In the podcast episode of "Gambling with an Edge," hosts Bob Dancer and Richard Munchkin discuss the impact of artificial intelligence (AI) in the casino industry. They delve into how AI is utilized to analyze vast amounts of data, improve player experiences, and tailor offers to individual players based on their gaming habits. The conversation includes examples of how AI has been applied at casinos to track player performance, evaluate video poker players, and enhance communication with players through tools like GPT models. Additionally, the hosts touch upon challenges and privacy concerns associated with implementing facial recognition technology for surveillance in casinos, highlighting legal restrictions in states like Illinois. The discussion provides insights into the evolving landscape of AI in the gaming industry and its implications for both operators and players.
Transcription
9643 Words, 51235 Characters
Good afternoon. You're listening to Gambling with an Edge. Now here are your hosts, Bob
Dancer and Richard Munchkin. Good afternoon. Welcome to Gambling with an Edge on Bob Dancer.
And I'm Richard Munchkin. Today we're having one of our irregular podcasts. We used to
do this weekly and now we do it somewhere but semi-irregularly. Whatever the spirit
moves us. And the spirit today is moved us because of artificial intelligence that is
being used for all kinds of things. And I had a brief conversation with Buddy a couple
months ago with Buddy Frank who is going to be our guest today. And he mentioned, he
knew something about that. So I figured maybe he had enough for a show. And he said he did
and he would love to come and talk to us. So Buddy Frank, welcome back to Gambling with
an Edge. Glad to be here, Bob and Richard. So our listeners in general, actually, maybe
we should define artificial intelligence. I assume everybody knows what it is but maybe
they don't. Yeah. No, I think we should definitely talk about what exactly do we mean when we
say they're using AI to help them in the casinos. Oh, God bless you because I find so many people
have no idea what that term means. You want a little background? Yeah. There was a great
movie out a while back. Should have been on your recommended list several years ago but
it was called The Imitation Game about a fellow named Alan Turing. And it was how he broke
the Nigma code using some of the very first computers which he helped invent. But they
really didn't tell you what the imitation game was. That came later in his career. About
1950, he wrote a paper in which he tried to do a test. He called it the Turing test to
see if machines can think. And it was a very interesting test. For years no one could pass
it but now you can probably do it with your Apple Watch. And then I think about 1955 there
was a workshop at Dartmouth where they coined the word artificial intelligence. So it's
been around since 1955. People I talked to talk about like it's just come on in the last
five years. Probably has a drone above your house and Arnold Schwarzenegger's in it and
gonna drop down in your backyard naked. But all artificial intelligence really is the
analyzing of data and what's changed? Is it so darn fast now? We can do things we never
imagined we could do because they were quite frankly impossible to do. And in the casino
world probably more than most business we have a whole bunch of data. In fact, early
in my career most I'm really close and really love slot systems. And early in my career
everybody complained that hey we have so much data we can't handle it. So sadly what
they did is just didn't look at other data because they couldn't handle it. But now
memories gotten cheaper, computers have gotten faster, costs have come down. And now there's
some really great things going on for casino operators, for game designers. And I'll argue
in many cases for the players because artificial intelligence is there and we can talk about
that as the show goes on. Okay. So the casinos had all this data, now things have gotten cheaper
and what did they do? Well, we can analyze things we never thought about and I could
give you a thousand examples but I'll mention one, I finished my career with a great casino
called Pechanga. And the Southern California casinos did really well and thank you very
much. They had lots of capital to explore new technology. So well before most of my
competitors we went to the tribe and said hey we want to put a high speed network on
our floor but we need to buy a bunch of switches from companies like Cisco and we need to buy
a lot of big computers from Dell and we need memory from a company called EMC and it's
only going to cost you four million dollars. And if I was working for a corporation I probably
would have been fired because they would have said well what's the return on investment
next week and I would have said nothing but it's really good for the future and that would
have really got me fired fast. But at Pechanga they went ahead and because of that we could
do all kinds of advanced things and we had to prove to them how we would make that money
back in the future. I'll give you a really simple example. Pechanga had a relatively
small hotel not like the mega hotels of Las Vegas but when they had a special event like
New Year's Eve guess who we invite to stay in the hotels. All the players who spend the
most money per trip we call it average daily trip budget. So I don't know if you guys would
ever be on that list but let's assume that you're what I call a 10,000 ADT enough player
meaning every trip you wager 10,000 dollars. Some people 100,000 and so on. So the host
would always put those people in the hotel first. But once we started analyzing more
data what data am I talking about? Well what if we take a look at the hotel data and see
how those players that were the 10,000 changed their behavior when they stayed in the hotel
versus when they didn't. And we found some players maybe did 20,000. Some maybe only
did 10,500. But we looked at $2,000 players or $1,000 players and saw when we put them
in the hotel they went up to 10,000 or higher. But changed our whole thinking we'd never
really analyzed what was the impact of play when they stayed in the hotel versus when
they didn't. We always had the data but we didn't have anybody go on and say let's do
all this because it took too much time and too much effort to look at all players how
they did this time that go clear down to a $100 player we didn't look at how they changed.
That one change alone generated enough incremental revenue to pay for our entire memory upgrade
which I think at the time was about $3-4 million. Didn't you need to hire data scientists?
