Big data has become one of the world’s most powerful business processes, unveiling secret business opportunities and improving the performances of thousands of companies across the world. It has saved hundreds of thousands of people in disaster zones and helped reduce crime rates in some of the most dangerous cities in the world, but one place that we don’t often hear about it is in gambling.
With the Big Data Innovation Summit taking place in the global mecca of gambling, Las Vegas, on January 25 & 26 2017, I decided to take a look at how big data is impacting the wider gambling industry.
Ironically, Nevada, the most famous gambling state in world only legalized online gambling in 2013, a full 15 years after the first online poker site was created, and it is legal in just two other states. However, it is still relatively popular, and although not necessarily setting the world alight in terms of growth, doing ok. Chris Christie, Governor of New Jersey, one of the two other states, had initially estimated that it would be bring in close to $1 billion in its first year, although in the end it achieved only roughly 12% of that target.
This has put the US and Las Vegas behind in terms of how they manage to use data in online gambling, something that has become increasingly common in countries like the UK and France, where it is now an industry worth billions of dollars. Part of the reason for this is how they have used data to not only improve the experience of players, but also to set attractive odds and games whilst still being relatively certain of making a profit.
However, most of the ways that data is being used in online gaming is traditional - think number of visitors, predictive analytics based on historical data etc. Las Vegas, in particular, is really pushing forward with more specialist and innovative data.
Take the 25,000 slot machines run by MGM throughout the US, which equated for $28% of the companies $6 billion in revenue in 2013. They are, in fact, so important to the company that they appointed Lon O’Donnell as Director, Advanced Slot Analytics in November 2014 (he left this role in March 2016). The idea of this role, he told ca.com was ‘to figure out how to optimize the selection of games so that people have a positive experience when they walk through the door…We can understand how games perform, how well they’re received by guests and how long they should be on the floor.’
Their job is essentially to look at what people are doing on the machines, why they are doing it, and the frequency of the action. This allows MGM to change out games to firstly remove redundant machines and maximize profit per square foot in their casinos.
Companies like Caesars have been charging even more aggressively into the data arena, looking at not only their games, but the entire casino and hotel experience.
Utilizing their Total Rewards program, they can track the actions of the 45 million people who are part of it, allowing the company to see where money is being spent, how long people are spending in certain areas, and so forth. With this data they can then target specific big spenders to give them incentives personalized for them, so if one person who spends hundreds of thousands every year is arriving they can provide a complimentary hotel room stocked with their favourite food and drinks.
This draws the customers back again and again, increasing their profitability per customer and also deepening their knowledge of what each customer wants. Their knowledge of each customer has grown by 27% since 2004 and now look at big data as ‘even more important than a gaming license’ according to Joshua Kanter, vice President of Total Rewards for Caesars Entertainment, Las Vegas.
However, the system doesn’t just mean giving customers what they want, with the system preventing employees from giving away too much. So, for instance, if an employee tries to give a complimentary suite to somebody who is at the correct level, the system will flag it and the company can make sure it is maintaining a decent profit per customer. This way the customers feel that they are getting what they want in terms of fun, while the company is getting what they want in terms of profit.
So what does the future look like for gamblers?
Anybody who has been to a casino will also be well aware of the number of security cameras around. With the amount of money in casinos, combined with inebriated people and those who have lost big becoming angry, it can be a relatively unstable place, so many presume these are for customer safety. This is currently correct in most cases, but in the future these cameras are likely to become even more important to the company. This is because they will be able to track where people are moving and what they are attracted to and repelled by. This will then allow them to identify bottlenecks, underused spaces or especially popular games, which can then be changed to improve the casino floor.
They could potentially use a similar method to many retailers with their use of wifi. The prevalence of smart phones means that they can track the exact movements of people throughout the casino, rather than relying on them making a purchase or interacting with a machine. It gives far more accurate data about the popularity of particular games and given the huge amount of information held about every aspect of their customers, can help to create specific datasets for different groups of people. For instance, it could show that females from the West Coast between 18-24 and who earn between $40-$60k prefer playing blackjack to roulette which can then help to target blackjack games at this specific group.
Many gamblers will say that gambling is just a numbers game and to some extent that is true, but with the amount of data that the casinos are now collecting, it is one that is likely to see the biggest growth in the numbers coming in through the door.