The global online gambling industry is massive and predicted to grow at an annual rate of 11% between 2023-30. According to the American Gaming Association, online sports betting in the US has been legalized in 29 states as of 2023, with online casinos live in only six states at the time of writing. Where online casinos are not permitted, players can access online games and competitions by opting to play at sweepstakes casinos for real money – these sites use virtual currencies earned via bonuses to provide legal access to games in most states.
With a large section of the world and the US now allowing some form of online gaming or real money gambling, participation rates are soaring. And so is the rate at which gambling operators increase their data processing and analysis capabilities through AI.
Chiefly, this technology is used to improve safety and user experiences. Still, as gambling businesses are profit-oriented and primed to drive retention rates and maximize profits, it’s raising interesting questions regarding the intersection between AI, service, and safety.
Improved UX + support
AI has primarily improved data collection and real-time processing and analysis capabilities. Add in a splash of machine learning, apply it to the gambling industry, and you’ve got a casino backend that can be programmed to collect information on player gaming preferences, betting patterns, and playstyles.
When used appropriately, this information can improve business operations and players’ experiences. This could include offering more appropriate game and product suggestions based on past playing preferences, knowing whom and when to offer a bonus, and staying on top of the latest product trends.
Moreover, as AI has better language programming, it can converse in a more “human” manner, making it instrumental for casino support. Gambling sites increasingly use an AI chatbot to filter which customer tickets make it to an agent and which can be solved through redirection to online help resources. This provides a quicker, 1-2-1 support service for each customer and reduces wait times for support agents.
Profit Meets Responsibility
An improved product, strengthened by the use of AI, will likely lead to higher player retention rates and potentially higher spending per player. While increased custom is the goal of any profit-oriented company, ethically (and in most jurisdictions, legally), gambling operators have additional responsibilities to ensure the product they provide is used responsibly, and that they are not encouraging vulnerable players to overspend, either inadvertently or purposefully.
Therefore, products and bonuses must be offered responsibly – based on a player’s usual spending habits and behaviors, considering what is sustainable and thus not encouraging excessive gambling. While this sounds complicated, it’s not; zero and low wagering bonuses are great examples of responsible bonuses. By releasing the consumer from gambling a bonus multiple times, they spend the money once, meaning it’s a fair deal. If the consumer chooses to keep playing, that’s up to them.
Player Safety
Considering the vast legal responsibilities involved in operating in a regulated market, it’s not surprising that gambling sites also leverage AI’s massive data collection, monitoring, and real-time analysis capabilities to improve player safety. If AI can detect player gaming and spending habits, like chasing losses, intensive gaming sessions, and players making large deposits that seem beyond their means, operators can then use it to monitor and flag signs of gambling harm.
In the past, detecting gambling harms at scale has been challenging, with many players falling through the gaps that traditional data analysis systems either missed or simply didn’t have the processing capabilities to deal with quickly enough.
AI has improved processing speeds and analysis, so it can flag accounts that need further investigation and even send automated responsible gambling messaging at lower levels of perceived harm. Additionally, machine learning in AI means that the more correct cases of gambling harm AI detects, the better it will be at identifying future cases.
Since lower-level, personalized, responsible gambling messaging and reminders can be automated using AI, it is reasonable to expect that more will be sent, thereby increasing players’ engagement with RG tools. Generally, the higher a player’s awareness of responsible gambling tools, the more likely they are to use them and display healthy gambling behaviors, like keeping to a budget.
Responsible gambling commitments are based in law in most gambling jurisdictions, but ultimately, sustainable, affordable play is a win-win scenario as it benefits all stakeholders over time.
Fraud Detection
According to the FBI’s Internet Crime Complaint Center (IC3), the number of cyber crimes reported and the cost incurred by companies has steadily risen since 2017. AI is the best first defense currently available to casinos and other online companies in guarding against and preventing fraud.
As well as highlighting player behavior patterns that may be damaging, AI can also detect unusual activities or game problems that suggest fraud or tampering. Very broadly speaking, there are two types of fraud common to gambling sites: lower-level fraud, like bonus abuse and cheating, and more sophisticated attacks, like outside hacking and ransomware attacks.
Through pattern detection analysis, AI can highlight unusual activity, like brute force hacking attempts, IP masking, etc. As it monitors in real-time, it can flag cases that need human intervention and automatically shut down accounts or specific games that are compromised. For example, a slots game consistently produces results that do not align with a correctly function RNG.
While there’s been a lot of talk about how AI integration in online casino back systems has improved online security, with both MGM and Caesars on the back foot after massive ransomware attacks just last month, it’s important to remember that the increasing technological capabilities available to operators are also out there for hacking groups.
Data Protection
This prompts further ethical questions, like how should worldwide gambling companies (outside of EU GDPR responsibilities) be legally mandated to protect data, and should environmentally friendly conditions be part of this? According to the World Economic Forum, the data centers that store servers, the necessary cooling equipment, and the data transmission networks required to run the internet account for 2% of global electricity demand, comparable to the entire aviation industry.
Ethical Considerations
In the context of booming internet use and greater gambling liberalization, some stakeholders in the industry have been found operating on the wrong side of responsibility.
In the UK, this has led some big-name gambling brands to fines worth millions of dollars for breaking new rules on VIP schemes that target bonuses to high-spending consumers without undertaking appropriate financial checks (some of these turned out to be vulnerable gamblers). This, along with 24/7 handheld access to gambling websites, has led to more recent reform regarding financial checks in the UK.
Comparatively with the UK, the US gambling markets (it would be more correct to treat each state as a separate market) are much younger and more dispersed. Unlike the UK, there’s no single gambling commission. Instead, multiple state jurisdictions, with varying legal and tax regimes, are spread over a much larger population and geography.
Most concerningly, there’s no single federal law that governs data collection, storage, and protection. There are different federal laws for various industries, like health and education, and state-level rules also apply. However, data collection is unregulated in many states.
Aside from the lack of consistent law that creates the potential for data mining and selling, the regulatory and geographic makeup of the US gambling market makes it hard to come by data. That is especially true for how gambling sites in the US abide by their duty to protect players while using AI to improve service and make better game and bonus recommendations that are inherently designed to keep players spinning.
Moreover, the responsible gambling data we do have is shocking – this month, the New Jersey Division of Gaming Enforcement reported a 6% rate of problem gamblers, three times the national average.
Conclusions
Overall, the intersection between AI use in gambling service provision and safety hinges on the responsible use and sufficient protection of the data it generates. There must be rules to govern this, enforced at the regulatory level, with adequate sanctions for businesses that fail in their commitments.
This means implementing more stringent regulatory protections for players from the get-go and regular mechanisms for operator reporting. Plus, comprehensive data protection laws that include gambling sites of all stripes.
Ideally, the US and other young markets should learn from the UK’s regulatory models and mistakes that have seen regulation go full circle, from strict to liberal and increasing again, primarily driven by growing evidence of gambling harms.