Pardon me? Didn't you need to hire data scientists? In addition to buying all that equipment that's
exactly right. In fact, I think for the first time we hired people that had that weird title
attached to their name, data scientists. Before that we had IT guys and we had financial
analysis and stuff but now all of a sudden we hire data scientists because that example
I gave you is very simple because you might actually take four or five or six or seven
or eight qualities like that and put them all in your database to make better decisions.
And how long ago how many years ago was this? Oh my gosh that was about 15 to 20 years ago
and not only could we do more advanced technical things like at one time we turned every machine
in Pachanga except for the real spinning machines. We turned every video machine into a tournament
machine and for about a half an hour every game in the casino I think there was 2200 and
we said again this world record turned into a tournament machine and then as soon as the
tournament was over it turned back into a regular machine. God we had record revenues
that day because everybody got all excited because I don't know if you know but tournament
software generally features like a thousand percent payback on the games versus a regular
machine maybe 7, 8 or 9 or 5, 6, 7, 8 or 9 as far as the casino hold. And so everybody
went crazy we had a great tournament. Well you couldn't do that with the old networks
but with the new one and advanced technology things are better and it's getting better
better every day and I can talk about that and also talk about some of the products that
are getting all kinds of positive and negative attention. Let's talk about how casinos use
it to evaluate player performance. That's why I made the point earlier talking about
how we always had the data but we didn't necessarily know how to analyze it meaning Bob I could
always look at my slot system and look at your coin in a number of handle poles, win
loss percentage and I put the machine data in there so I knew whether it had a theoretical
hold of x percent and as you know better than anybody in products like video poker how the
heck do you determine what the field hold is meaning mathematically you and I can tell
exactly what the theoretical hold is if someone plays it perfectly but in the real world there's
people who play it horribly and a whole range of people in between and so we just plugged
in a number and then once a year by regulations you take a look at the actual number and adjust
it as you got closer and in case any of your listeners got lost in that let me give you
an example of a multi game that had a 1% poker in it and an 11% video slot machine and they
were both in the same cabinet. Well what we used to do was just go hey one plus 11 that's
12 divided in two it's a 6% hold game and by golly at the end of one year we find the
machine was really about a 2% hold because most people played the video poker instead
of the video real game and not everybody is good at playing poker is Richard and you are
Bob and so we'd adjust the game to 2%. The problem is guys like you who are really good
players and take maximum advantage of all our programs you'd be racking up points at
6% when if I had really good data on you I'd probably have you a percentage of what you
were actually playing so for some advantage players that's not good. The good news for
you guys is not everyone in the world has taken advantage of these great tools and I would
tell you that in the real world probably only 20 to 30% of the computers are using advanced
AI programs and I'll mention a few of those as we go on and then they don't learn the
tools they have so as you know and as you can read all kinds of tip sheets out in the
industry there's still places where you might find they're out of whack with what they reward
and how they reward players and that works really well for advanced players.
Yeah I mean when people nowadays hear AI they think of chat GPT or Gemini and are the casinos
using those things or are they getting some kind of software that does the equivalent
that's geared specifically toward casinos how is all that changing now?
I'm glad you mentioned that because I've been using that for some time now and it's fascinating
we're now up to chat GPT version 4 and 5 is in beta but not out yet but the first thing
I ask people is do you have any idea what GPT means for and it means generative pre-trained
transformer well now that you know that you know everything I mean that's really confusing
what it really is is what they call a large language model let me make it even simpler
what this program does is go out and look at everything ever written because of the internet
and because the speed is so fast and tries to figure out what may be the next word and
what you're trying to write pretty simple and sounds simple but you got to remember
all these computers anyway only function with ones and zeros and that's incomprehensible
to some people but what this does is look at language models and determine how you should
probably say something well you can use this for a lot of things I'm a writer as you may
or may not know and every once in a while I write a story I think it's brilliant but
I'll go to chat GPT 40 and say hey can you improve on this and it's amazing one is it's
a great editor all those stupid typos I make and the wrong verb tenses and everything it
corrects all those immediately unfortunately half the time it it takes out the heart of
the story I'm doing and in some cases it'll even put in mistakes but I got to tell you
I used to use chat GPT 3.0 and it was full of mistakes 4.0 pretty darn good it's almost
mistake free not totally and every once in a while it'll invent stuff but guess what
we're just in the infancy of these large language models and they're getting better and better
and better every day now what you really want to know is how the casinos are using these
large language models it's mainly in that that probably the host and all the folks
in marketing aren't really necessarily great writers they should be but they're not all
so a lot of times that offer you're getting on your email now or in your text message
might come from chat GPT and it's probably written pretty damn well and it might even
automatically fine tune the offer so I could send out the exact same offer that five years
ago or ten years ago would just look at hey Bob's in this ADT group of two fifty to six
hundred and Richard's in there too so we'll send them the exact same letter well there's
a big difference between a two hundred and one dollar player and a five hundred ninety
nine dollar player huge difference in those two guys and something like this could actually
tailor each offer to each of those levels so instead of having three or four or five
tiers it might have ten thousand tiers based on your gaming habits so hopefully it'll it'll
