- G2E draws some of the gambling industry’s biggest players and sets the stage for the year ahead.
- This year, AI, online gambling regulation, and cybersecurity were hot topics.
- Sports-betting operators are also focused on product innovations, such as personalization.
Artificial intelligence, online gambling regulation, and cybersecurity were all hot topics at this year’s Gambling Gaming Expo, the largest gambling conference in the United States, which gathered many of the industry’s top leaders last week in Las Vegas, Nevada.
The event attracts industry leaders who meet with vendors, partners, and investors — and the conversations that take place there typically set the tone for the coming year.
“Let’s be honest, AI and the many forms of disruptive technologies are an area that we’re all trying to figure out as quickly as possible,” FanDuel CEO Amy Howe said last week during a keynote with DraftKings CEO Jason Robins. “And I’d argue as industry, we’re probably barely scratching the surface on what we can do.”
This year’s event drew thousands of people who braved the traffic caused by the Formula One Grand Prix next month. They heard from the CEOs of DraftKings, FanDuel, Entain, and other companies; met with vendors, partners, and investors; and saw the debuts of new “Squid Game” and NFL-branded slot machines from Light and Wonder and Aristocrat. Some even finished the week by attending U2’s residency at The Sphere.
Deals were brewing behind the scenes. Two industry insiders told Insider that there appeared to be more bankers on-site this year than in previous years. They were meeting with large and small businesses to try to piece together potential deals. Pricing and analytics firms are still in high demand, as evidenced by Entain’s recent acquisition of Angstrom.
M&A activity in the larger sports tech space, including sports betting and fantasy, has increased this year, with 105 deals announced in Q2 2023, a quarterly record for the industry.
Here are the top five takeaways from G2E:
Product, product, product, product
As new state rollouts slow and operators cut marketing spending to focus on profitability, product has emerged as the next battleground in the gambling wars.
Sports betting companies are working to improve the user experience and introduce features that will increase engagement, build loyalty, and differentiate their platforms from competitors.
The last major product innovation to transform sports betting was the same-game parlay, which allows bettors to combine multiple wagers on a single game for a larger potential payout. Companies continue to see opportunities to improve the models and types of bet combinations that an operator can price and offer customers.
Another area ripe for innovation is live betting.
Personalization, on the other hand, was a big theme at G2E this year, including how artificial intelligence could be used to tailor the betting experience for individual users, such as by serving up bet types that might interest a user or customizing the look and feel of the product for them based on previous behavior.
“It’s endless on the opportunities in terms of the actual personalization of the experience,” FanDuel’s Howe said.
The race against artificial intelligence
Overall, gambling companies are racing to figure out how to use artificial intelligence to boost their profits.
Artificial intelligence in gambling is not a new concept; for years, AI models with some level of automation have been used to enable trading, such as setting odds and pricing bets. However, these models are now able to perform more complex and sophisticated tasks, such as pricing more types of bets across more sports and reacting faster when an injury or other unforeseen event may impact an outcome.
Kambi’s SVP of analytics, David Jacquet, compared the AI in their trading platform to a “orchestra.”
“It’s a very complicated task to trade,” he added. “Most companies approach this problem as a monolithic problem, throwing a lot of data into one big box and expecting AI to give them the odds.” And that usually results in very poor odds. You must comprehend it and create a much more detailed map of it… It’s similar to an orchestra. It’s not the same as playing all of the instruments.”
FanDuel’s Howe also stated that the company is utilizing AI for tasks other than trading, such as customer operations and service. She believes AI has the potential to detect problem gambling behavior as well.
“One of the things I love is the use of AI for responsible gaming, to be able to use artificial intelligence and sophisticated data to spot problem behavior before it becomes an issue and be able to proactively take action,” he said.
Pick ’em fantasy sports draw scrutiny
DraftKings and FanDuel spoke at G2E about their opposition to one of the most popular and contentious new areas of daily fantasy sports.
The DFS titans had been campaigning against a wave of fantasy sports that resembled proposition-style sports betting.
Users bet on various player stats in pick ’em-style fantasy games popularized by companies such as PrizePicks and Underdog Fantasy, such as whether Travis Kelce will score more or less than a certain number of points in the next Kansas City Chiefs game, and whether F1 driver Lewis Hamilton will finish better or worse than third place in the next grand prix. They can select from a variety of stats from various sports. However, in order to win, they must bet on at least two picks and get both correct.
These pick-em games were recently banned in three US states — Florida, New York, and Michigan — putting up a stumbling block for the up-and-coming competitors who popularized them.
During a panel with DraftKings’ Robins, FanDuel’s Howe stated that these games were blurring the lines between fantasy sports and gambling.
“That to me is one of the real issues here — when the lines start to blur between games of skill and real-money wagering and you don’t have the same [know your customer] protections that we have,” he said. “When those lines begin to blur and you invite a younger audience into what many would consider real-money wagering… It’s up to the states to decide, but I think it starts to become a concern when we spend a lot of time focused on responsible gaming and making sure that we’re educating the 21- to 25-year-old that we know is more at risk.”
Robins stated that his company was only interested in knowing where the line was.
“We want to understand what the constraints of what we can offer are,” Robins went on to say. “There will be individuals and businesses that push the boundaries. And I believe that having clarity comes back to competition — we want to be able to compete, so we want to be able to offer the same things that everyone else does.”
PrizePicks’ $8.5 million in daily fantasy sports adjusted revenue through July outpaced both Draftings’ $3.1 million and FanDuel’s $1.3 million in Michigan.
PrizePicks and Underdog both announced new initiatives at G2E, with Underdog launching a $1 million fund to invest in early-stage startups addressing problem gambling and PrizePicks signing a deal with US Integrity that includes its ProhiBet platform with the company Odds on Compliance for monitoring and preventing fraud.
IGaming legislation may gain traction in 2024.
In the United States, the pace of legal online casino-style gambling, or iGaming, regulation has been glacial. According to the American Gaming Association, iGaming is legal in only eight US states, compared to 38 for sports betting.
It has been a significant barrier for gambling operators because iGaming is a more profitable business than sports betting.
However, some in the industry are seeing encouraging signs that iGaming legislation may pick up next year.
“I think we’ll see some movement in 2024,” BetMGM CEO Adam Greenblatt predicted. He stated that one state regulator and one bill-sponsor Senator from a “meaningful state” he met with that week were “more positive than I’ve ever seen them.” “Collectively, we understand the challenges in that state and we have a strategy,” Mr. Greenblatt said.
Many in the industry are hoping for a domino effect when the next major state legalizes iGaming, which will encourage others to follow.
The cyberattacks on MGM and Caesars were “alerts.”
The cyberattacks this summer that cost MGM Resorts $100 million in lost profit and Caesars Entertainment a multimillion-dollar ransom loomed large over the industry during G2E, where leaders unpacked best practices and plans to strengthen cybersecurity in panels and private meetings.
“On one hand, it is always a priority.” On the other hand, these instances serve as a wake-up call to be vigilant, according to FanDuel’s Howe.
DraftKings’ Robins also stated that these hacks “can happen to anyone” and agreed with Howe that cybersecurity was one area where competitors could improve their collaboration and information sharing.