• Manufacturing engineer Douglas Dorsey started working at Boeing in 1984 and retired in 2017.
• Dorsey worked on the Boeing 777 and 787 Dreamliner, where he said things began to unravel.
• He reflects on his time on the shop floor and how Boeing plans to repair its reputation.

This as-told-to essay is based on a transcribed conversation with Douglas Dorsey, from Washington, about his career as a manufacturing engineer at Boeing. The following has been edited for length and clarity.

I started my career at Boeing in 1984, and I worked there for over 30 years.

I was a manufacturing engineer. My responsibilities included writing instructions and coming up with assembly sequences for aircraft.

During my career, I worked on several aircraft projects for Boeing, including the Advanced Tactical Fighter program, the Boeing 777, and the 787 Dreamliner. It was always interesting and challenging. I worked with dedicated employees and on cutting-edge programs.

I retired in 2017 feeling proud to have worked there. I was a "lifer" with Boeing blue blood running through my veins.

However, while working on the Boeing 787 program in the 2000s, I noticed that outsourcing manufacturing tasks to suppliers became a really big problem for Boeing. When I worked on the shop floor, I saw the negative impacts of outsourcing to suppliers, such as slower production and delivering incomplete parts.

Even after retiring, I've stayed up to date with Boeing. I've followed the news on malfunctions and strikes, but I think management is taking baby steps in the right direction.

I saw chaos unfold at Boeing due to mismanagement and outsourcing

During the good old days, I had a positive opinion of Boeing. In my first decade at the company, the chain of command was clear. You knew what your job responsibilities were and could count on your line managers. Most importantly, there was no drama with executives, and we had confidence in those in command.

But in 1997, upper management was thrown into chaos when Boeing merged with McDonnell Douglas, with McDonnell Douglas executives taking top positions at Boeing. Harry Stonecipher, who was briefly Boeing's CEO, resigned in 2005 after he was found having an affair with an employee.

It was like a corporate soap opera played out in the media. As an employee, the news was distracting and felt like evidence of the level of disorder at the top of the company.

At the same time, the Boeing 787 program was underway. The 787 was launched as a complete departure from how Boeing airplanes had traditionally been constructed. To reduce the time from program launch to when the planes were in service, Boeing would have "risk-sharing partners" deliver complete aircraft sections to the final assembly site.

787 program managers and employees implicitly understood this new production method, and we cautiously believed it might work. But it began to unravel bit by bit and ended in a three-year delay.

I wondered why we were accepting substandard work on 787

I was a project manufacturing engineer for the 787, creating work instructions, and a liaison manufacturing engineer, working on the shop floor to resolve issues with existing work instructions.

At the beginning of each new airplane program, program leadership and supply chain management divided major sections of the aircraft among various subcontractors, suppliers, and risk-sharing "partners." When suppliers were late in delivering their components or delivered them incomplete, this became "traveled work," which had to be completed by Boeing employees during final assembly.

I spent much of my time on the program trying to accommodate parts that had a "non-conformance" tag on them and had to be reworked and installed into the build.

I wondered what was going on and why we were accepting substandard, incomplete work.

As an engineer, I wasn't privy to the decisions going on in the upper chambers of management, but I could see the chaos filtering down. It felt like the company wasn't listening to its mechanics about how to improve processes.

I remember group meetings where employees, including myself, questioned decisions by management and offered constructive criticism that was politely but bluntly blown off.

The 787 was sadly delayed three years.

Confusing supply chains seem to still cause problems

Earlier this year, there was an incident with a Boeing 737 Max plane, where a door plug blew out after take off.

Although I retired in 2017, I think this was caused by mismanagement of traveled repair work. The plug door was manufactured by Spirit AeroSystems, a Boeing subsidiary that was sold off in 2005.

An investigation found that because the part 737MAX9 fuselage is shipped in whole, mechanics at Boeing rarely work on the plug doors. When the plug door frame had to be repaired and the plug door replaced, two separate groups of mechanics working on the door made mistakes.

As a result, a plug door malfunctioned, and Boeing's reputation was damaged alongside it, causing the FAA to increase its oversight of 737MAX9 planes' production processes.

It's always disappointing when the company you worked for makes major news headlines for a mistake. However, it doesn't change my general opinion of Boeing. I know there are many dedicated employees who are committed to doing their jobs properly and safely.

Boeing is taking baby steps in the right direction

I still know some Boeing employees and followed the recent strike. I think employees have gotten a good package, but they didn't get a return to the legacy defined-benefit pension plan. When I retired, I still benefited from the traditional pension plan and also had a 401(k).