get everyone a more common playing field and a good value for their play now I know you
two guys like to get a better then deserved value and again not everyone is using these
tools so you've got a good future ahead of you so I remember hearing geez twenty years
ago or more that somebody had the patent on video poker on analyzing video poker in real
time to give you an exact theoretical of the player playing the game but they never had
implemented it and I'm wondering is that is that a reality now are they finally doing
that there's several people have our products that are reported to do that IGT has a product
out that works on their newest pokers that will do that acres and they have a product
their own slot system or slot supplemental system called foundation and it offers that
program in other words when it looks at me and I run a hundred dollars through a video
poker it says hey buddy's pretty good player let's give him five dollars of free play because
of that and Bob plays that same video poker machine and the system goes oh my god this
guy's incredible let's give him two cents because he is really good so those are the
future out there very few people have used it which surprised me I thought more people
would and I think we talked about this a year or two ago about how these programs were coming
but not everybody is implemented it yet in fact very few have implemented it but it's
so players who had a choice between playing on brand new machines in a casino or the same
game on a machine that was ten years old probably assuming they're a good player would be better
off playing on the older machines because they would be less detectable is that fair
depending on the product they use the acres product they say will work on all the older
machines the IGT product last time I checked and they just did a new version so I'll have
to check that one out Bob but last time I checked the IGT model only worked on newer pokers
I'll give you a little operator thing about new pokers versus old I highly recommend casinos
by new pokers because they don't have sticky buttons and technology things certainly the
screens are brighter and better but it's kind of hard because that new poker machine probably
won't make one penny more than the old one unless you take an advantage of more of the
action gaming products you know the ultimate X super duper might require a new machine
but it's kind of hard to go out and buy a new machine and your boss says how much more
money will it make and you have to tell him well probably not much more because people
like the old one well why are we getting new ones it's because of those we don't have
a sticky buttons they're much better they'll go into the future the other one you know
the mechanics out there fix and something every 10 minutes it's going to be better
for guest service so you notice an awful lot of casinos are upgrading their machines in
fact years ago one of the first companies to replace all the pokers was Caesars and
I went what a stupid decision they got one of the worst video poker products in the
industry least played because they're generally tight at least under the old Caesar's management
they sure were and you tell me if they still are Bob but but they bought all new pokers
instead of buying other slot machines and I was surprised by that but I think probably
everyone's going to end up in the very near future Bob of being able to track the quality
of play to the player whether they use it or not that's up for debate I'm actually surprised
is taking this long to be able to evaluate video poker players the the products that
I used to sell like when poker or video poker for winners and there were a couple other
brands where you could play them and they would tell you immediately what your percentage
accuracy was and that was that's been available 20 30 years and so the player community had
that software I don't see why the casino community didn't have it but I was perfectly
happy that they didn't have it but I well that brings up two great things one is I never
could understand why more people didn't use your products I've got it on I've got the
old version on several of my old computers plus my new one and now there's a similar
version out there on on the action gaming sites and they were wonderful but not very
many people used it in fact that I've written reviews of your books forever and telling
anybody you'd be an idiot to play poker and not read these books but I see the real results
and I find all kinds of people do dumb things Richard you probably see all those players
who play triple out roulette you know what's wrong with them so so those kinds of things
happen the problem Bob is the slot machines have a set of standards called sass how they
communicate and in the case of video poker for winners you know you've got control of
both sides you can see the outcomes and that same program can evaluate whether that was
a good player bad play and suggest alternate better plays the slot machine doesn't talk
to the analytical software in quite the same way except for these newer products like acres
and the IGT solution I think in the future they'll all have that capability but right
now they don't another thing we've been hearing about that is supposed to be coming is cameras
built into the machines that will recognize the players as soon as they sit down and whether
they're using a players card or not I mean are those is that started to happen are those
in casinos now actually I think it was you and I Bob wandering the floor three years
ago at G2 E and and what was left the ballies you know they've had 73 name changes since
then but they had little cameras staring right at Bob Dancer on the video poker games and
you know operators will go on this is great you know we'll be able to solve problem game
and everything well it went over like a lead balloon some states Illinois is one for example
have outlawed facial recognition technology and based on negative feedback almost all
the companies dropped their efforts of that you may or may not know most surveillance departments
use facial recognition to the spot band players or shovel makers or criminals but that technology
hasn't made it down to the slot floor and I don't think because of these privacy concerns
and the laws I talked about that it will so I think you're safe there I have some other
ways I wish we could track you just wait before we move to that does that apply in Illinois
to surveillance they can't use facial recognition in Illinois for surveillance Richard check
it out from someone besides myself I can ask that answer I'm emcee in the world game protection
conference coming up and I can ask them that about Illinois because some of their regulators
will be there but I believe that applies to all industries not just casinos wow and I
don't know which other states but I'd heard some other states are doing that one of those
privacy concern things yeah sounds good to me changing gears for a little bit slots is
