SBC News Voice of the Sports Betting Industry
AI is dominating discussions about the future of technology in a whole host of sectors, but it is still unclear how it will, or even if it can, be regulated effectively.
To find out more, SBC News spoke to leading igaming lawyer Ron Segev, Founding Partner of Segev LLP, about why AI has a huge role to play in the future of betting and gaming, and the difficulties regulators and legislators face in ensuring that the technology is used in a safe way.
SBC: As we all know, AI is becoming increasingly prominent in the betting and gaming industry, both in North America and Europe. Why do you think we’re seeing more companies tapping into AI? What are its main use cases?
Ron Segev: Companies are harnessing AI because it’s a tool that can do things humans can’t at a rate that wouldn’t be possible otherwise. For example, monitoring and managing millions of accounts at once in real time is impossible for even a team of humans to do manually.
There are a number of AI use cases. First, the industry is vulnerable to money laundering. Brick-and-mortar casinos, for example, do high volumes of cash-intensive transactions, which some criminals have used to engage in money laundering activities. AI’s data processing abilities can greatly enhance anti-money laundering and fraud detection by analysing transaction data and identifying anomalous activity usually associated with money laundering.
AI can also be a powerful tool to analyse and influence player behaviour. Again, by collecting player data and analysing it to detect anomalous behaviours, it can be used to detect cheating and help identify and crack down on bad actors.
It’s not only about preventing wrongdoing though, as AI can be used to forecast player behaviour and provide customised player experiences to enhance retention and optimise revenue.
In this example, a player’s data can be analysed to determine if the player is exhibiting behaviour associated with players slowing play down or cashing out and closing accounts down. The AI tool can prompt an operator to send that player a bonus-offer to retain and re-engage them. By the same means, AI can analyse player behaviour to determine if a player is exhibiting signs of problem gambling and prompt an operator to take appropriate action.
Another interesting application is using AI for odds-making by sportsbooks. On top of processing the massive amounts of existing sports statistics, there are things like computer vision (AI that is able to understand video/visual inputs) that can provide statistical data. AI-powered computer vision can analyse athletes and look for things like injury, illness, and fatigue while they’re currently playing, rather than relying only on their historical data.
AI can also analyse and provide data in real-time that we couldn’t really get so seamlessly in the past, like player positions, distance covered, etc. As live betting and prop betting markets continue to grow, this real-time new data creates new things for gamblers to bet on and can further enhance the gaming experience.
SBC: We don’t seem to have many regulations around this technology. In your opinion, what should governments and regulators be looking to monitor when drafting up new legislation?
RS: The major issues are privacy, data ownership, and responsible gambling concerns. AI player profiling and tailored incentivisation is powerful and could be used in either a predatory manner or even inadvertently to push vulnerable players into problem gambling.
There is already AI made for use in casinos to calculate the lifetime value of different players to the casino and manage player churn and retention, as it’s more lucrative to upsell existing players than recruit new ones. This is beneficial for gaming operators, but there is a point where, if unregulated, it could become harmful to the players. The new Gaming Control Act coming into force in British Columbia., Canada, for example, has moved towards full regulatory oversight around problem gambling, including those specifically related to the design of games.
Game integrity should also be regulated. There needs to be appropriate human oversight and monitoring of AI when it forms part of a game to ensure that the game is conducted fairly. Various government gaming standards already require that games be conducted fairly and honestly, but especially with AI and how opaque some algorithms can be, we need to be sure that this can be independently tested and verified.
There can also be player-side misuses of AI, like online poker bots that analyse the patterns of legitimate players to beat them. Game integrity may need to include reasonable safeguards against vulnerabilities to AI cheating.
Data privacy and the unique issues AI can create will also need to be addressed. AI may be using and incorporating player information as training data into the AI itself and using it to some degree in the AI’s later outputs. How do we reconcile this with the right to erasure under GDPR? Consumers may lose control of their data, and given how complex AI algorithms can be, they may not have the necessary transparency to give informed consent to the use of their data in the first place. We need to be alive to the new challenges AI can pose.
The EU has proposed AI regulation, and it will be interesting to see where it lands after it’s been finalised. In the current draft, it’s not entirely clear if gaming will be captured, but it categorises AI by risk level, banning the riskiest and regulating some that are potentially less harmful. The types of AI currently identified as posing an unacceptable risk includes programs that use subliminal techniques to distort behaviour or exploit vulnerabilities of specific persons, which arguably could include more extreme player profiling algorithms.
SBC: What do you think are the key legislative and regulatory challenges that need to be taken into consideration when utilising AI technology within the gaming sector?
RS: I think we need to strike a balance between allowing investment and innovation with sufficiently strong ethics and player protection requirements. There are numerous risks that AI could pose, like privacy and potential bias and discrimination in player profiling. For example, AI input data errors that are not discovered, or that are found but cannot be corrected within the AI, could create problems and ultimately prevent the AI from performing its task, such as accurately identifying problem gamblers. Player data collection could also veer too far into unlawful surveillance.
We need to have a clear understanding of what the technology can do so that they can foresee challenges and regulate accordingly. What level of technology disclosure would be required by regulators for them to be satisfied an AI technology is compliant? Will regulators force companies to give out their ‘secret sauce’ in order to maintain compliance? Is that necessary to safeguard players?
SBC: What are the player data implications of using AI technology? And how do gaming companies address these?
RS: The biggest concerns are privacy and player profiling.
Gaming companies must ensure that their AI can comply with applicable privacy legislation in their jurisdiction. The AI algorithm should be reviewable by a human, and we need to know how and where data is being processed and used. Since AI is data-fed, we need to address the temptation to circumvent privacy restrictions.
Operators also need to ensure that any AI is used ethically and that they have appropriate problem gambling safeguards, so that their players are not exploited. They should also be alive to the potential for bias in the way that AI profiles and treats different players. This may be harder to address, but being aware of and monitoring for this risk is the first step.
SBC: Is AI likely to be the future of the gaming industry, or could we see another technology disrupt the space?
RS: AI will almost certainly play a large part in the future of gaming, but that’s not mutually exclusive of another technology further disrupting the space. AI tools promise too many gains and advantages for AI to not be a big part of the future of the gaming industry.
AI offers significantly better speed, accuracy, and volume of data processing, and critically it can output insights based on that processed data that are actionable to gaming companies. AI can provide gaming companies with more information about their players in order to improve revenue and retention while better protecting them, and it can provide more information to gaming companies about their platforms to help them optimise how they perform.
Ron Segev is set to participate in the ‘Out of Ontario – regulatory roadmap for BC, Quebec and beyond’ panel on 20 September at the SBC Summit Barcelona 2023 conference and trade show. Tickets for the Global Betting and iGaming Show, which takes place at Fira Barcelona Montjuïc on 19-21 September, are available here.
