September Bot Tales Pt 2: Morgan Stanley Analyst Dings Online-Poker Operators on Bot Worries
Continuing on with our discussions of a couple of recent poker-bot related topics, a few days ago an investment analyst for global market giant Morgan Stanley turned some industry heads by lowering his firm’s price targets for a couple of major players in the global online-poker market, GVC Holdings (OTCPK:GMVHF), Playtech (OTC:PYTCF) and The Stars Group (TSG). According to Morgan Stanley Ed Young, who headed an analyst team’s look at these and other firms, the risks associated with the increased likelihood that automated-play accounts — in other words, bots — may well create a drag on the global online-poker economy.
Young’s comments precipitated Morgan Stanley’s target prices for London-traded GVC Holdings and PlayTech by 2% and 4%, respectively. Morgan Stanley actually updated its target price for TSG from $17 to $18 a share, but that was more to do with ongoing changes in The Stars Groups’ own portfolio of services, including a relative deemphasis on online poker.
The story within the story, though, was a foreseen rise in probable botting activity. It didn’t come, however, from the random tales of bot woe that populate poker discussion forums. Instead, the analysis was an extrapolation of another artificial-intelligence circumstance related to poker: the resounding defeat the “Pluribus” program created by Carnegie Mellon AI researchers delivered to numerous pro players earlier this year.
Though Carnegie Mellon hasn’t released the code that beat the pros (though they described the self-teaching logic in some detail), the Morgan Stanley analysts deem it as something of a Henny-Penny moment. Here’s how Seeking Alpha summarized Morgan Stanley’s take on the poker AI issue:
- Analyst Ed Young and team note that computer scientists from Carnegie Mellon University developed an AI system that is “stronger than human professionals” in the most popular version of poker. They note the code has not been released in part because it would have a “serious impact” on the integrity of online poker as it stands. The MS analysts then give all online poker players something to think about. “The AI blueprint strategy was developed for a cloud-computing cost of just $144 in 8 days, runs on normal computers, plays twice as fast as professional players and could be adapted for any poker variant,” they warn.
- The conclusion is that a reduced overall confidence in online poker could pose a risk to earnings streams in the future.
“The (re)emergence of superhuman poker bots in the online ecosystem now appears to be a matter of when, not if,” wrote Young. He also described the low cost and rapid development of Pluribus as a “major development,” implying, one would assume, that it’s only a matter of time before bots overrun every virtual table of the online game.
It is true that its hard to unring a bell. Once a programming possibility exists, there are always those that will seek to exploit a profitable opportunity. In a vacuum, that indeed spells bad news for online poker. However, it’s not quite as clean a progression as the Morgan Stanley analysis indicates.
The industry’s response, as we’ve previously stated, can be… will be… has to be to constantly increase its bot-detection efforts. There are many, many ways to detect bot-driven play, and a lot of them have nothing to do with the actual poker strategy being employed. That’s a key something that appears to be absent from the Morgan Stanley analysis.
What will need to happen is that responsible operators will need to dedicate considerably more resources to battling bots. If that translates to some nominal increases in rake to pay for the process, remember that online poker remains far more cost-friendly to most players than its live-poker alternative. Online poker will likely have to nibble at that margin a bit to properly fund the needed development.
Are more and better bots going to be the end of online poker? Of course not. Instead, they’re likely to help define the line between responsible and untrustworthy operators. The good sites and networks will understand the need to keep their offerings as clean as possible, and the not-so-good ones will simply exploit their customer bases over the shorter term. Over time, customers will recognize the difference.
All this is really nothing new. Framed properly, it’s just the latest in a long series of challenges, and it’s far from unexpected.