorithms that can more accurately forecast lifetime player value and propensity to churn, AI can be used to create an optimized customer engagement model to improve player loyalty schemes and individual brand interactions.

Personalized User Experiences

Much as current AI language learning models can analyze every piece of written documentation for a specific topic to ascertain key themes and conclusions, AI algorithms can be tuned to analyze the totality of an individual player’s entire customer journey. Through data-driven, automated message testing, AI can iteratively improve communications to players ultimately landing on optimized messaging that is timely, relevant, and highly personalized such as ‘Bets You May Like’ or ‘Popular Props for Your Favorite Team.’

Financial Management

AI can also empower gaming operators to maximize their profit & loss position via big data analysis designed to optimize each of the following:

• • Ongoing optimization of signup and retention bonuses, analyzing player profiles and betting activity to calculate the exact incentive offer most likely to influence the desired behavioral change(s).
    
    
  • Real-time risk assessment (both credit risks and real-time wagering risk exposure) to mitigate the exposure from poor credit profiles and/or large-scale betting trends.
    
    
  • Revenue maximization can be facilitated via AI’s ability to analyze the operator’s entire product and service offering and react accordingly with messaging designed to maximize peak engagement periods and product offerings for maximal margins.
    
    
  • By analyzing historic deposit patterns, an AI equipped financial management model can more efficiently forecast cash flow patterns in advance, giving operators a more predictable and manageable economy in what can often be a highly volatile business from a cash flow perspective.

Unfortunately, as with all things AI, the benefits will ultimately be determined by the ethical intent that guides its usage. Given the robust capabilities that AI can yield to identify specific player types and personalize messaging to influence their behavior, gaming operators will have the ability to proactively identify at-risk gamblers and safeguard them with timely and personalized protection measures. However, in the hands of an unethical operator, it is entirely possible that this same information can be used to exploit those at-risk gamblers demonstrating the highest propensity for potentially addictive behavior.

In fact, during the relative infancy of AI, The Guardian reported that the technology was already being used by unscrupulous gaming operators to target and manipulate betting behavior amongst vulnerable populations. As a result, while the technology can theoretically achieve potential wins for regulators, operators, and customers alike, it also carries the potential for huge social costs.

Potential AI Losses for Customers

• AI can theoretically equip gaming operators to circumvent existing privacy legislation with algorithms capable of cross-referencing massive datasets from seemingly disconnected sources to build detailed customer profiles that exceed the limits of information provided upon initial signup and deposit. Such analyses can provide operators with information about an individual bettor’s interests, earnings, personal life, credit history, etc.
  
  
• Integrated seamlessly with today’s data-driven advertising algorithms, an individual’s betting patterns and preferences can be leveraged to influence the bettor with highly personalized wager incentives proven to influence their specific player type, regardless of where they are on the web or what device they’re using.
  
  
• Rather than safeguarding at-risk gamblers, unethical usage of AI pattern recognition tools can be used to proactively identify emerging addiction behaviors with the aim of escalating wagering activity in real-time to exploit vulnerable gamblers for maximum short-term profits.
  
  
• As true big data becomes more available to increasingly sophisticated AI models, detailed bettor profiles can be correlated with geolocation data to equip gaming operators to entice bettors as they are entering a venue or connecting to a streaming service to watch a sporting event.

While gaming operators can naturally argue that such exploitation of AI tools would clearly contravene the terms of both their existing gaming license and their overarching regulatory regime, a spokesperson for the Campaign for Fairer Gambling insists this is already happening. “Big Data is being cynically exploited by the gaming industry to target vulnerable consumers. So the Gambling Commission’s trust in operators to use customer data for social responsibility purposes is naïve at best. (Source)”

Ensuring the Regulatory Benefits of AI

As it stands now, AI most definitely has the potential to make gaming safer for consumers. Unfortunately, AI also contains the capabilities to make gaming more addictive and more profitable for unethical gaming operators. What type of gaming environment is evolved will ultimately rest on the shoulders of today’s government gaming regulators who will be tasked with ensuring that the AI technologies deployed for regulatory oversight are sufficiently powerful to detect attempts to leverage AI operationally to maximize profits at the expense of at-risk individuals.

Of course, data-driven AI tools for regulatory oversight and responsible gaming outputs will only be as good as the breadth and quality of data fed into such machine learning models. That is why gaming agencies across North America are increasingly consolidating formerly siloed product offerings within a centralized regulatory regime powered by a proven enterprise solution like POSSE GCS (Gaming Control Software). Doing so enables overly complex regulatory models to be streamlined for potential automation while simultaneously equipping taxpayers to access the full bouquet of gaming products and services from the convenience of a single-account model. Equally important, it equips today’s modern gaming agencies to achieve a single-source-of-truth across formerly segregated datasets, creating the ‘Big Data’ that is absolutely mission critical for gaming regulators to achieve the broad benefits of emerging technologies such as Artificial Intelligence and the Internet of Things (IoT).

If we assume unethical gaming operators are racing to exploit AI for economic advantage, should today’s government regulators approach this challenge with any less urgency? The time to act is now.

To learn more about our streamlined regulatory and compliance solution for the government gaming enterprise, visit our POSSE GCS page for more information OR contact us today to schedule a no-obligation demo.