not the same as video poker a couple months ago the MGM made a big splash in the news
because they're going to be using AI to look at all the slot machines that people play
and the ones who only play machines of a certain type MGM is going to either restrict them
or eliminate them from the casino do you know anything about that sure but it's not just
MGM I find most of those corporate guys are years behind in their technology I got to give
you a little background I love the subject of AI for analytics we call it business intelligence
but I worked both with gaming analytics when they were founded I was on their advisory
board for a couple years and today I do a little consulting with a company called quick
customs intelligence QCI and they're both analytical programs to do that there are
about 10 other minor ones those two are the major ones if anybody wants I can look up
while we're talking the names of all the others but those are the two major ones and they do
all kinds of things like that Bob they look at the players and I wrote an article a while
back about the industry's upsetting about machines that I call it perceived persistence
and true persistence machines do I need to explain those to your audience plan ugly okay
persistence is a geez a machine like hex breaker was one of the first big ones but going way
back there was a machine called diamond mine from IGT and I'll use that one explain you're
looking at the slot machine and over at the side is a tube and every time you'd hit a
certain combination of diamond a jump up and drop in that tube and you could see it over
there on the right hand side of the screen and when that tube got filled to the top with
diamonds boom you get a jackpot that is true persistence and today there are several machines
out in the industry very popular that are true persistence meaning if certain conditions
occur you almost can't lose even simpler example let's talk about video poker they have a progressive
meter on that and if you were one of the guys who went out a long time ago like I did and
bought Bob Dancer's video poker for winners you could put in you can change the top award
and you'll notice as it gets bigger all of a sudden the machine it may have been a 99.5
all of a sudden now it's 100 or 110 or 120% payback so you could see as the progressive
grows the machine almost can't ever lose my luck it can still lose but basically overall
you're gonna be a winner it progressive so that's a form of persistence machines how
should operators feel about them well guess what when those jackpots get will use the
simple video poker instead of the persistence machine so when that jackpot gets bigger I
noticed all of a sudden the coin in goes up so I'm really happy more players are playing
it they're going crazy playing it and everybody's happy the casino's happy because we have increased
volume not so good when it hits and resets back down to 4,000 because now it's minimal
play but that'll happen again as it builds that's been going on for years in big link
banks it can get abused sometimes by what we call team play meaning on the link there
might be 20 machines all hooked to the same meter so sometimes when it gets high folks
hire whole team of players to play it and not let anyone else play till they hit it
that was an abuse from the operators point of view from the team captains it was a good
money making strategy can still lose but most of the time he won but those weren't extreme
you get new persistence machine and you're going what's the problem when that diamond
chute gets full people jump in there and play it and what's the issue I don't care we're
still getting the same whole percentage on the machine we always got well the issue
became I use John Smith as the average player comes in every day plays machine a bit and
then here comes what I call the persistence band the guy comes in he only plays that machine
when it's in a winning condition what's the problem we're still making money well John
Smith is upset because when he started there was one diamond in there and he filled it
up three quarters and had to go to the bathroom or had to go home on the bus that day and
or when he went to the bathroom he came back there's the known persistence player hitting
that jackpot for only playing a small amount great for the persistence player he's smart
he's spotted machines in a favorable condition and played it and won the jackpot but John
it's mad and doesn't come back to your casino again so a lot of I think this peak is this
resistance persistence machine peaked about two years ago and a lot of operators now won't
put in a persistence machine the brand new one that got most of the hype at G2E this
year was called phoenix link a brand new machine from aristocrats pretty good machine it's
got a persistence feature but it's not as prominent and a lot more of the bonuses go
to the other side now there's another thing called perceived persistence my favorite game
is from aristocrat I call it the firecracker game you've probably seen it with three strings
of firecrackers hanging down and some of them you look at them and only the bottom few layers
of firecracker are twinkling or simply you know they kind of glitter in the light as
the machine gets played more you'll notice that those twinkling firecrackers climb up
to the top a lot of players will go over and jump on that machine because it looks like
it's ready to hit because when one of those strings get to the top it can hit often does
but guess what that's perceived persistence because machine can also hit when there's
nothing flickering at all so operators love those and there's one other product I failed
to mention that really got people going and that's a special kind of progressive meter
called must hit by and several manufacturers did real good Ainsworth really kind of pioneered
this and and that means let's say there's two or three meters but one of them says must
hit by a thousand dollars so when the meters at five hundred man you play that goes up
but what do you think happens when the meter says nine hundred ninety eight dollars all
of a sudden there's this guy Bob Dancer playing it who we've never seen before in our life
because he represents he recognized this machine was in a winning condition and without too
much coin in he'd probably win so those also are getting some negative pushback from operators
GM's who say get rid of all the person I don't think you'd find a hex breaker around anymore
because so many people reacted negative there's a version of Buffalo that's like that and
if you read any of the good books out there you know the Wizard of Oz got one telling
you which games to look for and a lot of people are writing columns about what games to look
for. I urge you not to do that because soon as GM's and slot operators see that they'll
crush you out and remove those games but therefore the good analytical programs are doing it.
