DraftKings, Flutter Among Gaming AI Implementation Leaders

• Two sportsbook giants are gaming industry leaders regarding AI adoption
• The pair have some traits that make them consumer cyclical AI leaders, says Morgan Stanley
• Other betting-related companies also establishing AI leadership

Artificial intelligence (AI) is still young, but the disruptive technology is captivating Corporate America and that includes the gaming industry with some constituents in that space emerging as AI implementation leaders.

A new report by Morgan Stanley indicates DraftKings (NASDAQ: DKNG) and FanDuel owner Flutter Entertainment (NYSE: FLUT) – operators of the two largest US sportsbooks – are the gaming industry members flashing signs of AI deployment leadership. The investment bank evaluated 114 consumer discretionary and staples companies on the basis of current AI implementation and long-term opportunity, noting DraftKings and Flutter are among the gaming industry stand outs.

One particularly interesting takeaway is that the leaders in consumer AI are starting to shift away from simple surface level applications and into deeper, more strategic use cases,” observes Morgan Stanley. “Instead of just using AI for basic chat bots or recommendations, these companies are embedding AI into supply chains, inventory management, pricing strategies, and product development.”

For its part, DrafKings has long been one of the most tech-centric firms in the industry, indicating a seamless transition to increased use of AI. AI can help DraftKings standout against rivals while potentially creating reduced labor costs.

AI Adoption Sensible for DraftKings, Flutter

For companies like DraftKings and Flutter, increasing AI adoption could be material on multiple fronts. That includes the shift of consumers to experiences over goods and the operator’s ability to integrate media and streaming into its betting platforms.

The gaming companies’ AI competencies could also prove beneficial as both are readying prediction market platforms. Executing in the event contracts space is a tech-centric endeavor, indicating AI has myriad applications there and that could bode well for DraftKings and Flutter as the gaming companies attempt to capitalize on what some analysts estimate could be a $5 billion total addressable market. As Morgan Stanley notes, consumer companies need not have the brand recognition of an Amazon or a Target to reap AI rewards.

“And this is the part most people miss. The real winners may not be the flashiest brands, but the ones quietly using AI behind the scenes to run smarter, leaner businesses,” according to the bank.

Other Gaming AI Leaders

The business-to-business side of the sports betting industry is also ripe for AI adoption with data providers emerging as clear leaders on that front. At least one was mentioned by Morgan Stanley as a gaming industry AI implementation leader.

Sports betting data providers make for ideal AI adopters in the gaming realm because they’re already among the most technology-centric companies in the space. In fact, AI is essential to their business models and that necessity has vaulted these companies to among the leaders regarding AI adoption in the gaming industry.

To their credit, the data providers aren’t wasteful AI spenders. That’s something investors demand because AI is expensive at the corporate, prompting shareholders to demand spending that bears fruit, not expenditures for the sake of saying there’s AI involvement.