China's big brother casinos can spot who's most likely to lose big
China's big brother casinos can spot who's most likely to
lose big
Jinshan Hong, Bloomberg News Jun 25, 2019
The house always wins -- and now it has artificial
intelligence on its side.
Some of the world’s biggest casino operators in Macau,
the Chinese territory that’s the epicenter of global gaming, are starting to
deploy hidden cameras, facial recognition technology, digitally-enabled poker
chips and baccarat tables to track which of their millions of customers are
likely to lose the most money.
The new technology uses algorithms that process the way
customers behave at the betting table to determine their appetite for risk. In
general, the higher the risk appetite, the more a gambler stands to lose and
the more profit a casino tends to make, sometimes up to 10 times more.
This embrace of high-tech surveillance comes as casino
operators jostle for growth in a slowing industry that’s under pressure
globally from economic headwinds and regulatory scrutiny. In the world’s
biggest gaming hub, where expansion is reaching its limits, two casino
operators -- the Macau units of Las Vegas Sands Corp. and MGM Resorts
International -- have already started to deploy some of these technologies on
hundreds of their tables, according to people familiar with the matter. Sands
plans to extend them to an additional more-than 1,000 tables, said the people.
Three others, Wynn Macau Ltd., Galaxy Entertainment Group
Ltd. and Melco Resorts & Entertainment Ltd., are in discussions with
suppliers about also deploying the technology, according to the people, who
asked not to be identified because they’re not authorized to speak publicly
about the plans.
Serious Gamblers
Macau junket operator Suncity Group Holdings Ltd., which
is building a casino in Vietnam, said it is planning to deploy a system where
RFID technology -- which uses radio frequencies to attach tags to objects -- is
installed on chips and tables, storing data on players.
The gambling giants are motivated by the challenge of
maximizing profits from the growing Chinese middle class, who stream into Macau
en masse as it’s the only place in Greater China where gambling is legal. More
than 3 million people visit the territory every month, from wealthy and focused
bettors, to families on short trips with grandparents and kids in tow. The
advanced-surveillance technologies give casinos a way of easily separating who
might become serious gamblers from those just having a fun weekend.
It’s not unusual for casinos to have surveillance cameras
for security and to detect cheating, with Las Vegas operators utilizing
RFID-enabled chips that they can disable if they’re stolen out of the casino.
But these new technologies go a step further in tracking and rating every
customer, building up a treasure trove of data.
Sands China, the Macau arm of the world’s largest casino
company, recently received approval from the territory’s gaming regulator to
deploy the technologies, said the people. One supplier, Regensburg,
Germany-based Dallmeier Electronic, worked with casinos to re-design cameras so
they could be embedded into columns and not visible to customers, said EP Smit,
the company’s senior enterprise solutions manager.
Representatives for MGM, Galaxy Entertainment, Sands and
Wynn didn’t respond to requests for comment, while a spokesperson for Melco
declined to comment on business matters that aren’t public. Macau’s regulator,
the Gaming Inspection and Coordination Bureau, didn’t respond to emails and
calls seeking comment.
In a recent product demonstration at a Macau industry
conference by Walker Digital Table Systems -- a Las Vegas-based company
peddling technology to invisibly track chips, wagers and game outcomes -- its
vice president of Asia operations, John Orth, assured a potential buyer: “Your
customers don’t even realize they are being tracked.”
Afford to Lose
The ability to identify customers with the potential to
bet -- and lose -- big means that operators can offer special attention and
targeted perks to keep them gambling. In Dallmeier’s system, facial recognition
alerts floor managers once a high-value customer walks into the casino or sits
down at a table, allowing them to immediately dispatch staff to the customer’s
side.
“Those who can afford to lose, those who play even more
when losing money, we can for sure offer them a free meal,” Andrew Lo,
executive director of junket operator Suncity’s listed arm, said in an
interview. Suncity will use Walker Digital’s technology at its new casino in
Hoi An, Vietnam.
There are three major companies supplying casino
operators with the A.I.-enabled technology: Walker Digital, Dallmeier, and
Japan-based Angel Playing Cards.
While the companies differ somewhat in the technology
that they offer, the general set-up is this: gamblers’ betting behavior is
tracked through high-resolution cameras and RFID-enabled poker chips and
tables, with the intelligence gleaned flowing back into a centralized database
where a risk profile of the individual is then created.
Detecting Collusion
The system can track individual gamblers down to how
often they take “side bets” on a baccarat table -- a bet on very unlikely
events like a tie, which have higher risks and higher returns. Gamblers who
favor side bets can mathematically yield around 10 times the profit for a
casino compared to a gambler with an average risk appetite.
The technology can also help detect any dealer and player
collusion, preventing fraud, and it can track the speed and accuracy of
dealers, doubling as a performance management tool.
Ultimately, casino operators can rate each player with a
combination of metrics they can tailor, such as the total time a player has
spent in casinos, their betting volume, risk appetite, win/loss ratio,
remaining chips, past dishonest behavior and net worth.
Privacy Concerns
Operators themselves are wrestling with the implications
of this advanced surveillance. In their discussions on whether to proceed with
implementing the technology, senior management at Galaxy Entertainment voiced
concerns at an internal meeting that high-spending customers probably wouldn’t
want to be watched, according to a person familiar with the matter.
They were also concerned that government and law
enforcement authorities may want access to data that’s collected, the person
said.
A representative for Galaxy Entertainment didn’t respond
to calls and emails requesting comment.
The speed with which Macau-based casinos are racing to
implement the new technology speaks to a greater ease with data collection and
sharing among Chinese consumers compared to those in Europe or the U.S. Chinese
tech companies are at the global forefront of using consumer data for
everything from designing new products to expanding health insurance. China’s
government also has a nationwide network of surveillance cameras that utilize
facial recognition.
“This new technology certainly has the potential to
infringe the law as it expands the scope of players whose breadth and range of
activities would now be tracked,” said Ben Lee, a Macau-based managing partner
at Asian gaming consultancy IGamiX. He noted that sending collected data to
casino company offices offshore for analysis could be breaking the law.
Suncity’s Lo said consumers are used to being tracked. “I
think customers expect that their bets are being watched, it’s just whether the
casino operator knows how to make use of the data,” he said.
“Facial recognition is very mature in China: border
customs has it, banks will soon have it, it’s a trend,” Lo said. “If you’re
afraid of this, then you’re very likely a criminal and casinos won’t do
business with you anyway.”
--With assistance from Daniela Wei and Christopher
Palmeri.
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