AI and iGaming: Innovation or Infiltration?

We are all quite used to the occasional vignette of a story touting all of the new and innovative technologies AI will soon bring to US online casinos near us.

From machine learning, which promises to match our personal preferences with just the right slot product or even a live dealer in near real-time, to complex algorithms that will change and adapt games and bonuses as we play, the industry of tomorrow is often hyped to promote a more utopian and fair iGaming environment.

The crypto bros are still hard at work trying to convince us that blockchain will solve all our problems. They claim that transparency and immutability will take over, and that AI can bring fair and easily checkable randomness to online casino slots using that same blockchain. But is that really true?

Player Monitoring and Responsible Gambling

AI is often promoted as a powerful tool for monitoring players and ensuring fair play in online casinos. It's said to help not only prevent cheating but also allow regulators to track players' habits. The idea is that AI could make sure no one is gambling beyond their means or falling into harmful patterns. It’s a tool to ensure players stay safe, while also safeguarding the casino from any internal fraud or financial mishandling.

In theory, this approach sounds promising. Casinos could use AI to monitor gameplay, flagging any unusual behavior, ensuring that players who are at risk of problem gambling receive the support they need, and that insiders aren’t abusing the system. The goal is to create an environment where both the player and the casino are protected.

However, the reality of such extensive monitoring raises a bigger question about personal autonomy. With the increasing presence of AI in the gambling world, it starts to feel a little like a nanny-state watching over our vices. Yes, it’s legal, and we are going to tax you, but goodness me, we wouldn’t want anyone spending more than they can afford.

There’s a fine line between promoting responsible gambling and infringing on personal freedoms. It may be helpful to prevent harm, but it also creates a feeling of being watched at all times.

KYC, AML, and the Role of AI

Perhaps its biggest promises have been in the areas of Know Your Customer (KYC) and anti-money laundering (AML). One of the many little dark secrets about iGaming is that estimates, which many believe to be on the low side, report about $140 billion laundered through online casinos each year.  

However, AI is expected to have a big impact in this field, with technology that incorporates biometrics and behavioral analytics to address the importance of identity verification and regulatory compliance while being less intrusive to the customer.

When it comes to onboarding new clients, we are told that AI will allow instant identification, near-instant checks against hundreds of AML databases, and then ongoing monitoring for risk assessment. With biometric sign-ins, we can reduce identity theft. AI can help reduce the administrative burden as it walks clients through the onboarding process, then uses data gathered to make further recommendations to the customer, all while remaining interactive and engaging. 

UK Gambling Commission Highlights New Concerns

Not so fast, says the UK Gambling Commission in their latest AML and terrorist risk assessment. The shoe is on the other foot as the Commission notes a marked increase in the use of AI to bypass due diligence checks. Techniques include using AI’s new capabilities to make deepfake videos to confound biometric screenings and face swaps, as well as making convincing forged documents.

Other recent AI techniques have been used to produce deep fakes of celebrities appearing to endorse crypto or fake casino sites, or simply to impersonate a depositor in order to gain access to their account using various AI forged credentials or deep researched info on their targets, such as mothers maiden names or first pets.   

They also report an alarming number of attempts to buy people’s online identities, ostensibly to be used to open various gambling accounts across the web to earn casino bonuses, but which will probably be used to launder various smallish sums of money through, or perhaps just sold off for identity theft after they’ve been used for multiple ”mule” accounts at online casinos.

The commission also went to great lengths to pass along to operators their belief that any customer using crypto or who said their source of funds came from crypto was inherently high risk.

They stressed that operators must conduct an assessment of money laundering and terrorist funding before accepting crypto assets and pointed to online crypto casinos as a source of laundered funds in recent high-profile crypto heists.

Final Thoughts

We aren't exactly sure how the blockchain plays into all of this, but we are more convinced than ever that, like any of mankind's inventions, AI can be a tool for good as well as mischief.