DraftKings, Red Rock Resorts Among Gaming Companies Tapping AI

Gaming companies are increasingly deploying artificial intelligence (AI) in a variety of ways, confirming the industry could be a dedicated, long-term adopter of the disruptive technology.

In a recent report to clients, Jefferies analyst David Katz highlighted DraftKings (NASDAQ: DKNG), Light & Wonder (NASDAQ: LNW), and Red Rock Resorts (NASDAQ: RRR) as among the prime examples of gaming companies operating different segments that are boosting use of AI. The analyst noted that one of the clear usage cases for AI in gaming is assisting operators in identifying customers with problematic wagering patterns and cutting them off before things spiral out of control. That could help betting firms gain favor with regulators.

Specific to DraftKings, Katz observed that the online sportsbook giant 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.

Having the most advanced technology in the competitive OSB market could drive differentiation over time,” according to the analyst. “Furthermore, the harder and more important functional improvement is promotions, as it could enhance the ability of predicting [long-term values] of customers on a more granular level.”

Katz added that AI could replace some human functions among DraftKings’ 500-member trading force, which would create cost savings for the operator.

Light & Wonder, Red Rock Embracing AI, Too

Slot machines and other electronic gaming devices make for practical territory for AI deployment, so it might not be surprising that Light & Wonder is among the gaming adopters of the innovative technology.

“The company remains highly aware that design talent is the engine of their business, and therefore, though potentially some artistic avenues could be enhanced via the use of AI, the need for talented designers and the creative element they provide should remain a core component of the business,” said Katz in the report.

As for Red Rock, the casino operator is using AI to ensure its staffing levels are on par with demand at its Las Vegas gaming venues and to realize cost efficiencies. The operator is also using the technology as an avenue for fraud detection.

Speaking of AI and Fraud Detection…

Generative AI, the form of the technology currently most prevalent and accessible, has a plethora of applications when it comes to warding off fraud. That’s likely one reason why following large-scale cyber intrusions last year, Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM) are reportedly quietly increasing use of AI.

“Online gaming is also using AI to monitor potential fraudulent activity and maximize the promotional side of the business, by strategically timing and placing player offers and bonuses,” according to Seeking Alpha.

Though not a fraud usage case, AI is beneficial to sportsbook operators in terms of building predictive models and rapidly processing large amounts of data in real time.