The problem once I identify a guy who only plays those machines what do I do about it
and I don't know anyone who's come up with a good answer for that yet Bob. I guess they
could cut you off your club points but you're still going to make money so it's kind of
a quandary. What we can do is not make you absurd offers and put you in the high roller
suite and everything's free at the golf tournament and send you on our Norwegian cruise but other
than that there's not a lot we can do about that and sadly some really fun games are not
being purchased or put on the floor by some operators because of this problem. There's
probably more than anyone to know on this. No I mean some of the operators are throwing
people out. I mean literally you know 86ing people for playing slots. You ought to be
familiar with that Richard. I'm not a slot player. I know but you were the first, your
table games players were the first victims of being excluded from because you know something
no good reason. Yeah and it's hard to do that so you know that may be fine in a place like
El Cortez where you know all the players and you say hello to your friends but try that
in Yavamar Pachanga where there's more than 5,000 machines or Winstar where there's close
to 10,000 and the place is packed. Hard to get rid of people. Well it is actually is
easy to get kicked out for slot hustling in El Cortez as it is to be counting cards.
They know the bad guys. That's the difference. It is. One of the places that does that they
don't actually kick out but they restrict is the airport in Las Vegas. The airport has
lots of machines and the people who run those machines are actually eliminating players
or are restricting them. They cannot tell them don't come back to the airport because
the airport is a federal facility but they do make, they call the cops on them and hassle
them and stuff like that and they in my mind that the airport would have less reason to
do that than a casino would because the airport doesn't really depend on repeat customers
of the same people than a casino would because it's just it's a different animal than a casino.
As you tend to a lot of locals would go to that one place but in airports it's not that
way. You don't really go hang out at the airport unless you're flying but there were people
who would get refundable tickets and go in and run off to play all the persistence games
and then cash in their ticket and don't fly and the airport slots are restricting them.
Interesting. Can I tell you a secret you can't share with anyone? There's no one listening
to this.
No, just the three of us. Generally airport slots are the worst slot machines on earth
to play. I mean they're generally tighter than most but if the operator is foolish enough
to put pure persistence machines in there they deserve it. So my overall tips is don't
play airport slot machines as a regular thing unless like Bob said you spot pure persistence
machines.
Yeah, I just I can't imagine it seems to me that they could really open themselves up
for a lawsuit to have the police come literally the police come hassle some guy for playing
a slot machine when the guy actually is flying somewhere or arriving from somewhere.
Well, the other thing is that with persistence machines you got to kind of know your machine
to get to know what conditions it in and you got to be there when they hit. I don't know
Bob maybe you do but I don't know anyone who goes to the airport on a very very regular
basis unless it's a commuter flying commuter. So well I can see why they can beat them but
there certainly wouldn't be beaten them on a regular basis would they?
Well if they had refundable tickets and they made it trip every day to check out all the
persistence machine and then didn't fly out on that ticket use the ticket to get through
security and then turned it in and got reimbursed for it. There were people who did that on a
regular basis there were slot teams that did that on a regular basis.
Bob I love talking to you because I learn something every day for me.
Buddy before we started you said that once you started doing all this data analysis you
found that you had misjudged players in the past. Can you talk more about that?
Well the one area where we haven't made a ton of progress Richard is table games mainly
because we don't get automatic inputs like we do with slot machines. I mean pretty much
anyone who plays a slot machine whether they're a card member or not I know the data because
it comes through the slot machine. Well with table games we have to rely on things like
the pit boss comes every once in a while and sees Richard's only putting out black chips
or five dollar chips and he writes it down and he goes around. Of course all the advantage
players when they see that guy come and put out a big bet and soon as he's gone they put
out smaller bets until the decks in the condition. Anyway for lots of reasons we didn't have accurate
inputs on table games players. I was working at the El Dorado which in those days was a
little casino and now is the largest casino group in the world but we explored a product
called mind play. It was a table games tracking that use cameras to record the chips and stuff.
Turned out it had a lot of flaws and the dealer had to do it perfectly or didn't work right
so they abandoned it. But we learned with that short amount of data that we were actually
throwing out all kinds of people we thought were advantage players or card counters or
wheel slicers or whatever. And when we got that system and we find out those are really
good players. I'll tell you one more secret Richard don't tell anyone this. Of all the
card counters in the world only a very small percentage of them are good enough to really
beat the game. And I'm going to ask you if you agree. 100%. Yeah. And we were throwing
out all kinds of good players who actually should have been VIPs because they weren't
that good. But based on their way they were playing just using cameras upstairs and having
the guy look at it we went ah that guy's a card counter throwing him out. Another mistake
that they make and I'm wondering if they have changed in this regard. They look at a guy
and they say oh we think he's counting cards you know we should throw the guy out but they
don't look at the rest of his play. And let's say you have a guy who maybe he is a winning
player you know on Blackjack and has some small edge. But he also goes and plays slots
and he goes and plays craps and he bets in the sports book where you know if you look
at all of his play he's actually great for the casino. But because maybe they're worried
so much about the Blackjack they throw the guy out. And I'm wondering if they've started
looking at the totality of people's play in that regard.
