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Gaming & Thinking Machines — Who's Got the Edge?

Originally published in iGaming Business, issue 96.

Cover of iGaming Business Issue 96

One driver for innovation and invention is the desire to better ourselves by removing what we see as our flaws. We invent machines that mimic us, but with the ability to remember everything, process diligently, relentless focus, and possessing logical thought that isn’t distracted or tainted by emotion; ironically, our desire to create a better being is accompanied by the fear that the loss of what makes us human, will be our undoing.

Humanity has always found itself in a tug-of-war with technology — on one side, we strive for advancement, and on the other, we fear what that advancement brings — in spite of the fact that history is filled with examples of how our advancements have elevated us, not hurt us.

Popular fiction is filled with prophetic warnings in the form of Terminators, Matrix-creating supercomputers, big red- light eyed panels with an eerily calming voice, and robots that can out-human humans to become the ultimate tyrants and psychopaths.

This fear isn’t just from philosophers taking the traditional stance against the intelligentsia’s, often amoral, approach to research and science. In 2014, a group of leading scientists in the field of Artificial Intelligence got together to ensure that the scientific community stays focused on “keeping artificial intelligence beneficial and [...] exploring ways of reducing risks from nuclear weapons and biotechnology.”

This group, the Future of Life Institute, may have a name that sounds like a cover site for the Mormon Church, but it’s a serious endeavour founded by scientists in the field and has the likes of Stephen Hawking and Stuart Russell, the man who writes the textbook on AI, on its Scientific Advisory Board.

In 2015, the group went viral when it released an open letter to the governments of the world on the potential dangers of AI weapons, calling for a global ban on autonomous offensive weapons. Signed by prominent scientists and endorsed by familiar tech-world names like Elon Musk and Steve Wozniak, the US Pentagon made it clear it wasn’t going to be swayed by warnings from scientists and billionaires when they requested US$12-15 billion for AI-related weapons research as part of their 2017 budget.

While the effects of AI proliferation into the gaming industry may not lead to the end of humanity, we have not been immune to this conflict either. As an industry, it should not be surprising that our relationship with technology has had similar trumps and bumps, be they from the regulatory or the business front — the same push-pull effects are in play. We are run by humans after all, right?

So what can AI do for, or against, our industry? First let’s get a grasp on what AI encompasses.

Safe to say there will be many new smarter and autonomous devices. From more self-driving car news, to fancy drones, to home automation systems complete with disembodied voices — devices making decisions and performing tasks with little to no human intervention — will be invading a store near you in 2016.

Not to be left out of the AI surge, Mark Zuckerberg announced that he will build himself a smart home with an AI-persona, akin to Tony Stark’s Jarvis from the Iron Man movies, as his New Year’s resolution.

Now, back to our corner of the world. Our industry has always been more selectively cautious with combining gaming with the latest in technology, especially in the United States, which ironically takes the trophy for inventing and exploiting much of it in the first place.

With gambling being essentially a statistical endeavour at its core, it is perfect for machine thinking applications. Flawless memory to compile historical statistics, diligent processing of those stats, focused on identifying patterns, AI can certainly provide an edge, but to whom? The player or the house?

The answer is quite simple — whomever wields it better.

Like any tool technology has brought us, AI, for now, is a servant to its master. Ignoring it won’t make it go away, it only increases the chances your first encounter with it will be an undesirable one.

From the operations perspective, many modern brick-and-mortar operations already have systems that can be classified as having AI technology baked in. Many security and facility management systems are highly automated, providing a relentless first-line of defence that never sleeps, always watching and reacting, alerting humans only when it goes beyond their scope.

On the cyber side of things, we have seen tangible results from jurisdictions that have embraced technology in their management and compliance roles: helping to prevent cheating, fraud and money-laundering; monitor for responsible play; and many other features. The strategic integration of technology by the New Jersey Department of Gaming Enforcement comes to mind. If you haven’t already, check out Issue 22 of iGaming Business North America to get up to speed.

But that’s not the only edge that thinking machines can bring to the industry.

Black-box systems have been used to make stock trading decisions for well over a decade, and that fact isn’t lost with many sportsbook operators, whom have also added similar intelligent odds calculating systems to their arsenal of tools.

Several years ago, I was given a demo of a system that combines statistical analysis with heuristic processes to predict the results of sporting events, in near real-time, in running, at well above average accuracy. More recently, with the meteoric rise of daily fantasy sports in the US, news of black-box systems being used in draft tournaments became the trend.

My first reaction to these systems was that they will skew the edge towards the players, but while these tools do give players an edge, I was shown data to the contrary — it turns out, if you make your players feel and bet smarter, they will play more, and that brings the edge back to our side, and then some.

Any takers that the driver who owns a radar detector will be getting more speeding tickets in spite of the advantage?

This is an illustration that technology doesn’t have to hurt our industry, we just have to play the game and be better at it.

Sportsbooks aren’t the only area that can benefit from thinking machines, similar strategies can be deployed in other areas of gaming, for both brick-and-mortar and online. Clever application of this can help drive in more players, attract younger customers, increase efficiencies, and better protect both ourselves and our customers.

Who knows, since IBM’s Watson has started creating cool recipes for gourmet meals, maybe one day, AI will be creating new games! One thing is for certain, if we don’t use it, it will not happen, but it doesn’t mean it isn’t happening — standing still in today’s world is moving backwards by default.

Technology is here to stay, and it will continue to move and proliferate into our industry, whether we like it or not. Gone is the luxury of ignoring what goes over our heads, banning it, and simply operating the way we’ve always done.

In the Art of War, Sun Tzu said, “知彼知 己,百戰不殆;不知彼而知己,一勝一 負;不知彼,不知己,每戰必殆” or “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

If you already have a technology strategy team in place to continuously evaluate AI and other technological advances, and how they may affect business, you are ahead of the game. If you don’t, it might be time to seriously consider putting one together as your New Year’s resolution.

Whether you go the route of an internal team or bringing in strategic consultants, it is important to allow that team to work. Not everything that comes out may make sense initially, if it did, then you wouldn’t have needed the team in the first place.

Knowledge is the key — wield it innovatively, manage it wisely, and it will work for you.

#Technology

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