Back in 2014, Boeing promised employees that they'd build the 777-9 in Washington. Part of the strike package is also building the next new plane in Washington. These promises show that Boeing management is waking up to the matter of outsourcing.

Boeing is also bringing Spirit AeroSystems, which it sold in 2005, back in-house. All the workers will be merged back under one camp.

The lines of communication between two in-house teams are often simpler and more direct than with a supplier. When I was on the 777 program in the 1990s, I would call my counterparts at the Wichita site to resolve issues and exchange information. I couldn't do this with a supplier because all communication had to be through supply chain management.

I think this shows Boeing acknowledging it went down a bad path when it sold the supplier.

I see these actions as baby steps in the right direction. Kelly Ortberg, Boeing's CEO, is trying to steer the company on a new course, but I think it's going to take a long time.

Editor's note: In response to Business a request for comment from Business Insider, a Boeing spokesperson highlighted remarks by CEO Kelly Ortberg during the company's third quarter report:

"Much has been written about how we got to where we are, but most also recognize that Boeing was once a benchmark for what good culture looks like. And I believe we can return to that legacy. I know culture change starts at the top. Our leaders, from me on down, need to be closely integrated with our business and the people who are doing the design and production of our products. We need to be on the factory floors, in the back shops, and in our engineering labs. We need to know what's going on, not only with our products but with our people."

• Klarna CEO Sebastian Siemiatkowski says AI can perform his job as it has reasoning capabilities.
• The buy-now, pay-later firm's cofounder said the realization made him feel "gloomy."
• Siemiatkowski previously said Klarna stopped hiring because AI "can already do all the jobs."

Sebastian Siemiatkowski has said AI is capable of performing his job as CEO of Klarna — but he's not thrilled about the prospect.

The cofounder of the buy-now, pay-later firm said in an X post on Monday, "AI is capable of doing all our jobs, my own included," because it now has reasoning capabilities.

"I am not necessarily super excited about this," he added. "On the contrary my work to me is a super important part of who I am, and realizing it might become unnecessary is gloomy."

Siemiatkowski explained that AI can already routinely solve simple problems using basic reasoning. Because complex problems can be "divided into smaller and more basic reasoning tasks that are combined," the building blocks for AI solving advanced tasks already exist, he said.

"However, how exactly we will combine those building blocks of reason and knowledge to replicate the work we do today is not yet entirely solved," Siemiatkowski said.

This isn't the first time Siemiatkowski has voiced concerns about AI's potential to disrupt traditional roles. Siemiatkowski told Bloomberg in December that he believed AI could "already do all of the jobs that we as humans do."

Klarna itself has embraced AI. In February, the Swedish company said its AI assistant was "doing the equivalent work" of 700 full-time human agents.

The Klarna chief has also been outspoken about the firm's use of AI and how it's impacted the workforce. In August, he wrote in another X post, "AI allows us to be fewer in total."

In October, Siemiatkowski appeared on the "Grit" podcast and said that Klarna "stopped hiring due to AI, so we're shrinking because we have a natural attrition rate of 20%." He later clarified that Klarna continues to hire some engineers.

Meanwhile, the fintech company has been gearing up for an IPO in the US. In November, it announced it confidentially submitted draft registration documents to the Securities and Exchange Commission.

The following month the company told its employees it would start random drug testing for staff in Sweden from January. Its director of people and HR, Mikaela Mijatovic, told employees in a Slack post the move was "part of a larger effort to strengthen security across Klarna."

Klarna didn't immediately respond to Business Insider's request for comment.

Do you work for Klarna? Got a tip? Contact the reporter, Jyoti Mann, via the encrypted messaging app Signal at jyotimann.11 or via email at [email protected]. Reach out through a nonwork device.

• EY, Deloitte, PwC, and KPMG make up the world's largest accounting and consulting firms — known as the Big Four.
• The sector is tackling a slowdown in demand, new regulatory pressures, and the need to adapt to AI.
• These are the four leaders that have made it to the top of the firms.

EY, Deloitte, PwC, and KPMG make up the world's largest accounting and consulting firms, known as the Big Four.

They're billion-dollar companies with a collective 1.5 million staff and influence over hundreds of industries.

In recent years, the Big Four have faced a series of challenges, including a post-pandemic downturn in demand, shifting regulatory requirements, and the need to adapt their skills and services for the emerging AI future.