Hey Richard you should go be a salesman for QCI or Gaming Analytics or one of those things
because that's exactly what they claim. I want to look at the full picture of a player
you know he may be wonderful for all kinds of other reasons. Yeah and his wife might
be playing slots you know. Hey man look at total value his address is where he comes
from drive time all these things we never used to consider now we can put in for a total
mix of players. You know and you're very right about spouses. I remember we had one player
huge player an old associate actually was a Wall Street guy with all kinds of deep pockets
only played craps but his girlfriend hammered the hundred dollar machines and so he got
to look at a place like that her profit margin par exceeded anything he did. So yes you're
absolutely right with advanced data analytics you can look at the total player and again
I mentioned the breakdowns between that. Another big secret in our industry you've heard of
the 80/20 rule where 20% of your players produced 80% of your revenue. Well it's wrong. What
it really is is more like the 95% rule meaning 5% of your customers generate 20% or I mean
80% or more of your revenue. It's amazing. So you really want to track and accurately
understand those players and these new programs allow you to do that. The one thing I just
urge I just wrote a little piece for CDC called 10 wishes for the new year and the first
one was to visit the competition visit the competition visit the competition. But down
on the list I said you know use some of these new tools. The other thing I put was one update
your software. I can't tell you how many people are using like IGT version 5 when the rest
of the world's on version 97 ETH and we're not updating their software. So our industry
still has a problem. There are great tools out there today but people aren't necessarily
investing in the training to use them properly to take advantage of what you can learn. For
you guys like that example Bob just gave a minute ago with the airport that I had no
idea about that because I didn't think about refundable tickets. There's still ways to
get around it. I got to tell you a story about Bob Richard. I'm working in Reno at a place
called Fitzgeralds and I've known Bob because he did some consulting with us a very good
video poker player and everything else and based on his help I tried to make sure I was
in marketing then. I tried to make sure that our rewards programs accurately affect reflected
the value of the players. So Bob comes in with his, I believe it's his ex-wife at the
time.
No, at the time she was my wife.
She was his wife. She's his ex-wife now. And I'm going, "Oh, how come you're here
or visiting?" I didn't, especially our property. We didn't have particularly loose poker but
he said, "Well, the women's bowling congress is in town." And I went, "What the hell does
that have to do with anything?" He said, "Well, I got my wife to join and found out everybody
in town was given huge bonuses and points, rewards, things and everything if you're a
baller." So she joined and we went out and had quite a profitable weekend. I never thought
of that. So those are the kinds of things that I think you'll continue as advantage players
to have it because one, the operators who have the kinds of tools I have now that would
have spotted that, they didn't exist back then. And then an awful lot of operators are
not using these tools. One of my suggestions was, "If you haven't done it already, please
explore these AI tools in your marketing, in your slot selection committees, hopefully
someday in table games, Richard, as well."
Or hopefully not, depending on which side of the fence you were.
Yeah.
Yeah.
Well, I also talk about an area that's really got a lot of people buying these programs.
It's called churn. That's a marketing term. And let's say, I'm at a casino A and Richard
came in every two weeks or at least every Thursday and spent his budget. Maybe his spend
was $75 every trip and he stayed there about two and a half hours.
Well, with these programs, we can see one, if you change that pattern, why and what do
we need to do? But secondly, with these really advanced programs, and I know Akers is one
of them, we could look at your play, Richard, and went, "You know, he's here for two and
a half hours, but he's only been here a half an hour and these machines are wiping him out."
And we could reward you money. Now, where do I get the money to do that? Well, I don't
give it to Bob who's playing another machines over there and he's just won two Royal Flushes.
He's happy. He's got 8,000 ahead on the machine. I don't need to feed him any instant bonuses.
He's doing just fine and very happy because machines are paying off for him. So we can
tailor offers specifically that and even do it in the middle of your session. That's what
Akers stimulates, but I think the other folks will follow their lead in the near future
and try to enhance your thing. So if we see your budget's going out too fast or items
like that, and even they talk about some of their materials, maybe we find out for some
strange reason, unbelievable to me, you're a Las Vegas Raiders fan. Well, when they score
a touchdown in real time, we can say, "Hey, Richard, your team just scored a touchdown.
Here's a bonus." And that'll make you feel very personal connection to the machine.
Now, sadly, for you, they don't score very many touchdowns, so you won't get much.
Right. Yeah, I'll get the bonus on the slot machine, but if I go over to bet them in the
sports book, they'll say, "Sorry, you can bet $10."
Well, that's a whole new world, the sports book. But one thing about that I mentioned,
we have good data about slot machines. We got really great data about sports betting.
So that's an area where AI will really, really be valuable in the future because everything's
online or has the data computerized, so lots of opportunities there.
Now, for the game designers, they're really love AI because they can look at all kinds
of element. What bonus did the player like the most? When he got this bonus, did he play
more or play less? Did he leave when he got that? All kinds of things we couldn't look
at before, we'll be able to look at in the future. And the manufacturers will be able
to look at that data too if it's on a shared link.
I would think sports books have been using AI for a while, sports book.
Yeah, because, like I say, everything's online. And their purpose is, by the way, I don't
know if you've seen the numbers, but it's staggering how much is being wagered. Lanark
City on their combination of sports betting and online betting exceeds their slot play.
It's just phenomenal. And they've only been in that business three, four, five years,
and already it's that big and growing like a weed. So I don't think it's hurting. Casino
bricks and mortars, but it's a whole new audience who's very active and gambling a
lot. But I think it's good because we'll be able to spot quickly illegitimate bets or
money swinging in bizarre ways that if it was all just with the bookie in the corner
or the guy in the back alley, you wouldn't spot those patterns, but now you can.
