DraftKings, Light & Wonder, and Station Casinos are leading the gaming sector in making use of artificial intelligence (AI), according to Jefferies Equity Research analyst David Katz. In an investor note published this morning, he also cited casino-aligned Marriott International as a frontrunner in the deployment of AI.
Katz’s min-survey revisited the topic of a June 12, 2023, white paper in which he catalogued the prospective impacts of AI on gaming and hospitality. For instance, “Removing the human element of cutting people off who are betting beyond their means, which is consistent with state level regulations, is a productive use” of AI.
Ditto slot machines, “which are able to evaluate the customer profiles as he/she approaches the game and can deliver entertaining content and engaging math models.” And AI has its horseracing applications: It “could more effectively confront the scientific efforts to circumvent the regulations and risks to [a] horse’s well-being.”
DraftKings has been investing in the technology for a decade, Katz said. Recently, former CFO Jason Park moved over to the role of chief technology officer of DraftKings and was described as seeking ways to enlarge AI’s role.
“Having the most advanced technology in the competitive OSB market could drive differentiation over time,” opined Katz. He viewed customer service as the primary area of potential improvement, as it drove the bulk of odds-setting and operating expenses.
Katz felt the company could cut down on its 500-person trading force. “Furthermore, the harder and more important functional improvement is promotions, as it could enhance the ability of predicting [long-term values] of customers on a more granular level,” he wrote, also giving a nod to the potential of AI in combating gambling disorders.
Light & Wonder already makes widespread use of AI, Katz continued. Its CTO, Victor Blanco, “has been leading the AI initiative and has been looking for efficiencies in some of the more manual tasks to help maximize efficiency in the process.” Light & Wonder is looking at AI as a means of refining the math models on its slot machines through judicious application of the technology.
“The company remains highly aware that design talent is the engine of their business, and therefore, though potentially some artistic avenues could be enhanced via the use of AI, the need for talented designers and the creative element they provide should remain a core component of the business.”
Station Casinos was described as using AI in a mainly back-of-house capacity, such as record keeping and report generation. Station, according to Katz, “has been implementing early stage strategies to leverage the use of AI to manage costs, optimize staffing levels, manage inventory, and streamline processes that lead to cost savings and operational efficiencies.” The casino company was also looking to AI as a means of early fraud detection.
As for MGM Resorts International strategic partner Marriott, it was characterized as an opportunistic user of AI. Katz explained that Marriott “expressed strong interest in AI, while remaining cautious due to general concerns about the technology being used the ‘right way.’”
One way these ethical concerns manifested was Marriott’s solicitation of employee feedback regarding how workers would like to see AI used. “Some of those suggestions,” Katz reported, “have been selected and are currently being evaluated and tested to see the potential impact these new uses could have.”
In addition, AI was described as a possible tool for personalizing one’s travel experience and facilitating travel and hotel bookings, which the casino industry is trying to recapture from online travel agencies. Customer-service efficiencies could be improved through AI, Katz wrote, and could be deployed proactively, predicting guests’ issues and offering solutions rather than forcing guests to research them.
