Even though artificial intelligence (AI) is still in its infancy, the disruptive technology is attracting Corporate America, including the gaming industry, where several players are emerging as leaders in AI application. 

According to a recent Morgan Stanley research, the operators of the two biggest US sportsbooks, DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), who operate FanDuel, are showing leadership in the use of AI. DraftKings and Flutter are two of the gaming industry's standouts, according to the investment bank's evaluation of 114 consumer discretionary and staples companies based on current AI application and long-term possibility.

"One particularly interesting takeaway is that the leaders in consumer AI are starting to shift away from simple surface level applications and into deeper, more strategic use cases,” observes Morgan Stanley. “Instead of just using AI for basic chat bots or recommendations, these companies are embedding AI into supply chains, inventory management, pricing strategies, and product development.”

For its part, DrafKings has long been among the industry's most tech-focused companies, suggesting a smooth transition to expanded AI use. AI has the ability to lower labor expenses while making DraftKings stand apart from competitors.

Adoption of AI Sensible for Flutter and DraftKings

Increasing the use of AI might benefit businesses like DraftKings and Flutter in a number of ways. This includes the operator's ability to incorporate video and streaming into its betting platforms and the trend of consumers favoring experiences over products.

These businesses have been dedicated to technology for a long time. In order to process correlations and data points related to the operators' increasingly popular same-game parlays, artificial intelligence and machine learning are essential.

Given that both gaming businesses are preparing prediction market systems, their AI capabilities may also be advantageous. AI has several uses in the event contracts industry, which is a tech-centric enterprise. This might be advantageous for DraftKings and Flutter as the gaming companies try to take advantage of what some analysts believe could be a $5 billion total addressable market. According to Morgan Stanley, consumer businesses can benefit from AI without having the same level of brand awareness as Amazon or Target.

“And this is the part most people miss. The real winners may not be the flashiest brands, but the ones quietly using AI behind the scenes to run smarter, leaner businesses,” according to the bank.

Other Leaders in Gaming AI

Data providers are emerging as clear leaders in the deployment of AI in the sports betting industry's business-to-business sector. Morgan Stanley identified at least one as a leader in the application of AI in the gaming sector.

Since sports betting data providers are already among the most tech-focused businesses in the industry, they make perfect AI adopters in the gaming sector. As a matter of fact, these companies' business models rely heavily on AI, which has propelled them to the forefront of the game industry's use of AI.

To their credit, the data providers don't waste money on artificial intelligence. Investors are demanding this since AI is costly for corporations. As a result, shareholders are demanding spending that produces results rather than expenditures just to claim that AI is involved.