A major issue is looming on the gaming industry’s horizon. It is not necessarily life threatening or category breaking, but it will present challenges: artificial intelligence (AI). In gaming as in most industries, the experimental use of AI is beginning. The range of potential uses is still unclear, but AI can and is being used in marketing. We know, for example, that sports betting apps are putting AI to work. And that is raising some eyebrows.
The state of New York is concerned about artificial intelligence. Like every state, New York has general concerns about the existential threat that is discussed daily in the media, on social media, and around the campfires of families across the nation. However, the latest concern of the Empire State is more specific. It objects to the use of AI by sports betting companies. Regulators in New York want to stop the use of AI to entice gamblers to bet on sports using one of the apps that we have grown to know and love, like FanDuel and DraftKings.
AI is being used to explore a gambler’s history, create offers based on that history, and thereby pull him or her down into the pit, taking the rent money, the children’s shoes, and his humanity with it. At least that is the implication. Demonizing gambling and gamblers is easy, the low-hanging fruit. New York will get supporters for its position; people all over the country will jump up and applaud. After all, stopping AI dead in its tracks before it uses its magic to entrap New Yorkers quietly watching a game and suck out their money and their souls like a dementor at Hogwarts—it’s the right thing to do.
The problem with New York’s stance is it is singling out AI or one of the apps and ignoring the broader uses of database marketing. AI does not use magic; it uses mathematics to analyze behavior patterns and refine marketing offers to suit the fan’s past patterns. It is a tactic as old as Green Stamps and frequent flyers. Loyalty clubs like those of airlines, banks, and grocery stores have been using information about customer preference, spending history, and income for decades. It is also a common tactic of political parties.
The first Tuesday after the first Monday of November, November 3, is approaching. It is election day; voters will go to the polls and choose between Democrats and Republicans in races that will determine control of the House of Representatives and the Senate for the remainder of Donald Trump’s presidency. In the minds of the leaders of both parties, it is a critical election. They are pulling out all stops to win.
No one has accused either of the two major parties of using artificial intelligence to raise money, create ads, or rally the troops. But both parties are using the same strategy as the sports apps in New York, just a little less sophisticated version. The parties know a voter’s history and tailor their messages to suit that history. Taking themes from recent new articles and reframing the story, the intent is to elicit emotions, like fear, and thereby get donations and votes. The tact is not new. Democrats, Republicans, Southwest Airlines, American Express, and AI are just using enhanced, refined, and more advanced techniques that began with mass mailings.
The mass mailings of earlier years used zip codes; it was a way to segment the market and address different demographics in different ways. It was not terribly effective, but it was the best method available at the time. The key is in understanding the difference between people and segmenting marketing using that information. A message can be designed specifically to fit a group, or better yet, an individual. Sending special offers to Buffalo Bills fans can be very effective, but the most effective way is to send William Buffalo of 65 Niagara Square, Buffalo, New York a very personal message. Bill’s favorite food, movies, books, teams, players, and music can all be used to influence his behavior.
Therein hangs the tale. Artificial intelligence is a tool for gathering information. It is being used the same way that retailers have been using customer information for ages. New York would like to isolate one usage and call that illegal, while allowing all the others to continue. It is an attempt to cut one cow out of herd, declaring it a non-cow thing and therefore illegal. Laws and regulations designed for one specific thing rarely work in the way imagined and become outdated quickly with the changing of social norms.
It may work in New York, but it will face a rocky road in the courts. Indian gaming offers an example of court thinking that might serve as a model. In its ruling on Indian gambling in California, the Supreme Court said that gambling was not illegal in California “if it is allowed to any person for any purpose.” And California did permit charity bingo, casino nights, and cardrooms. That decision opened the door for Indian casinos everywhere to engage in gambling. Congress passed the National Indian Gaming Regulatory Act to give some limitations and definitions to the court ruling. It was the scope of legislation required.
AI does pose a threat, but the threat is much bigger than sports betting in New York. It will require a great deal of study and debate at a much higher level than the New York Gaming Commission. In the meantime, instead of legislation or regulation, it might be wise to start with education. Teach children logical and critical thinking. With good thinking skills, people might be able to sort the wheat from the chaff in the news, policial advertising, and campaign promises. Teach children basic finance and teach them probabilities, so they might on their own assess the value of a wager, purchase, or candidate. That is not a quick fix, but artificial intelligence is a problem that cannot be solved with the jerk of a knee.