Two of the firms appointed new leaders in 2024. The process varies by firm but generally includes hustings, where contenders present their vision to voters, a partner vote, and global board ratification.

These are the four people who now sit at the helm of the world's biggest professional services firms.

PwC — Mohamed Kande

In July 2024, Mohamed Kande was elected as PwC's global chair for a four-year term, becoming the first Black leader of a Big Four firm.

Kande is also the first PwC head to come from the advisory division, as opposed to the audit wing.

Kande was born and raised in the West African country of Côte d'Ivoire. When he was 16, he moved to France alone to study. He worked at a PwC subsidiary called PRTM Management Consultants, before joining the firm in 2011. He became a global advisory leader in 2019.

Kande took over leading PwC's 370,000 employees at a time when it appears to be tightening pursestrings amid the consulting slowdown. Partner payouts dropped and more PwC partners took early retirement at the end of the year. In October, The Wall Street Journal reported that the firm would make its first major layoffs since 2009 and cut 1,800 jobs.

PwC is also working to rebuild trust in the Asia-Pacific region following scandals in Australia and China.

"The need for reinvention has never been more urgent," Kande said in the firm's 2024 annual review.

In 2021, he wrote a 1,000-word essay on LinkedIn about the impact his race had on his career in professional services.

"Often, I had to work hard to be included because I was different. I have felt slight but sharp jabs about my accent and my name, accompanied by quieter, larger unspokens about my skin color," Kande wrote.

"I try to give the opportunities that others gave me. I try to bring them into the room, knowing that their diversity, their unique perspective is a strength and something to be valued."

Deloitte — Joe Ucuzoglu

Joe Ucuzoglu has been Deloitte's global CEO since January 2023.

Ucuzolgu, who grew up in Los Angeles, was CEO of Deloitte US from 2019 to 2022 before ascending to the top job. He was a college intern in 1997. He rose to become a senior advisor at the SEC before rejoining Deloitte in 2015.

Deloitte is the largest of the Big Four by both revenues and number of employees with 460,000 staff.

In March 2024, Deloitte announced a major restructuring aimed at cutting costs and repositioning it for future success. It is "modernizing and simplifying" its core offering into four categories: audit and assurance, tax and legal strategy, risk and transactions, and technology and transformation.

Ucuzoglu told the firm's partners in an email that the reorganization would reduce the firm's "complexity" and "free up" more partners for client work instead of managing staff.

Under Ucuzoglu, Deloitte has taken steps to drive investment in green hydrogen, releasing a report in 2023 estimating that the energy source could become a $1.4 trillion global market by 2050 and arguing that it "is moving into prime position as a solution for hard-to-abate sectors."

The CEO continues to engage with clients. He is also a frequent speaker at the World Economic Forum, a member of the Business Roundtable, and regularly gives interviews on issues affecting the business community.

EY — Janet Truncale

Janet Truncale was elected as EY's global chair and CEO in July 2024, making her the first woman to lead a Big Four accounting firm. She joined EY as an intern in 1991.

Prior to her election, Truncale had spent almost four years as the vice chair and regional managing partner of the Americas Financial Services Organization.

The New Jersey native now heads EY's global workforce of more than 400,000 staff.

In her first public statement as global CEO, she launched a new strategy called "All in."

"All in is not just a business strategy, it captures an attitude and way of working," Truncale said. Her focus on unity comes after EY was rocked by a failed plan to break up its consultancy and audit divisions into two units, known as Project Everest.

Truncale was named as one of the "25 Most Influential Women" of 2023 by the Financial Times, which described her as "a trust builder" and "an advocate of being down to earth."

Outside EY, she serves as board chair for Women's World Banking and is on the board of UNICEF USA and the US-China Business Council.

Truncale has a BSE from the Wharton School of UPenn and an MBA from Columbia University.

KPMG — Bill Thomas

Bill Thomas became KPMG's global chairman and CEO in October 2017. Three years later, he was unanimously re-elected to a second term.

Thomas has over a decade in executive-level leadership, and was previously chairman of KPMG's Americas region between 2014 and 2017.

The Canadian leads KPMG's 275,000 employees. The firm is the smallest of the Big Four.

Over the past seven years, Thomas has focused on overseeing the development and implementation of KPMG's global strategy. Under Thomas, KPMG has launched $5 billion digital strategy investment plan.

"Over the coming years, my focus will be on continuing to enable and empower these talented teams to achieve their full potential," he said in a statement released on his reelection in 2020.

