Artificial intelligence, online-gambling regulation, and cybersecurity were hot topics at this year’s Gambling Gaming Expo, the largest gambling conference in the US, where many of the industry’s top leaders gathered last week in Las Vegas, Nevada.
The event draws industry elite who meet with vendors, partners, and investors — and the conversations there typically set the stage for the year ahead.
“Let’s be honest, AI and the many forms of disruptive technologies is an area that we’re all trying to figure out as quickly as possible,” FanDuel CEO Amy Howe said during a keynote with DraftKings CEO Jason Robins last week. “And I’d argue as industry, we’re probably barely scratching the surface on what we can do.”
This year’s event drew thousands of attendees who braved the traffic caused by preparation for next month’s Formula One Grand Prix. They saw keynotes from the chiefs of DraftKings, FanDuel, Entain, and more; met with vendors, partners, and investors; and checked out the debuts of new “Squid Game” and NFL-branded slot machines from Light and Wonder and Aristocrat. Some even rounded out the week by catching U2’s residency at The Sphere.
Behind the scenes, deals brewed. Two industry insiders remarked to Insider that there seemed to be more bankers on-site this year than in the past. They were meeting with companies, large and small, to try to piece together potential deals. Pricing and analytics companies remain in demand, in the vein of Entain’s recent deal to acquire Angstrom.
M&A across the larger sports tech space has picked up this year, including sports betting and fantasy, with 105 deals announced in Q2 2023, a quarterly record for the industry.
Here were five key takeaways from G2E:
Product, product, product
Product has become the next battleground in the gambling wars, as new state rollouts slow and operators curb marketing spending to focus on profitability.
Sports-betting companies are focused on improving the user experience and introducing features that can increase engagement, build loyalty, and distinguish their platforms from competitors.
The same-game parlay, where bettors can combine several wagers on a single game for a larger potential payout, was the last major product innovation to transform sports betting. Companies still see opportunities there in terms of improving the models and types of bet combinations an operator can price and offer customers.
Live betting is another area ripe for innovation.
But personalization was the big theme at G2E this year, including how artificial intelligence could be used to tailor the betting experience for individual users such as by serving up bet types that might interest a user, or customizing the look and feel of the product for them based on their previous behavior.
“It’s endless on the opportunities in terms of the actual personalization of the experience,” FanDuel’s Howe said.
The AI arms race
Gambling companies overall are racing to figure out how to use artificial intelligence to supercharge their businesses.
Artificial intelligence in gambling is nothing new — AI models with some level of automation have been used for years to enable trading, such as setting odds and pricing bets. But these models are now starting to enable more complex and sophisticated tasks, such as pricing more types of bets around more sports, and reacting faster when there’s an injury or other unforeseen event that could impact an outcome.
David Jacquet, SVP of analytics at gambling-tech provider Kambi, likened the AI in their trading platform to an “orchestra.”
“It’s a very complicated task to trade,” he said. “What most companies do, they see this problem like a monolithic problem and they throw in a lot of data into one big box and they want the AI to give the odds. And that usually ends up with very poor odds. You need to understand and build a much more granular map of it … It’s like an orchestra. It’s not one thing playing all the instruments.”
FanDuel’s Howe also said the company is using AI for tasks beyond trading, including customer operations and service. She sees potential for AI to help spot problem gambling behavior, as well.
“One of the things I love is the use of AI for responsible gaming, to be able to use artificial intelligence and sophisticated data to spot problem behavior before it becomes an issue and be able to proactively take action,” Howe said.
Pick ’em fantasy sports draw scrutiny
DraftKings and FanDuel opened up at G2E about their pushback against one of the most popular and controversial new areas of daily fantasy sports.
The DFS giants had been lobbying against a wave of fantasy sports that mirrors proposition-style sports betting.
In the pick ’em-style fantasy games popularized by companies including PrizePicks and Underdog Fantasy, users put money on several player stats, such as whether Travis Kelce will score more or less than a certain number of points in the next Kansas City Chiefs game, and if F1 driver Lewis Hamilton will finish better or worse than third place in the next grand prix. They can choose from lots of stats across different sports. But they generally need to put money at least two picks and get both right to win.
These pick ’em games were recently banned in three US states — Florida, New York, and Michigan — hamstringing the up-and-coming competitors that popularized them.
FanDuel’s Howe said during her panel with DraftKings’ Robins that these games were blurring the lines between fantasy sports and gambling.
“That to me is one of the real issues here — when the lines start to blur between games of skill and real-money wagering and you don’t have the same [know your customer] protections that we have,” Howe said. “When those lines start to blur and you’re inviting a younger audience into I think what many would consider to be real-money wagering … It’s up to the states to adjudicate that, but when we spend a lot of time focused on responsible gaming and making sure that we’re educating the 21- to 25-year-old that we know is more at risk, that’s where I think it starts to become a concern.”
Robins said his company simply wanted to know where the line was.
“We want to understand what the constraints of what we can offer are,” Robins said. “There’s going to be people, companies that are pushing the limits. And I think for us having clarity, again, it comes back to competition — we want to be able to compete, so we want to be able to offer the same things that anyone else out there offers.”
In Michigan, PrizePicks’ $8.5 million in daily fantasy sports adjusted revenue through July well surpassed both Draftings’ $3.1 million and FanDuel’s $1.3 million.
Amid the increased scrutiny, both PrizePicks and Underdog announced at G2E new initiatives, with Underdog launching a $1 million fund to invest in early-stage startups addressing problem gambling, and PrizePicks signing a deal with US Integrity that includes its ProhiBet platform with the company Odds on Compliance for monitoring and preventing fraud.
IGaming legislation could gain steam in 2024
The pace of legal online casino-style gambling, or iGaming, regulation has moved at a glacial pace in the US. IGaming is legal in just eight US states, compared with 38 for sports betting, per the American Gaming Association.
It’s been a big obstacle for gambling operators because iGaming is generally a more profitable business than sports betting.
But some in the industry are starting to see encouraging signs that iGaming legislation could pick up next year.
“I think, 2024, we’ll see some movement,” BetMGM CEO Adam Greenblatt said. He said one state regulator and one bill-sponsor Senator in a “meaningful state” that he’d met with that week were “more positive than I’ve ever seen them.”
“Collectively, we understand the challenges in that state and we have a strategy,” Greenblatt added.
Many in the industry are hoping for a domino effect when the next significant state legalizes iGaming that spurs others to follow.
The cyberattacks on MGM and Caesars were ‘wake-up calls’
The cyberattacks this summer that cost MGM Resorts $100 million in lost profit and Caesars Entertainment a multimillion-dollar ransom loomed large over the industry during G2E, where leaders unpacked in panels and private meetings best practices and plans to step up cybersecurity.
“On the one hand, it’s always a priority. On the other hand, these moments are also wake-up calls to say that you have to be vigilant,” FanDuel’s Howe said.
DraftKings’ Robins also said these hacks “can happen to anybody” and agreed with Howe that cybersecurity was one area where competitors could do a better job of collaborating and sharing information.
Read the full article here
