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Rise of the Machines: How AI Is Changing Casino Marketing

Artificial intelligence could revolutionize how casinos win, woo and otherwise manage their customers

Rise of the Machines: How AI Is Changing Casino Marketing

Human beings have been gathering data since they lived in caves.

Futurist Bernard Marr once traced data-banking to 18,000 B.C., when people carved notches in “tally sticks” to record their trades. By 2,400 B.C., the abacus was making calculations easier. In the 1600s, English statistician John Graunt used “bills of mortality” to track the bubonic plague across Europe. And in the 1920s, inventor Nikola Tesla predicted that wireless technology would turn “the whole Earth… into a huge brain.”

Which brings us to the present, when every smartphone, smartwatch, credit card and social media platform is a version of Pac-Man, gobbling up consumer info to fuel the marketing machine. With all this data, artificial intelligence (AI) or artificial general intelligence (AGI) can predict what consumers want—sometimes before they want it—then pitch them in a hyper-targeted way, and do it all more efficiently.

It’s a potential boon for casino marketers, who still use direct mail for much of their outreach. In a 2020 article in this magazine, Clay Peister and Steve Gallaway of Global Market Advisors wrote that Big Data (and by extension, AI) could mean marketers no longer have to “guess at the success of promotions.”

Three years later, and given recent advances in technology, how’s it working?

The Bots Take Over

Just Google “artificial intelligence,” and an AI robot will pop up to take a bow. It will introduce itself as a computer system capable of tasks that once could only be done by you, a sentient being—“people-y” things like “visual perception, speech recognition (and) decision-making.”

That’s no brag, says Andrew Cardno, co-founder and chief technology officer of Quick Custom Intelligence (QCI), provider of data analytics software. In Cardno’s view, the November 2022 launch of OpenAI “changed everything in the world, changed humans forever, changed tech forever.” For importance, he compares it to the discovery of penicillin and Einstein’s theory of relativity.

OpenAI brought us ChatGPT, the ubiquitous chatbot that can compose text, respond to inquiries, carry on conversations in a humanlike way, and provide pretty fair customer service. It’s already spawned imitators by Google and Microsoft, and it’s coming to a casino near you.

“It was a seismic shock,” Cardno says, “because it provides a true artificial general intelligence. We’ve made something that thinks like us and is almost indistinguishable from humans.”

While such technologies raise uncomfortable questions—are robots going to help us, replace us, or rule us?—Cardno prefers to look on the bright side.

“What’s the single biggest issue facing entertainment? ‘I can’t get people.’ It’s the hardest problem now… and AGI can largely remove that. Everything, every role in a gaming business, can double its productiveness through the use of AGI.”

He foresees “vast hyper-level automation of vast areas of the entertainment business,” including “really smart human-level intelligence agents everywhere in your business that can communicate with you in a meaningful way.”

For example, Cardno says, “it could book my hotel room and dinner reservation. When I want to talk to somebody, an AGI would follow your brand and communication protocols. You can even have other AGI watching your AGI, and interrupting if it’s doing something wrong.”

Cardno’s biggest concern is that gaming as an industry “doesn’t embrace” this new approach to service and optimization.

“We’re not very famous in hospitality for being adopters of technology,” he notes. “But this one we can’t miss.”

Practical Applications

What can AI add to the casino marketing space? For one thing, it can drag it into the digital age, says Earle G. Hall, president and CEO of AXES.ai, maker of a cloud information management platform for the industry.

“We’re so used to things like the Starbucks app or Amazon Prime’s suggestions in our daily lives, but the casino industry still relies on hard-mail marketing to enhance loyalty,” says Hall.

“AI can help provide the personalized recommendations needed for tailored marketing. AI algorithms can track individual customer behavior, including the games they play, the times they visit and their preferred amenities. This data can be used to make personalized recommendations for games, promotions or events, enhancing the guest experience.”

