With computers now beating the best players in poker and eSports, the raison d’être for gambling on skill based games is gone. Earlier this year, Google’s DeepMind Artificial Intelligence (AI) defeated two pro-gamers at StarCraft II. While the AI’s victory did not garner much attention, people are getting used to AI beating humans, it has profound implications for part of the real money gaming ecosystem. Coupled with Libratus beating professional poker players in No-Limit Texas Hold’em and previous AI victories in Go, Chess and other games, it is clear computers already can beat humans in most skill based games and will almost certainly conquer the rest of gaming in the near future.
I will leave the implications of powerful AI on society to the Elon Musk’s and Neil deGrasse Tyson’s, but it is important not to underestimate the impact on the electronic gambling industry. This type of AI will, faster than expected, make gambling on skill based games irrelevant.
Everything takes longer than expected but than happens at a more massive scale
In many ways, people have been lulled into a false sense of security because AI has not had a significant impact on gambling, yet. Bill Gates, however, once pointed out that transformational technologies normally take longer than expected to become widespread but once they do have a far greater impact than anticipated. Personal computers followed this pattern, they were a fringe product for years and people started to dismiss them as a fad. Then almost instantaneously they found their way into all parts of life (thank you Windows) and even your grandmother was using one to check her investments. Similar phenomenon occurred with cell phones, drones, streaming video, etc.
AI is following the same pattern, particularly in skill based games (chess, poker, go, StarCraft, etc.). It is going from fringe applications and projects that take years to quick iteration and AI that is superior to humans across many game variants. As the underlying algorithms get stronger, human players will no longer hold an advantage in any skill-based game. More importantly, the tech will go from computers only owned by huge research groups to devices or apps that normal individuals can get cheaply, just as the tech once needed to send a man to the moon is not as powreful as that in a common smartphone.
Doesn’t have to be best
It will not even take the time needed for optimal AI algorithms to become ubiquitous to impact skill based gaming, average AI can beat most players. While beating the top players in StarCraft or Go generates headlines, most people do not play at the level as the top players. Thus, even a sub-optimal algorithm can beat the majority of players. Once people realize they are unlikely to win because there are good algorithms everywhere, they will have no incentive to bet (very few people outside of Browns fans bet on sure losses). If everyone can get a device or program that let’s them play a skill-based game near optimally (but not perfectly), it will still mean that 90+ percent of people will lose regularly. Even those under the delusion they are in the top 10 percent will give up after repeated negative reinforcement.
Impact will be far reaching
As with other technologies, people often do not realize how broad the impact of AI will be. Initially, people will not want to wager on any Player vs. Player skill based game, because AI could augment the opponent. This problem will then extend to betting on any skill-based game, if the human cannot beat AI it is pointless to predict who will win.
The only exception will be at live events, from a Chess Tournament to a Live eSports Tournament. As long as the event can be controlled to limit or prevent AI (which I do not believe will always be possible), people could still wager on these live events. However, as more events move online (Twitch), this will be a small opportunity.
Social casino is not immune
The knee jerk reaction is that AI will negatively impact real money gaming but have a positive effect on social (free to play) casino, the reality is social casino will bear the same negative consequences. Players in social casino are also competing against other players and when AI makes it impossible to win regularly, the appeal of Player vs. Player social casino games will also decline. Recently Zynga saw a significant negative impact from bots in Zynga Poker, one of the largest poker games in the world. The impact on social games like Zynga Poker will get worse as AI becomes more prevalent.
You cannot stop the inevitable
Companies have learned repeatedly, often the hard way, that you cannot stop progress but seem to think they can. Taxi companies fought pitched battles against Uber in courts and with protests but the successful ones adapted their business to compete. Travel agents complained to the government and providers but only the ones who reimagined their businesses survived. While some companies have slowed change, they never stop it and leave themselves in a poor position to compete.
Where the real opportunity exists
While AI will negatively impact the existing gambling space, these types of challenges always create opportunity. Gambling is simply another form of entertainment so the trick is for companies relying on skill based gambling to pivot and provide another entertaining option for their customers.
- Maybe turn poker or backgammon into a fixed odds challenge against a computer.
- Pivot the business model to a subscription model so that there is no benefit to winning (and thus no benefit to using AI), especially viable for free-to-play.
- Use the great advances in virtual sports to replace traditional sports betting by offering people 24/7 events to bet on.
- Have people gamble on computer vs. computer sporting events (i.e. an EA Fifa World Cup).
- Create gambling that is based on individual skills (the quality of a drawing, the ability to solve math equations, etc.), player versus themselves.
- Take traditional casino games and adapt them for the mindset of skill-based players.
The point is you need to be creative and find a new way to entertain your customers.
Key takeaways
- With computers now beating the best players in poker and eSports, there is no reason for gambling in skill based games to exist.
- The proliferation of AI in skilled base games will take longer than predicted but when it happens will be much broader than anticipated and companies won’t be able to prevent it.
- Instead, successful gambling companies will understand they are providing entertainment and find new ways to delight their customers.
The Business of Social Games and Casino 