Advancements in technology in the online wagering industry continue to be influenced by the emergence and development of artificial intelligence (AI). However, the benefits of emerging AI technologies give rise to many legal considerations and may expose businesses to risk if appropriate safeguards are not enacted. In particular, wagering businesses which utilise AI technology for predictive purposes must have careful regard to their obligations to customers and the need to safeguard responsible gambling practices and protect privacy rights.

This article discusses some of the ways in which AI technology is being employed in the wagering sector, and identifies legal considerations which providers should keep in mind.

If you have any questions about the implementation of AI technology in the context of gambling operations, please do not hesitate to reach out to any of our team at Senet.

Pre-emptive intervention with customers

An area where AI may have significant impact is in early identification of, and intervention with, customers displaying potential problem gambling behaviours and/or responsible gambling red flag indicators.

For example, AI algorithms can be trained using historic customer data held by a wagering service provider (WSP) such that the AI technology can flag when a particular customer is displaying potentially unusual or problem gambling behaviour. The AI model can be trained to pick up on “key behavioural shifts” as well as behaviour that is objectively problematic or which meets pre-determined criteria or parameters. Subject to careful consideration and implementation, AI can also be used to assist WSPs in their decision making and responses to potential problem gambling so that when the system flags a particular user, it can offer pre-emptive protections such as encouraging the user to take a break, reduce their maximum bet sizes, or direct the user to help services. AI enables WSPs to react more quickly and to better monitor their customers’ transactions on a 24/7 basis. This can provide invaluable support to smaller WSPs in particular, which may otherwise be constrained by the size of their customer support teams.

In the future, AI ‘emotion recognition’ capabilities might also be utilised to support responsible gambling (RG) tools including by assisting with the early identification of customers who may be displaying unusual or problem gambling behaviours. AI emotion recognition could be applied to detect a user’s emotions and respond based on its assessment and how it is programmed. For example, there is AI technology available which could be implemented through a customer’s phone camera function while they’re using a gambling app and which would measure the position of a person’s eyes, eyebrows and mouth as well as monitoring speech patterns, body language and tone of voice. It is foreseeable that this technology would give WSPs a more fulsome picture of the user’s experience and enable the WSP to respond earlier and quicker to any RG risks with tailored support.

However, such technology gives rise to many legal considerations including in respect of customer consent and privacy laws. Facial recognition technologies have been in the spotlight in Australia of late with the Australian Office of the Information Commissioner recently releasing guidance on the application of such systems. The guidance highlights the special status under Australian law afforded to sensitive biometric information and that alternatives to the use of such information must be evaluated and prioritised where appropriate.

There are also concerns that AI is not ready to make unsupervised or unilateral decisions and that consistent human supervision is necessary for a WSP to comply with its legal obligations. Nonetheless, it is a space that ought to be continually monitored by gambling industry participants.

Tailored customer experience vs. ethics

Another potential use of AI models in the wagering space is that they can be used to optimise and improve promotional materials and advertisements. For example, AI models can now analyse customer behaviour to determine which content or promotions (such as bonus bets or specific betting markets) are more likely to appeal to particular customers. AI can be used to send out different promotions at different times to different users, based on the particular customer’s preferences and behaviours. The AI model and its analysis can then be used to generate personalised customer experiences that are tailored to appeal to customers and, in so doing, implement marketing strategies and gambling products that are ultimately more engaging to customers.

The flipside of using AI to generate such a personalised betting experience is, naturally, the risk of creating or exacerbating gambling-related harm to vulnerable customers who may feel incentivised to gamble more frequently and/or beyond their means. For example, if product visuals and incentives are tailored to individual customers, there is a risk that this may drive gambling volume and expose some customers to the risk of more significant losses. Any WSP who monitors customer preferences for the purposes of personalised promotional materials (including with the use of AI) ought to ensure that they have sufficient harm minimisation measures in place to adequately protect customers and satisfy regulators that their gambling products and marketing strategies have been developed in a socially responsible manner. The use of AI for promotional purposes is not a defence to any breach of applicable laws and/or licence conditions applicable to a WSP, and AI is still prone to mistakes depending on how it is programmed, developed and implemented.

Customer protection & fraud detection

AI algorithms are adept at identifying patterns and anomalies in customer behaviour that could indicate fraudulent activities. These systems continuously learn and adapt, making them increasingly effective over time at spotting potential threats and ensuring a secure gambling environment.

However, again, such AI advancements give rise to ethical and legal considerations that will need to be addressed before the technology can be fully implemented, such as the need for customer consent and the use and storage of personal data.

Predictive AI for odds calculation

AI is also used by WSPs and their service providers to analyse game and betting data to make more accurate predictions and enhance the odds-making process. AI algorithms can process a multitude of factors – from weather conditions, horse or dog performance, track conditions to jockey and trainer statistics – that traditional methods might overlook or otherwise take lengthy periods to digest and analyse. The outcome is more precise odds that reflect real-time conditions, significantly enhancing the betting experience. For example, AI could be used to enhance both probability-based pricing by WSPs and liability-driven pricing to reduce potential financial exposure to WSPs.

Key Takeaways

AI continues to evolve and become increasingly accessible and valuable to businesses including WSPs. However, the integration of AI technology can pose significant risk to WSPs in respect of their compliance with applicable laws and wagering licence conditions. Any use of AI should be planned carefully and balanced with ethical considerations, particularly given its propensity to both assist and harm consumers who may be displaying problem gambling behaviour or related RG risks. While on the one hand, AI can personalise the betting experience and pick up on problem gambling behaviours, on the other hand, it risks exploiting customers by encouraging them to spend more if not appropriately and carefully integrated into a WSP’s business.