KPMG's global annual revenues have grown by 45% since the year Thomas was appointed CEO. In its latest annual earnings, it reported annual revenue of $38.4 billion.

Thomas stays largely out of the media spotlight, giving few interviews. Before entering the business world, he studied science, which he says is "extremely relevant today as technology infuses every part of our business and the businesses of clients."

Do you work at the Big Four and have a tip or story to share? Contact this reporter in confidence at [email protected] or on Signal.

President Biden is moving to block about 625 million acres of offshore areas from future oil and gas drilling, the White House announced Monday morning.

Why it matters: The sweeping actions — which drew strong criticism from the oil industry — may hinder President-elect Trump's ability to quickly deliver on plans to scale up fossil fuel production.

• The steps rely on a provision from a 72-year-old law and affect wildlife-rich areas in the northern Bering Sea; eastern Pacific Ocean off the West Coast; the eastern Gulf of Mexico; and areas up and down the East Coast.

Driving the news: The steps, in the form of two presidential memos, are designed to permanently protect vast tracts of offshore lands to potentially benefit states dependent on fisheries and tourism.

• Withdrawing hundreds of millions of acres — equivalent in size to the states of Alaska, California and Colorado — from potential leasing may also help limit greenhouse gas emissions that are causing global warming.

Unlike executive orders that Trump could overturn with the stroke of a pen, Biden's actions rely on an open-ended provision in the 1953 Outer Contintental Shelf Lands Act.

• This law governs energy leasing activities for submerged lands under U.S. control that are beyond three miles from shore.
• A provision in the act allows the president to permanently take parts of the Outer Continental Shelf off the table for leasing activities, without providing a means for another president to undo the action.

What they're saying: "Congress and the incoming administration should fully leverage the nation's vast offshore resources as a critical source of affordable energy, government revenue and stability around the world," American Petroleum Institute President Mike Sommers said in a statement.

• "We urge policymakers to use every tool at their disposal to reverse this politically motivated decision and restore a pro-American energy approach to federal leasing."

Between the lines: Kevin Book of research firm ClearView Energy Partners told Axios in an email that congressional Republicans could include a provision reinstating some or all of the offshore areas in any filibuster-proof budget reconciliation bills.

The big picture: Biden is portraying the steps as part of his environmental legacy, which has included major climate legislation and land conservation efforts.

• "As the climate crisis continues to threaten communities across the country and we are transitioning to a clean energy economy, now is the time to protect these coasts for our children and grandchildren," Biden said in a statement.

Yes, but: Many of the regions to be protected are locations that the oil and gas industry had either not shown strong interest in for development. Other protections would apply to places where states put up stiff resistance against drilling.

• This applies particularly to California and Florida, both of which have consistently opposed offshore drilling.
• During Trump's first term, he exempted a region from North Carolina to Florida from drilling for 10 years, given political opposition to such activities in these coastal states.
• The industry has largely backed off from expensive forays into Arctic drilling, including the Bering Sea where there are no active or pending lease sales.
• However, human-caused Arctic climate change is making the region far more accessible for development and shipping routes, and could entice companies to explore for fossil fuel resources in coming years.

Friction point: Oil and gas companies have shown interest in drilling in the eastern Gulf of Mexico, where significant resources are thought to be accessible.

• That makes the designation of this region as off limits to be particularly notable and potentially controversial, even with Florida's opposition to offshore drilling for environmental reasons.
• The use of the law, which grants the president broad power to alter the regions subject to oil and gas leasing, is likely to be tested in court.
• One district court ruling from 2019, which involved a step taken during the Obama administration, held that only Congress could overturn a president's use of the provision within the law.

The bottom line: While Trump can still move forward with plans to boost land-based oil and gas production, he will now face new legal hurdles on offshore drilling.

• Microsoft launched its Xbox gaming console nearly 25 years ago.
• The brand has become beloved, owning popular gaming franchises like "Call of Duty" and "Minecraft."
• Read about the Xbox's history, and how it became a staple of the gaming industry.

Since its debut in 2001, Microsoft's Xbox has become a cornerstone in the gaming industry, quickly coming to rival and challenge the market dominance of the Sony PlayStation and Nintendo.

The Xbox brand has evolved through multiple console generations, introducing innovations that have not only influenced competitors but also helped cement Microsoft as a serious player in the entertainment sector.

The development and launch of Xbox

Starting in the late 1990s, Microsoft recognized the growing importance of the gaming industry and the potential of integrating personal computing into a home console.