How do you see AI different in five years than it is today?
I think it'll be adoption. I always consider myself an early adopter in the industry. And
I didn't deserve that title. It's just because everybody else around me was a slow adopter.
It's the old story. You don't have to outrun the bear. You just have to outrun the guy,
the slowest person in the group. And I think as time goes by, you'll find more and more
people seeing the benefits of good analytics and good AI and implementing in their products,
their marketing schemes, their rewards program and so on.
Just another simple thing. At the company, I do a little consultant called QCI. You guys
ever heard of a CEO at company's chief operating officer?
Yeah, sure.
Their chief operating officer, there is a computer program. It's got something's name.
I forget what it is. And if you think about the Peter principle in our industry, like
a QCI, that's a company that really hires the co-CEO's or the co-founders, one guy's
an analytical expert in databases and graphical designs and floor mapping. He's wonderful.
The other co-founder is a PhD in mathematics. They're just really good guys.
So you promote those guys to the CEO and they're spending half their time filing HR reports,
answering emails, wondering why one of the employees ran off with another employee or
did they do their requisite training and all this stuff and which emails should go out?
Who did you respond to? We checked our supply change. Those are not the skills of those
two guys. So they found, gosh, I wish I remember the name, they call it. They love it. But
it does all the mundane things like schedule, times for meetings, do all this stuff, knows
who's where, who's traveling. All those kinds of mundane things is being done now by a computer
at that firm, not by a human. Because those are skills better handled by a machine than
a person. And I think you'll see more and more and more of that.
You guys, simple example I can think of, Bob, is I loved it when cars came out with cruise
control. And what that meant, you push a little button, you set the speed, and now you don't
have to keep your foot, especially on that drive between Reno and Vegas. It'll just
go the speed you set it at. Well, then along came adaptive cruise control using
Neon. And what that did is it had a little sensor in the front or a camera. And same
exact thing. But if all of a sudden now there's a car doing 55 in front of you and your cruise
control set to 70, you won't smash into the back end of the car. Whereas with the old
cruise control was wonderful, but you would smash into the back end of the car if you
weren't paying attention. So that thing was really cool. It would slow down. Then I bought
a Tesla. And a Tesla, the first part of it was it had adaptive cruise control, but it
also had cameras on all four sides and everything. And so now it goes and it goes right up the
car and it keeps the constant speed no matter what it is. But it also because of the cameras,
it'll go around that car if there's nothing in that other lane. And now I got the latest
free version of the thing called full self driving. And now I just put in where I want
to go. And I swear to God, it works perfectly. The car will just go there by itself. It'll
stop, it'll signal, it'll stop at the red lights, it makes turns, does everything. And
I don't have to do a thing. Now I hold on the wheel because my old fashioned mind doesn't
totally trust it. But I barely have to touch it. These things just keep getting better
and better and better. And Amazon keeps recommending books I like to read. So getting better and
better and better every day.
As always buddy, it's a pleasure to have you on the show. Thank you. I learned a lot today.
You accuse me of teaching you things. I definitely accuse you of teaching me things.
I've got to buy refundable tickets from now on. That's a good idea. But also know that
they're looking out for you. If you're playing Buffalo Ascension too much, they will do things.
Richard, don't tell me, but he just mentioned one of those games on that list, I totally
know. Yeah, I think the cat is out of the bag on that one. Yeah, among those who know,
and they're not hard to spot. In fact, I recommend regular players look for that. Why should
they not do it? But just like people not using video poker for winners or some of the great
tools out there, thank God for us operators and for you advantage players. There's a bunch
of players out there who oblivious. I can't understand why anybody plays six, five black
jack or triple lot roulette, but there's hundreds of people who do.
Yeah. All right. So at the end of our show, sometimes Richard and I would have a recommended
section and today I am going to talk about a recommended book called Blood Game by Jeff
Boats. For some reason, Jeff spells his first name, J E F F E. I don't know why, but I asked
him how to pronounce it and he goes, it's Jeff. So I should have known I suppose. Anyway,
Blood Game is an action packed thriller involving mid Eastern terrorists set at an Eastern European
poker tournament. The protagonist, Dr. Thomas Vales, a highly functioning individual with
Ashberger's syndrome, somewhat similar to Rain Man. And he's on the fringes of the CIA,
but not fully part of it. The book is the first of a series of adventures that involve
this character. I enjoy the thriller genre and this book will definitely fit right in.
And the fact that it's set at poker tournament will make it of interest to many of our interests,
many of our listeners. Richard will provide a link to that game at the end of the show.
Its published date is February 4th of 2025. So you can't get it quite yet, but it's coming
up soon. Yeah, I, you know, after spending a lot of time in Hollywood and reading a lot
of really terrible scripts, you know, when I was younger, I felt like if I started a
book, I had to finish it. And then I got to the point where I realized, boy, is that a
waste of time. If I don't like it, I'm dropping it, you know, after 10 pages or whatever.
