AI Technology Utilized by Gaming Companies: DraftKings and Red Rock Resorts Join the Trend
Gaming firms are increasingly implementing artificial intelligence (AI) in a range of applications, reinforcing the industry's potential as a long-term adopter of the transformative technology.
In a note to investors, Jefferies analyst David Katz pointed to DraftKings (NASDAQ: DKNG), Light & Wonder (NASDAQ: LNW), and Red Rock Resorts (NASDAQ: RRR) as prime examples of gaming companies integrating AI into different segments. One primary use case for AI in gaming is assisting operators in detecting customers with potentially problematic wagering patterns and limiting their access to prevent potential issues that may escalate. This could potentially earn support from regulators.
In the case of DraftKings, the online sportsbook specialist has long been known for its strong technology focus, which may facilitate its transition to increased AI usage. AI can potentially help DraftKings distinguish itself from its rivals and potentially lower labor costs.
According to Katz, having the latest technology in the highly competitive OSB (online sportsbook) market could lead to a lasting competitive advantage. Furthermore, the most crucial enhancements involve promotions, as this could allow for a deeper understanding of customers on a more detailed level.
Katz also mentioned that AI might replace some tasks among DraftKings' 500-member trading force, resulting in cost savings for the operator.
Light & Wonder, Red Rock Utilizing AI as Well
AI is a natural fit for slot machines and other electronic gaming devices, so it's not surprising that Light & Wonder is among the gaming companies embracing AI.
Katz informed clients that Light & Wonder is applying AI in several directions, such as reducing mundane tasks and using math models on slot machines. These models can provide crucial insights into bettors' habits and preferences.
"The company remains acutely conscious that design talent is the driving force of their business," said Katz in the note. "Therefore, though some creative domains could benefit from the use of AI, the need for talented designers and their creative contributions should remain a crucial part of the business."
As for Red Rock, the casino operator is using AI to ensure its workforce matches demand at its Nevada gaming venues and to achieve cost efficiency. The company is also employing AI for fraud detection.
AI's Role in Combating Fraud
With generative AI, the most prevalent and accessible form of the technology at present, there are numerous applications for combating fraud. This might be one reason why Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM) are believed to be quietly ramping up their AI usage following major cyber breaches last year.
"Online gaming is also using AI to monitor possible fraudulent activities and optimize the promotional aspect of the business by strategically timing and locating player offers and bonuses," according to Seeking Alpha.
Although not a fraud prevention application, AI can significantly benefit sportsbook operators by enabling the development of predictive models and rapidly processing vast amounts of data in real time.
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Source: www.casino.org