Predictive analytics, gleaned by intelligent technology from vast data farms, enables AI to tell the future, somewhat reliably. “It can predict customer behavior, such as the likelihood of a customer returning to the casino, their potential spending, or the types of games they might be interested in,” says Hall.

Needless to add, that same information can be used to help players wager responsibly, “as the responsible gaming tools for brick-and-mortar casinos are woefully behind their online counterparts.”

AI systems like AXES’ Black Box enable casinos to access real-time, actionable data about customers while they’re on-site, when a marketing pitch may be most effective.

“The average casino visitor spends four to five hours at your property,” says Hall. “With current casino management system providers, you get a snapshot in time that typically is far after a patron has left your property. Don’t you want to market to them while they’re there? AI helps you do that.”

Fast Forward

Since the 1960s, casinos have pampered their best customers with complimentary drinks, hotel stays, show tickets and other perks. But early loyalty programs were work-intensive, requiring staff to physically prowl the floor and monitor play to see who deserved a special coupon or promo. In the 1970s, John Acres created the first player tracking system to automate the process, reducing human error and eliminating much of the staffing.

AI takes the process one better. Based on historic data, it can determine existing players’ value, detect who’s at risk of churning, identify who’s taking a pause but may be lured back with the right offer, and even suggest the right time to make that offer.

“Our claim to fame is we gather more data than casinos have ever done before,” says Noah Acres, partner with his father John at Acres Manufacturing, creator of data-gathering products Foundation and Foundation HQ. “Historically, when casinos wanted to run information on slot players, they could only do it after the sessions and measure how much the player spent. We’re processing the information in real time, how they react on a spin-by-spin basis.”

Acres’ suite of products let casinos “target bonuses to specific players or floor-wide, send rewards in the midst of a losing streak to ensure long-term brand loyalty, and send in-game promotions or add-ons to any display, mobile device or sound system.”

Using data analysis, casinos can also learn why some players return and others don’t, then “work through the bonusing and messaging technology” to more successfully convert and retain them. Importantly, it can identify and reel in new customers, a demographic that has often eluded operators.

“Other industries don’t rely on physical loyalty cards, because everything is digital,” says Acres. Asked to stand in line at a kiosk to sign up, many would-be cardholders could just walk away: “Too much friction.”

Acres’ Foundation technology can rate uncarded play—how much a newbie is spending, their average bet size, their potential worth over time—and send an offer during the session. That takes them to an enrollment site based on a QR code correlated with their value, and opens the door to a previously untapped customer pool.

“Right now we’re in a feedback loop, where casinos are competing against each other for core players who are simultaneously aging,” says Acres. “That means we’re not growing new players”—which is a long-term prescription for decline.

There’s a lot of waste in casino loyalty programs, he adds; operators on average spend up to 30 percent of player losses on comps, but they may be throwing some of that money at the wall. Maybe they’re rewarding the wrong players. Maybe they’re rewarding them so often that the perks lose their perceived value and become entitlements.

Bottom-Line Benefits

AI narrows the scattershot approach to marketing for better ROI, and also can reduce costs, especially direct mail, says Hall.

“Using the AXES app, I can build a profile for you: I know when you visit the casino, how long you stay, how long you play and how much you spend. I can push instant offers to you while you’re on-site, to make your experience more rewarding. So instead of a $100,000 hard-mail campaign that generally ends up in the trash, I can give you something of value that recognizes you for who you are.”

It’s the personalization that matters. “Every guest is unique and different,” Hall says. “Some may show up, go right to their favorite slot and hammer that thing for hours. Others might play for 15 minutes between dinner and the start time for a show at your theater.

“What if I push you a two-for-one drink offer at the center bar after the show? What if I push you $10 in free play when you get up to get a soda? Those experiences aren’t possible today with legacy CMS providers. But AI, when leveraged with cloud-based, real-time data, can provide those to your customers.”

Same thing with new customers, he adds. “They want to feel special. They want to be rewarded. AI can help you do that while they’re on-site. Then you can deliver a tremendous experience that helps create that stickiness and loyalty that every operator wants.”