Microsoft co-founder Bill Gates was intrigued by the idea of entering the console gaming market, but posed a major hurdle in the beginning. It took months to convince a skeptical Gates to agree to fund the Xbox project, Business Insider previously reported.

A team of engineers led by Seamus Blackley had already started work on the project before it was even presented to Gates. They envisioned a console that could leverage Microsoft's expertise in DirectX graphics technology — hence the code name "DirectX Box," which was later shortened to "Xbox."

The original Xbox was unveiled on November 15, 2001, in North America. It was the first gaming console produced by an American company since the Atari Jaguar ceased operations in 1996. With a built-in hard drive and Ethernet port, the Xbox was technologically advanced for its time. It introduced the world to franchises like "Halo: Combat Evolved," which became a flagship series for the brand.

From Xbox 360 to Xbox One

In 2005, Microsoft launched the Xbox 360 aimed at building online gaming. Xbox Live, initially introduced with the original Xbox console, was significantly expanded, allowing players to connect, compete, and share content globally. The console popularized achievements and "Gamerscore," incentivizing gameplay and fostering a competitive environment. It also introduced the concept of downloadable content (DLC) for consoles, changing how games could be monetized and extended post-release.

The Xbox 360 S was released in June 2010. Its slimmer design aimed to address the infamous "red ring of death" overheating problem that plagued the original Xbox 360 consoles.

The Xbox 360 consoles saw the rise of the best-selling video game series "Call Of Duty." The series is published by Activision Blizzard, which Microsoft acquired in 2023 for $68.7 billion. DLCs for "Call of Duty" games typically released earlier on the Xbox than the PlayStation, leading fans who wanted to experience newly released content as soon as possible to adopt the console.

After an 8 year run, Microsoft retired the Xbox 360 lineup in 2013 in favor of the Xbox One, which it marketed as an all-in-one entertainment system not just designed for gamers. Microsoft ceased producing the Xbox 360 in 2016.

Satya Nadella's strategic pivot

The Xbox One generation saw a stronger focus on exclusive titles and services like Xbox Game Pass, a subscription-based model offering a library of games for a flat monthly fee. This service-oriented approach was part of a larger monumental strategic pivot facilitated by current Microsoft CEO Satya Nadella. Under his leadership, the company has prioritized investment in cloud infrastructure, which caused Azure to surpass its Windows business and subscription versions of Microsoft Office to amass some 50 million monthly users by 2015.

In a 2018 E3 appearance, Microsoft introduced the Xbox Adaptive Controller, designed to make gaming more inclusive by making gaming accessible to those with various disabilities such as Cerebral Palsy.

The controller, designed to work with both Windows and Xbox One games, gives players with limited mobility large programmable buttons, a single joystick, and easy mounting options to wheelchairs or the player's legs. It also boasts compatibility with headphones and other accessories, including additional switches and buttons. Time magazine considered the Adaptive Controller among the best inventions of 2018.

Xbox Series X and Series S

The years 2016 and 2017 saw the release of the Xbox One S and Xbox One X, respectively. Both consoles introduced 4K resolution support for games, with the Xbox One X's implementation featuring a 31% graphics performance boost over the original Xbox One.

Building on the success of the Xbox One lineup, Microsoft released the latest two iterations of the console in 2020: the high-end Xbox Series X and the more affordable Xbox Series S. Both systems boasted faster load times, higher frame rates, and support for ray-tracing. With this console generation, Microsoft embraced backwards compatibility, allowing players to play games dating back to the original Xbox console.

Further illustrating Microsoft's heavy investment in cloud technologies, the company expanded the Xbox Game Pass and introduced the Xbox Cloud Gaming beta. Game Pass essentially works as a Netflix-like service for games, allowing players to pay a flat monthly fee to access a large library of games; Xbox Cloud Gaming allows players to play Xbox games on their computers, Smart TVs, or phones — even using a Sony DualShock 4 PlayStation controller if they so choose — through Game Pass' Ultimate tier, entirely removing the need for an Xbox console.

Microsoft layoffs hit Xbox and Activision Blizzard

However, despite its success, Microsoft's Xbox division has had layoffs and has not been immune to overall market forces. A major slowdown in video game sales following the end of the COVID-19 pandemic has resulted in job cuts across the gaming and tech industries.

In early 2024, Microsoft layoffs affected 1,900 workers between Activision, Xbox, and Bethesda Softworks' parent company ZeniMax.

