Antithesis to online casinos, like our very own Grande Vegas online casino, which encourage players to play responsibly within their budgets, Macau’s brick-and-mortar casinos are now using artificial intelligence to identify the players who are the most likely to lose the most money. The casinos have known for a long time that the longer a gamer plays, the more money he stands to lose. Now casinos in Macau are employing digitally-enabled poker chips and baccarat tables, facial recognition technology and hidden cameras to track how individual customers behave at the betting table. The casinos then use that knowledge to determine the players' appetite for risk.
The casinos are banking on the belief that, the higher the risk appetite, the more a casino patron stands to lose. That means that casinos will make more profits from customers who have higher risk appetites. Sometimes, the difference increases the casino’s profits by 10x.
Artificial intelligence, also called “AI” focuses on how computers are programmed so that they function intelligently and work and act like humans. This involves technology in learning, planning, speech recognition and problem solving.
Computers programmed to act in an artificially intelligent manner are programmed for reasoning, perception, manipulating objects and knowledge.
Artificial intelligence has been used in the online casino industry for several years already. The computers in an online casino are programmed to compete against human players who want to experience a challenging gaming event. Now, AI technology is using algorithms to process the way that players behave in a land-based casino so that they can identify the customers who are most likely to bet big and lose big.
Once the casinos know which players are most likely to lose the most amount of money, they can target those customers. The casinos offer targeted perks and other types of special attention to designated players. One such system, designed by Dallmeier Electronic from Germany, employs facial recognition to alert floor managers that a high-value player has arrived. The manager then dispatches a staff member to the customer’s side, sends complimentary drink to keep the customer drinking and uses other methods to encourage that individual to stay at the betting table.
Andrew Lo, executive director of Macau junket operator Suncity Group Holdings Ltd. was frank about the casino’s willingness to offer goodies to the right customers. “Those who can afford to lose, those who play even more when losing money, we can for sure offer them a free meal,” he said. His company, which is building a new casino in Hoi An in Vietnam, plans to use technology developed by Las Vegas-based Walker Digital Table Systems to invisibly track wagers, chips and game outcomes.
Growth in a Slowing Industry
In some ways, the global casino industry is growing. New casinos are opening almost every month, many of them in third-world, remote locations which encourage casino development because they believe that the casinos will be able to attract tourism and other types of visitors.
On the other hand, the industry worries that pressure from regulatory scrutiny and economic head winds could plunge the industry into a recession. AI, the casinos believe, might give them a jump start in focusing their attentions on the “right” types of customers.
In Macau, the world’s biggest gaming hub, expansion is reaching its limits. Two casino operators — the Macau subsidiaries of MGM Resorts International and Las Vegas Sands Corp., have begun to use AI technologies on many of their table games. Sands has already decided to expand the project.
Three additional operators, Galaxy Entertainment, Melco Resorts and Entertainment and Wynn Macau Ltd. are in the preliminary stages of deploying the technology. At Suncity, a system is being put into place in which tags are attached to objects such as chips and tables so that they can relay data on players in real time.
Much of the motivation for the new thrust on the part of the casino giants comes from the challenge that they are facing due to the dwindling numbers of VIP gamers from China combined with the growing numbers of players from the Chinese middle class.
Over 3 million people visit Macau every month and they include both wealthy, focused bettors as well as families on short trips and casual players. The casinos hope that the advanced surveillance technologies will allow them to separate the customers who are looking for a few days of fun from the serious gamblers who are prepared to play big and, if necessary, lose big.
Casinos have had high tech surveillance technology for years but up until recently, it was there mainly to detect cheating and for security. The rationale for RFID-enabled chips was to disable them if they are removed from the casino. Now, new technologies are taking surveillance a step forward. Every customer is tracked and rated and the casino can build up data on each individual gambler.
How the Technology Works
The Gaming Inspection and Coordination Bureau of Macau, the territory’s regulator, has given Sands China approval to embed the technologies in its Macau casino. Dallmeier Electronics embedded cameras into the casino’s structural columns so they wouldn’t be visible to customers.
Different firms offer different types of AI technology but all track gambler’s betting behaviors through RFID-enabled chips and tables and cameras. The data from these technologies flows into a centralized database, enabling the casino to build a risk profile of each customer.
Most of the casinos aren’t talking about their use of AI but John Orth, vice president of Walker Digital, was prepared to comment. “Your customers don’t even realize they are being tracked.”
One system gives the casino the ability to track a bettor’s wagering behavior. For instance, it monitors which customers prefer to take baccarat “side bets. ” Side bets in baccarat are risky bets . The statistics show that a player who favors side bets may yield 10 times the profit to a casino compared with a customer with an average risk appetite.
Casinos will be able to rate individual players with a combination of metrics -- the total average time the player spends in a casino, risk appetite, win-loss ratio, betting volume, past dishonest behavior, remaining chips and net worth.
The technology can also help detect any fraud including player-dealer collusion. It can also be used to assess the speed and accuracy of dealers, making it valuable as a performance management tool.
The ethics of such advanced surveillance are tricky. Operators have discussed the implications extensively, with entire high-level internal meetings dedicated to the issue. The fact that none of the casinos contacted were willing to go on record about the technology is indicative of the sensitivity of the issue.
Many operators are concerned that they will alienate high-spending customers who won’t want to be watched. Others worry that law enforcement and government authorities might demand access to the collected data.
The fact that the surveillance is, for the meantime, limited to Macau, points to the relative ease that data collection and sharing is accomplished among Chinese customers as opposed to those in the U.S. or Europe.
Ben Lee, a Macau-based managing partner at the Asian gaming consultancy firm of IGamiX said that sending collected data for analysis to casino company offices offshore could break the law “This new technology certainly has the potential to infringe the law as it expands the scope of players whose breadth and range of activities would now be tracked,” he said.
But Lo of SunCity said that Chinese consumers are used to being tracked. “I think customers expect that their bets are being watched, it’s just whether the casino operator knows how to make use of the data,” Lo said.
“Facial recognition is very mature in China: Border customs has it, banks will soon have it, it’s a trend. If you’re afraid of this, then you’re very likely a criminal and casinos won’t do business with you anyway.”