New regulatory directives for Macau’s Casinos

The Macau Gaming Inspection and Coordination Bureau has directed Macau casinos to refrain from installing facial recognition and other Vegas casino online surveillance tools until such time as the bureau approves them.  In its directive, the Bureau told the casinos that any data collected must remain with casino operators and could not be shared.

According to David W. Opderbeck, co-director of the Gibbons Institute of Law, Science & Technology at Seton Hall University School of Law, this may be a positive development. “Many businesses use data analytics and other forms of AI to monitor consumer behavior. This isn’t necessarily a bad thing — it can help businesses better serve their customers while also maximizing profits.”

The Gaming Inspection Bureau in Macau, Opderbeck said, is concerned about such AI and data analytics’ “dark, manipulative side. Many regulators are concerned that in an industry like gaming, the House may use such technology to increase its advantage. “This kind of AI seems fundamentally to change the rules of the game,” Opderbeck cautioned.

Opederbeck confirmed the use of the technology be used by the casino to personalize patrons’ experiences. “This can be a very good thing, both for the casinos and their patrons,” Opderbeck said. “The technology can also improve security and detect cheating. The issue is how to use the technology for these purposes without fundamentally changing the customers’ legitimate expectation that there is at least a fair possibility of beating the house.”

Tough Task

Regulators have a tough task, says Konstantinos Pelechrinis, a computer science professor at the University of Pittsburgh, where he also leads the university’s Network Data Science Lab. The balance between taking advantage of surveillance technology, specifically facial technology, and stepping on the rights of individuals is a thin line. Pelchrinis said that this is true “not only in the case of casinos, but for every business that attempts to exploit personal data for maximizing their revenue.”

The gambling industry, including casinos, have different needs than do online retailers. “For example, one can argue that a retailer is going to use your preferences and other information to let you know about new things that you do not know,” Pelchrinis said.  “What does this look like for a casino? Recommending a roulette game that you know your chances of winning are low?”

Pelechrinis surmises that casinos on Macau may be “targeting high-risk people to extract higher revenue” and that’s what the regulators are trying to prevent. “So, the actual question that … regulators need to answer is: What do the casinos that use [the] … tech attempt to do? For instance, this tech can be used for good — for example, identifying high-risk gamblers and not allowing them to gamble more.” 

Pelechrinis believes that regulation is needed but that it’s not necessary to ban the new technology. His suggestion is that “……. the regulators might want to think how this technology can be used for benefiting both the operators and the customers.”

Mass Surveillance

Felix Wu, faculty director of the Cardozo Data Law Initiative and a professor at Cardozo School of Law, says that ““People are predictably irrational when it comes to gambling.  It would be highly problematic if casinos are able to target individual gamblers in a way that optimally exploits each individual’s irrationalities. “

He explains, “Information is power, and concerns have been raised about companies’ ability to leverage personal data in order to exploit individual consumers’ irrationality. This seems like a particular concern in the gambling industry.” 

Wu says that to the extent that the casino’s data collection is made available to others or merged, it contributes to concerns over mass surveillance by the government or private companies. He theorizes that “There’s probably not the same social interest in people being able to gamble anonymously as there is in people being able to generally live their lives with some measure of anonymity.”

What Will the Casinos Do?

Will the casinos follow the directive, especially if it goes against their interests?

William C. Banks, an emeritus professor of law at Syracuse University, notes that, “particularly in a location such as Macau, law has little bearing on what casinos may do or what rights gamblers may have, except to the extent enforced by Chinese law."

Banks explained. “Like other activities that are highly digitized, AI, facial recognition and other technologies may be widely employed. The dynamic growth of capabilities in these fields means that any limits imposed by the casinos will likely need to be revisited frequently to assure that they are meeting their objectives.”

Temporary Measure

Anthony Cabot, Distinguished Fellow of Gaming Law at UNLV Boyd School of Law believes that the restrictions are a temporary measure. The Bureau wants to buy some time so that it can study the use and implementation of facial recognition and other AI technologies. The emerging issue is not the use of these technologies, but their potential abuse,” Cabot said. “There simply is not enough experience and vetting of these technologies to understand their uses in the casino industry to properly consider new regulations.” 

Cabot said that he is most fearful of seeing how regulators might “approve technologies not based on evidence-based facts, but simply what they feel is appropriate. This is particularly problematic in a Macau where the regulatory process is not transparent.” 

Facial Recognition

Macau casinos have recently been accused of using facial recognition technologies for non-security purposes – specifically, to monitor the habits of high rolling customers.  Reports that some of the casinos in Macau were using facial recognition technology to identify gamers who had a history of losing heavily at the casino elicited worry among those concerned with civil liberties as well as people monitoring ethical business practices.    

According to the reports, after the casinos would gather information about the VIP losers, they would then use the information to ply those customers with drinks and other amenities in order to encourage them to continue playing – and losing.  Now, Macau gaming inspection bureau officials seem intent on clamping down to make sure that the AI technology will be used for only security purposes.

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