Later that year, some Xbox employees took voluntary severance packages, and a further 650 employees were laid off from the Xbox division itself.

Narrativa is among a crop of startups seizing on the artificial intelligence boom to enthusiastically automate writing tasks that would once have fallen to humans. From penning regulatory documentation for Pfizer to zhuzhing up marketing copy for insurance and e-commerce firms and helping generate breaking news articles for The Wall Street Journal, the Los Angeles-based Narrativa boasts roughly 50 clients in various industries. But one of its core focus areas, comprising a quarter of its business, is a little more polarizing than the rest: gambling.

Working with major industry players like 888 and Betway, Narrativa uses large language models to pump out everything from automated summaries of sports games to SEO-friendly reviews of online casino games and promotional social media posts. With no humans required, the 20-person company's AI tools produce 10 million words a month for gambling clients — the effective output of 170-odd full-time writers producing a grueling 3,000 words a day. It's all in service of enticing gamblers to place more bets.

"You want to create a community, you want people coming back for more," Matthew Rector, Narrativa's vice president of content, says. "You want to foster that environment, and our content helps facilitate that."

Sam Altman, Elon Musk, Satya Nadella, and the tech industry's other top impresarios talk a big game about how AI may one day attain sentience, solve the climate crisis, and lead society to a post-scarcity economy. Today, though, the technology is being embraced by traditional industries for more prosaic — and mercenary — aims. Key among them is the gambling industry, which is rapidly adopting AI for everything from writing alluring online marketing copy to identifying and helping problem gamblers to tracking people and perfecting the physical layout of casinos.

The ultimate goal: to harvest ever more money from gamblers, by profiling them, feeding them content and games personalized to their whims, and cajoling them to stay longer and make bigger bets.

The gambling industry, much like AI, is in the middle of an unprecedented gold rush. In 2018, a US Supreme Court ruling allowed states to legalize sports betting; nearly 40 states since did exactly that. Major investments have since flooded in, with some gambling stocks hitting record highs and private-equity firms jumping into multibillion-dollar deals with gambling and casino companies.

Meanwhile, consumers' wallets have been emptying: Americans bet a record $120 billion in 2023, according to the American Gaming Association. A study by California researchers released in 2024 estimated that legalized gambling across America may result in as many as 30,000 bankruptcies and an additional $8 billion in debt collections each year. Another paper out of Kansas found that average household investments in the stock market dropped in states where gambling was legalized by roughly $50 per quarter. (In Brazil, which legalized online gambling in 2018, as much as one-fifth of welfare money is now spent directly on gambling, the AP reported in November.)

Under the hood, artificial intelligence is helping power this surge.

Several online betting platforms, for example, offer "micro bets," which allow gamblers to bet in real time throughout the game — who gets the next touchdown or makes the next tackle, whether the next play will be a run or a pass. AI companies like SimpleBet (recently acquired by DraftKings for $195 million) have automated processes that allow the maximum number of possible micro bets to increase by an order of magnitude. No longer bottlenecked by the capabilities of human sportsbook odds calculators, every moment of a sports game can be turned into a wager. Won your bet that Lamar Jackson would throw on 2nd and 10? Why not bet again that he'll scramble for the first down on 3rd and 3?

Physical casinos are also looking to harness AI for efficiency gains. nQube, a Canadian startup run by a physics professor, uses machine learning to optimize the placement of slot machines on casino floors, profiling players and the performance of one-armed bandits individually and collectively — replacing an older generation of floor-manager intuition and basic analysis. Some of nQube's findings have been counterintuitive: It turns out that removing the total number of slot machines can often increase the casino's "win," if the machines are arranged in a way that redirects players to games where they'll make larger bets.

Jason Feige, a cofounder of nQube, had been working on computational astrophysics when his partner, Stasi Baran, found a scientific paper about the problem of optimal casino floor planning. Though neither had any gaming experience, they both realized their work could be a fit. "I like math and I like hard problems, and she brought me just a monster of a problem and I just fell in love with it," Feige says. "I have never seen data as clean and as comprehensive as what you see in this industry, largely because it is so heavily regulated. But that combined with the kind of powerful AI systems that I've been building, it was just such a natural fit. I just absolutely fell in love with the industry."

The prospect of deeper AI integration is definitely in the air. At one of the gambling industry's biggest events, G2E, a glitzy conference held in Las Vegas in September, there were packed panels on AI in sports betting, women in AI, AI-powered behavioral analytics and "responsible gambling," and AI for customer relationships.

