The Future of Gambling By Luke Haward, CDC Gaming Reports January 23, 2018 at 7:24 pm Traditional high street bookies in the UK took a big hit recently on the news that the government review into fixed odds betting terminals looks set to conclude on reducing their maximum stake to the lowest level being considered, namely £2. The Sunday Times broke the story that Culture Secretary Matt Hancock had said that the machines were a social blight, and referred to his determination to set the maximum bet to the lowest level possible. The official verdict is some weeks off, but shares have already dropped for the major bookies, William Hill for example tumbling by some 12 percent, with Ladbrokes Coral falling by 8 percent. The debate continues as to whether this decision is for the best, with many believing that these machines did a great deal of damage on the high street. Bookmakers are complaining that many jobs will be lost, and that high street shops will close down. This is indeed likely to happen, at least to some extent. Now that the writing’s on the wall, what can we expect from major entities such as William Hill and Paddy Power? Where will they put their focus next? It seems inevitable, and we can already clearly see it with the bigger brands, that online gaming is the way forward. We can expect to see the high street betting shops survive, but in fewer numbers, with online offerings proliferating. In the UK online gambling has been the largest slice of the sector since 2015-16, when it accounted for a gross gambling yield of £4.5 billion, and made up 33% of the total gambling market. The biggest players can throw their weight around in promotion and can speed up technological development by increasing investment, but the online world is so fast-paced, and so mercurial in its development, that there will always be room for up-and-coming startups to innovate too and grab a slice of their own.Just as the technology itself shows no signs of slowing down in its expansion and innovation, so the services which can be offered through it will continue to grow. Mobile gaming is the obvious example, with tremendous growth in this area in recent years. The mobile gambling market worldwide is expected to reach some 165 million users this year. Every major operator has a mobile app, and users are quick to move among them, seeking the most user-friendly experience. So which are the areas to watch within online gambling? Where is the next wave of development going to take place? Mobile gambling surely has a way to go, but one market which is going to grow hugely over the next few years is virtual reality (VR). It’s a small market right now, with only early adopters buying the relevant tech, and it currently sits around the £40 million mark globally in terms of bets being wagered. However, in the coming three years VR gambling is expected to grow by around 800%. There isn’t another market in gambling which is expected to grow so rapidly, and operators who invest in the VR technology early could reap significant returns. Virtual casinos of course will offer full immersion, as with any other VR experience, and users will be able to wander casinos of tremendous size and variety ensconced in the comfort of their own homes. Virtual reality poker is also likely to be a fascinating enterprise, with the potential to use cameras to view one’s opponents and see real facial expressions, and to play from home while maintaining that live poker feel. Early player pools are likely to be made up of relatively well-off early adopters without specific poker knowledge, so the action will surely be soft! And virtual reality sports betting may be amazing, especially if coupled with GoPro head cams. Other developments in technology may prove more disruptive than helpful to the industry. AI is a great example. Machine intelligence has progressed rapidly; AI can beat the best Go players (Google’s Deep Thought) and some of the best Texas Hold’em poker players in the world (Libratus, beating several top players across 120,000 hands last year). Any games where humans compete against each other remotely is vulnerable to “imposter” AI players or bots, so we can expect to see some major industry challenges as AI continues to improve. Artificial intelligence can also be used by casinos to assist with their corporate social responsibility, as in the case of Human, a company hitting the news this week. Human has created innovative AI-based facial recognition software, and plans to work with brick and mortar casinos in offering software which can detect “emotional distress” in players and flag this up to the casino staff, helping to detect and assist with potential problem gambling cases. A natural fit in the technological world is with online gambling and cryptocurrency, which maps well onto any service requiring, or benefiting from a virtual token or coin. The blockchain concept underlying cryptocurrency also offers the potential to have verifiable, checkable records of any transaction made, as well as being a provably fair random number generation (RNG). This can assist both with enabling the industry to become more competent with regard to anti-money laundering (AML) and customer due diligence, as well as reassuring players that they are not being ripped off. Also, smart contracts such as those enabled by Ethereum allow for terms of service to be automatically agreed between parties as part of a transaction. While there will be further regulation of cryptocurrency, and many current offerings may fall by the wayside or even be exposed as scams, blockchain technology itself will survive any crashes along the way, because it possesses something of fundamental value – the ability to verify and track all previous transactions in the chain. This verification without any central authority is the critical feature of the blockchain, which will thereby survive any “bitcoin bubble”. So there is likely to be continued uptake of crypto in the gambling world over the years ahead. In summary, it’s a brave new world, and along the way we shall see the behemoths of the gambling industry taking stock, stepping back somewhat from the high street, consolidating on their mobile and online gaming investments, exploring emergent sectors such as virtual reality, flirting and speculating with the little-understood cryptoworld, and trying to keep up with the pace of technological change, just like the rest of us. There will be plenty of chances for the gambling industry to reinvent itself along the way, and hopefully that will include a better approach to corporate social responsibility, due diligence, and protection of the most vulnerable people impacted by this sector.