So I, when Jeff sent the book, you know, I was trepidatious because I didn't want to have to
tell him like, you know, sorry, I thought it was terrible. But I read it in two days. I mean,
like you, Bob, I'm a fan of these kind of thrillers, you know,
Vince Flynn or Tom Clancy or these type of books. And you throw in the poker aspect. Yeah,
I'm a sucker for that book. But yeah, held my interest right from the beginning. And as I say,
I finished it in two days. So we wanted to give a shout out to Jeff since he's a fan of the show.
And, and he wrote a good first book. So there you go. Hey, I got a recommendation, guys. Oh, good.
It's a game you can't play until summer, unless you live in Indian land or a few jurisdictions.
In fact, it's going to be legal in Louisiana any day now. But it's been out for a while. It was
released in 2021. I don't know if you've heard of it, Bob, but it's called Devil's Lock. It's by
a company called Blueberry. And it's a slot machine or what? It's a slot machine. And it has a small
perceived persistence bonus. But this machine came out from a very small manufacturer named
Blueberry, Canadian company based in Quebec. They've got they got a brand new CEO. And he
hired some really great people, hired some good salespeople and some good product developers.
And this game came out. And even though it wasn't in Nevada, in all the national polls,
it shot up to number one. That's not unusual in one first month when a game comes out.
But this thing stayed at number one for almost a year, almost more than a year. It's really a fun
game to play. You can go on to any of those influencers and watch them play this game.
It's up for approvals in both New Jersey and Nevada in this coming summer, 2005. So I think
you'll find all the Nevada operators I talked about are just dying to get this on their floor,
but they can't because it's not licensed yet. But it will be this summer. You can go to California
and play it all over the place. Is it a persistence machine? It's got a perceived persistence element
in it. It's not true persistence. But it's a lot of fun. Instead of using the 888 like every Asian
game in the world or back in my day, the seven numbers, it's based on 666. They didn't want to
go to 666 because of the Antichrist. But 666, it's a great game. A lot of people love it.
It uses 15 independent reels, a center pig or piggy bank figure in the, excuse me,
devil figure in the center where, because it's a three by five, that triggers all kinds of bonuses.
It's a game I think a lot of people will like, but it's not a true persistence.
Yeah. I have to tell you a secret, buddy, but our listeners, they don't play slot machines for fun.
So I know I'm just mentioning this one because they'll notice an awful lot of players playing.
I'll give you a tip that might mislead some of your players at first. A lot of these
persistence bonuses trigger on the pay line. This company took those and put them up above
the real set. And it's two pigs that look like piggy banks. When they grow, they grow, grow,
grow, grow, and then they explode. And when they explode, you just about can't lose. Again, don't
tell anybody this, but it's perceived persistence because the size of the pig makes no difference.
So they might get mislead a little bit. They're kind of like the firecracker game
food a lot when they play that one. So that's good for our listeners to know to avoid this machine.
Yeah. It's a great and variant. If they want to be entertained, they'll love it,
but it is not true person. Yeah. Very good. Thanks again, buddy. You're welcome. Anytime.
Good talking to you. Bye-bye. Wow. We got to the end of the show and I was editing it and realized
that it had been so long that Bob forgot to end the show. So I guess I will have to do it.
Go out and hit lots of royal flushes, everybody. Good day.
Podcast Summary
Key Points:
Introduction to the podcast "Gambling with an Edge" hosted by Bob Dancer and Richard Munchkin.
Discussion on artificial intelligence (AI) and its applications in the casino industry.
Examples of how AI is used in analyzing player data and improving player experiences.
Mention of tools like GPT models for improving communication and offers to players.
Use of AI in tracking player performance, adjusting rewards, and evaluating video poker players.
Challenges and privacy concerns related to implementing facial recognition technology in casinos.
Summary:
In the podcast episode of "Gambling with an Edge," hosts Bob Dancer and Richard Munchkin discuss the impact of artificial intelligence (AI) in the casino industry. They delve into how AI is utilized to analyze vast amounts of data, improve player experiences, and tailor offers to individual players based on their gaming habits. The conversation includes examples of how AI has been applied at casinos to track player performance, evaluate video poker players, and enhance communication with players through tools like GPT models.
Additionally, the hosts touch upon challenges and privacy concerns associated with implementing facial recognition technology for surveillance in casinos, highlighting legal restrictions in states like Illinois. The discussion provides insights into the evolving landscape of AI in the gaming industry and its implications for both operators and players.
FAQs
AI is the analyzing of data at high speed to perform tasks that were previously impossible. Casinos use AI to analyze large amounts of data for various purposes such as improving player experiences and optimizing operations.
By analyzing player data, a casino discovered that offering certain players hotel stays increased their spending significantly. This data-driven strategy resulted in incremental revenue that covered the cost of the AI implementation.
Casinos use AI to analyze player behavior and tailor offers based on individual gaming habits. This personalized approach allows for more targeted and effective player rewards and incentives.
Casinos are increasingly using AI language models like GPT for marketing purposes to craft personalized and effective communication with players. These models help tailor offers and messages to specific player segments.
Some casino systems can analyze player behavior in real time to adjust rewards and offers accordingly. However, the adoption of these real-time analysis systems is still limited in the industry.
Facial recognition technology for tracking players in casinos has faced privacy concerns and legal restrictions in some states, leading to limited adoption. Most casino surveillance departments do not currently use facial recognition technology on the gaming floor.
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