One of the most enticing, and controversial, uses of AI in gambling is customizing casinos — virtual and on the floor — to each gambler.

Just as Netflix uses machine learning and data science to tailor each user's feed to what they're most likely to binge, the startup Future Anthem uses similar tools to keep users hooked on casino websites. The UK-based software provider builds a personalized, dynamic homepage, presenting the exact right game — bingo, slots, poker — to cater to a player's desires at the exact right moment, offering bonuses if the player is getting dejected and keeping them betting for longer.

"We have machine-learning models that are understanding and humanizing that player, that player data," says Ian Tibot, Future Anthem's chief commercial officer. "We see every single spin of a slot, we see every single bet, and we actually understand the experience that the player is having by creating the concept of a session out of that data, and that allows us to understand changes in patterns of behavior."

Brick-and-mortar casinos are also digitally profiling their users. Some locations have RFID chips embedded in every gambling chip, tracking how each gambler is playing and building a profile that automatically directs human workers to intervene as needed — an extra free drink here, a bonus spin there. "Before it used to be like a pit boss maybe having their eyes on 40 players across five tables" to monitor bet sizes and manually assign perks and freebies, says Kasra Ghaharian, a researcher at the University of Nevada, Las Vegas, International Gaming Institute. "It wasn't very accurate," he says. AI allows casinos to "be much more precise in how you're tracking that activity."

Beyond using AI for efficiency gains and user profiling, the industry's ultimate vision for employing the technology is much more ambitious — and unsettling.

In a research paper published last May, the consultancy giant Deloitte's Global Lottery and Gambling Centre of Excellence predicted a future where every game could be personalized in real time to appeal to individual gamblers. Generative AI, the authors wrote, could "allow the games themselves to generate content based on the explicit or even implicit actions of players, from instantly generated new items and playing levels to in-game characters that can have lifelike discussions."

The technology, they continued, could create "individually themed online slot games that can respond to a player's voice and even generate novel content in response to a player's behavior and game history." Generative AI chatbots the players could talk to, games with themes automatically tailored to their preference — the ultimate filter bubble. Social media's endlessly personalized carousel of content is already notoriously addictive, and the damaging parasocial relationships that can be formed with AI chatbots are currently under a microscope following reports of suicide and self-harm linked to a popular provider. Adding these elements to the famously powerful money-extraction machine that is online gambling is a potent combination.

Gambling is historically a human-centric business — gamblers try their luck against the house, for better or worse. But Christina Thakor-Rankin, a veteran industry consultant based in the United Kingdom, dreams of an automatically managed brick-and-mortar casino in the years and decades ahead, akin to Amazon's automated Go convenience stores, with unnecessary human staff costs eating into the casino's margins.

"Look at the amount of operating expenditure required in terms of serving customers, monitoring customers, keeping them safe, people who work in the cage or the cashier pit bosses. What if you had a casino that was very similar to the new generation of self-service Amazon stores where you don't need cash and you don't need people?" she asked. "How would that kind of technology transform a world of sportsbooks, but also land-based casinos?"

At least one casino workers union, the Culinary Workers Union, has raised concerns about the risk of blue-collar jobs in Las Vegas being automated. In 2019, The Nevada Independent reported that between 38% and 65% of casino jobs (depending on the study cited) in the south of the state could be automated over the next decade and a half, calling the city "one of the most vulnerable to automation in the entire country."

But for many gamblers, a trip to Vegas isn't just a transaction — it's an experience, punctuated by banter with dealers, table service, shows, and the seedy glamour of the strip. It remains to be seen if they will accept a robot substitute.

Artificial intelligence may be a moneymaker for gambling companies, but the companies say it's also something else: a remedy for problem gambling.

Playtech, a European gambling software provider, is one of several firms using AI to try to suss out when a gambler is demonstrating signs of addiction or problematic play and intervene. Part of this is recognizing a player's patterns — larger-than-usual bets, or declined deposits, or playing at unexpected times — and interjecting with prompts suggesting they take a break. (Future Anthem says its systems can also detect aberrant behavior and automatically check in with target gamblers.)

"Online gambling companies have lots, tons of data about their players because every single bet or every spin on a slot, every single deposit, the time you spend online, there's lots of information," says Francesco Rodano, Playech's chief policy officer. "So we train an AI model to analyze this behavior and recognize possible harmful patterns."

Playtech and other gambling companies are also developing chatbots that gamblers can talk to about addiction — the logic being that because gambling addiction is stigmatized, addicts may actually be more comfortable talking to a nonhuman.