AI in the casino space “is very much in its infancy,” but the demand is growing, he says. “The next few years within this industry are going to be incredibly exciting as some of these tools come to market and revolutionize the guest experience.”

Face to Face

Facial recognition is an intriguing piece of the AI puzzle. A 2022 Forbes article said the technology could “do away with” many loyalty program costs “in one fell swoop,” by automatically validating identity.

By reading player expressions, it can also detect their moods and thereby predict their responses. Are they having fun? Are they losing big-time at the slots or tables? Are they ready to walk? Depending on the answer, casinos can respond with targeted offers or promotions.

In the digital era, when the world’s biggest casino operators are subject to cyberattack, security is “more imperative than ever,” says Mike McManus, Sightline’s president of customer innovation. “With patrons demanding to know their data is secure, operators are ever more security-conscious. They’re turning to facial recognition technologies in their apps as a way to meet that consumer demand of security and convenience.”

Sightline is the first provider of app-based facial recognition and biometrics for the industry, using iOS and Android biometric functionality that keeps consumers in the driver’s seat.

“The agreement between the phone user and their provider is maintained—that’s important because it keeps the information held by the user on their phone, so no one has their biometric information. In other words, limited access to the data is important because it maintains patron trust,” says McManus.

Facial recognition technology can be used “in a number of ways, such as financial transactions, where the patron can verify their ID as they fund their gaming experience. It can also be used to meet regulatory requirements, for example, if a jurisdiction requires patron ID and geolocation services to ensure patrons are physically present on property using their mobile device for gaming. Facial recognition on the patron’s phone can be useful as an added layer of protection.

“Another example is when casinos conduct live drawings,” McManus says. “Using the app, a patron can receive a notification that they have won a drawing where they must be present to win. The patron can open the app, use facial recognition to verify they are who they say they are and that they’re on property, and the reward is instantly redeemed into their account, all without leaving the restaurant, the concert, the retail outlet or the slot machine.

“It’s a win for everyone—the patron can keep doing what they’re doing, respond to a notification of the win, and keep enjoying the experience they’re having.”

Of course, the process must be easy and intuitive, McManus adds. “The banking industry went through this years ago. When they first launched consumer apps, it was almost impossible to log in because there were so many hoops to jump through, and consumer adoption was low. Today, they’ve adopted modern technologies to streamline the log-in process, all while maintaining the critical dual functions of privacy protection and delivering the service you want to provide.”

The end result is “a smoother patron experience as patrons use an app and/or fund their play. What’s really exciting about apps is they can be used throughout the entire modern resort. They arrive at the property, open the app, ID themselves and receive a digital key almost instantly—bypassing the check-in line and getting on to the fun they came to have. Another example is a patron could use the technology instead of a ticket for admission to a concert or other theatrical performance.”

The Human Touch

As for concerns that robots will take over humanity, like HAL 9000 in 2001: A Space Odyssey, well, only people can decide.

In a 2020 interview with the Nevada Independent, Anthony Cabot of the University of Nevada, Las Vegas Boyd School of Law said facial recognition technology, in particular, is “starting to raise issues—or questions—as to how this works and what the ramifications could be for things like patron privacy, anonymity and data protection.

“We’re right at the cusp of a new era,” he said, “and it gives us that unique opportunity to do it right from the beginning.”

According to Acres, AI doesn’t mean human action or interaction is irrelevant in the casino resort. Far from it.

In one test program, employees on a slot floor were dispatched to “simply to say hello to a player, talk about their favorite football team, ask about their wife or have a personal conversation.” The experiment showed that players who were personally greeted two or more times a month tended to be more loyal, and were less inclined to simply shop for bonuses or freebies at competing casinos.

“The deciding factor was, ‘Where do my friends work?’” says Acres. “We can’t make everyone a winner, but we can deliver little wins and some entertaining moments, where we can put some points on a scoreboard. And we can always fulfill the need for personal recognition.”