Rodano acknowledges that the same technology that could help problem gamblers could also be used to exacerbate their addictions. "If you use a tool like ours to identify vulnerable players, in theory, you could use that information to target them — which is the opposite of what the tool is intended for, which is totally unethical," he says. "If you operate in a regulated market, it's very unlikely to happen because the regulator would notice that and clamp down."

Amid frothy valuations and wild hype, there's a risk of overstating the technology's near-term promise — particularly the more giddy ideas, such as Thakor-Rankin's predictions of a Caesar's Palace augmented with robotic, voice-activated "Centurions." And some industry insiders say that what's now called AI might be considered statistics or big data, just rebranded.

"I like to say that we've been doing AI since before it was cool and this new age of AI hype — it's been very interesting to navigate because on the one hand, everyone wants to talk about AI, which is great for us," says Stasi Baran, nQube's cofounder.

"On the other hand, there's so much noise to sift through for our customers and for us as well to determine, everyone says that they've got an AI product, but what's actually real and what actually brings real value? I mean, that's difficult to determine. I think there's a lot of overnight AI experts out there, and that concerns us."

This AI frothiness isn't unique to the gambling industry, and the space has long had a nose for innovations that boost its bottom line — from the development of electromechanical slot machines in the 1960s to the creation of loyalty programs for high rollers in the '80s. As ever, the house always wins.

Rob Price is a senior correspondent for Business Insider and writes features and investigations about the technology industry. His Signal number is +1 650-636-6268, and his email is [email protected].

• Hekate Café & Elixir Lounge offers a sober experience in New York City.
• BI visited Hekate following the US Surgeon General's report linking alcohol to cancer.
• Though alcohol use soared amid the pandemic, there is a blossoming sober-curious movement.

Tucked away in Manhattan's East Village, a sober bar offers an alternative to the rest of the boozy scenes in New York City.

On a Saturday night, Eliott Edge, the bar manager at Hekate Café and Elixir Lounge, welcomed patrons, telling newcomers that: "Everything — with a capital E — is alcohol-free."

Business Insider revisited Hekate after US Surgeon General Dr. Vivek Murthy said alcohol is a leading cause of cancer and should have warning labels like those on cigarette boxes.

Edge, a career bartender, said he was drunk for five years straight before seeking rehab. Now, after being sober for two years and rebranding himself as a mocktail bartender, he wasn't surprised by the surgeon general's announcement.

"The news is not news, yet at the same time, whenever an authority figure shows up and makes a declaration, it enables people to reconsider their behavior," Edge told BI. "People are now going to think about their choices differently."

Alcohol consumption surged during the COVID-19 pandemic and deaths from excessive alcohol use jumped nearly 30% from 2016 to 2020, according to the Centers for Disease Control and Prevention. Heightened levels of excessive drinking continued into 2022, well after the pandemic first hit, according to the Annals of Internal Medicine.

Even so, Gen Z drinks less than previous generations, fueling a growing interest in sober socializing.

"It does seem that there is a slowing down of alcohol consumption enough for those of us in the industry who make it our job to notice," Edge said. "If there is a silver lining to the pandemic, it is that this whole new world of non-alcoholic options really exploded onto the scene."

Edge predicted that every bar will have to have non-alcoholic options to remain competitive "because they're going to realize that it's like vegetarians or vegans or gluten-free or dairy-free. It's just another type of customer profile to cater to — and the ones that don't cater to that are going to go the way of the dinosaur."

Though Hekate is a totally sober experience, Edge said the bar is a "shining example" of how to do it right.

Drinks at Hekate are about $13 for those paying cash — slightly less than your average cocktail at an NYC bar.

But Edge says people come to bars for fun, and with his bar's music, lighting, and mood, Hekate delivers. The cozy bar, which shares its name with the Greek goddess of sorcery and witchcraft, is decorated accordingly.

"You don't need alcohol," Edge said. "Very little is required to have a good time. Really what we need is permission to have a good time, which is what booze does for us. But how often does that good time end in a shit show?"

Not only is he happier as a sober mocktail bartender, Edge said his customers seem happier too, even if they're only stopping by for a mocktail or two before going out for boozey drinks later on.

"My regulars look fantastic, you know? They don't look like they're slowly sliding down the hill," he said. "I'm not watching fights break out amongst best friends. I'm not watching dates dissolve into, you know, puddles of misery."

Perhaps the best part?

"My bathrooms are much cleaner."