Betting on balance: how to protect players & encourage innovation

Introduction

Legislating to solve a perceived problem is a vastly complex task. Each regulator or legislator has their own constituents, with their own cultural values, their own unique individual problems, and their own relationship to gambling. There are many stakeholders involved, some wanting to make their fortune, some just trying to bring in some extra cash. Some like to gamble from time to time, some are addicted to gambling and some see themselves as the person trying to protect people they see as having a gambling problem.

With the enormous changes in gambling over the past decade – consumers having the ability to access online gaming at the click of an app whenever and wherever in the world they may be, fast paced innovation in game design and harnessing new technologies to protect players – how will the industry find a balance between increasing legislative action and allowing technology to continue to meet consumers’ demands and expectations for change?

Whilst some may argue that expanded legislative action is not always the best course of action, elected officials of a jurisdiction are best placed to judge what proper measures are imposed or, as the case may be, not imposed on its population due to their fundamental responsibility to their constituents.

Why impose Player Protection measures?

The situation over the last decade in the United Kingdom is a prime example of the challenges of gambling related harm. On one hand, the United Kingdom has a strong gambling industry, growing in an historic culture not adverse to placing the odd bet and a liberal approach to regulation. On the other, the United Kingdom enjoys a free but often sensationalist press, eager to jump on to the next public health ‘scandal’ and a vocal lobby of gambling skeptics moved to action by what they see as a perceived threat to the common good.

This setup leaves the waters muddied by claims and counter claims about just how dangerous the liberalization and regulation of gambling really is. For example, a June 2020 United Kingdom Parliamentary Group Online Gambling Harm Inquiry makes assertions which, when investigated more deeply, contain figures which have been cherrypicked from the upper end of estimates or are backed by evidence which has had its reliability and suitability called into question. Scientific studies of the evidence have been few, infrequent and varying in scope and quality. It is apparent that to draw any solid evidence of trends across time from the studies that have been conducted to date would be extremely difficult and legislating based on such studies would bring much uncertainty.

Out of the little scientific evidence that does exist, the most consistent and properly conducted studies show that the number of “problem gamblers” remains relatively constant as a proportion of population, despite an increase in availability of gambling. Further, studies tend to show that the percentage of the population that are considered problem gamblers tends to be under or around one percent of the population. A 2015 Spanish report with a sample size of over 6,000 stated “the results of the study show a prevalence rate in the Spanish population of 0.9% for persons classified as compulsive gamblers and 1% for persons classified as problem gamblers, values which are reduced to 0.3% and 0.6 %, respectively, when working with the results related to gambling in the last year.”

Although care should be taken not to read too much into comparing problem gambling from different countries and cultures, the figures from Spain are consistent with data from the more reliable United Kingdom studies. This is generally reflective across most countries where good sample sizes have been used, although there are exceptions and difficulties in comparing different survey methods.

When considering harms, it is also worth noting that gambling may not be the main cause of an individual’s problems. There could be a plethora of other factors in a person’s life which leads to harm, with gambling being a minor one. Harm may come to a gambler who has a large amount of debt, but gambling may not have been the primary cause of that debt, or the debt may have led them to try and gamble their way out of it.

That being said, the report by the United Kingdom Parliamentary Group does contain some interesting opinions from psychological and health professionals which raise concerns over the way the online market in the United Kingdom is heading and the serious effect gambling has on an albeit small portion of the population.

There is no doubt that gambling addiction is a serious problem for some people, but the truth appears to be that there has not been a sufficient amount of research conducted to draw conclusions on: first, whether certain types of gambling product cause an increase in gambling related harm and second, whether proposed “responsible gaming” legislation will have any effect on reducing gambling related harm.

The UK case study mentioned obviously only relates to one of the world’s many jurisdictions with their regional and ethnic cultures. The gambling harm caused in Las Vegas is likely to be different from a rural region of, for example, Eastern Russia – and not just due to the availability of gambling but also the ingrained cultural differences of the people that live there. The stark differences in gambling addiction between those from the more European communities in New Zealand and those from predominantly Maori communities is well documented. Again, the complexities of why this is the case may have more to do with other factors such as poverty, opportunities, societal structures, or numerous other factors, but it illustrates that even in a small island nation like New Zealand, a single, simple idea of what causes gambling harm is impossible to achieve.

This is not to say that no measures should be taken to alleviate gambling harm. Each jurisdiction will be best placed to understand what will work for those under its sovereignty, but the brief overview above illustrates that, even in jurisdictions with a mature gambling industry such as the United Kingdom, the ‘correct’ answer to harm caused by gambling is difficult to come by. Just as the gambling harm caused in each country, community or individual will be different, the approach adopted will be different. The United Kingdom Gambling Commission employs a tactic of high engagement with the industry, even inviting gambling operators to produce proposals on responsible gaming regulation, whilst the regulators in other jurisdictions may take a more top-down approach, laying down the requirements and expecting the industry to accept them with little consultation.

Analyzing player behavior, industry trends, and the effectiveness of existing measures

Deposit, Stake and Win Limits

Deposit, stake and win limits are a straightforward, simple approach to providing a safe environment for players. If you lower, for example, the monthly deposit a player can make, then if they feel the urge to gamble more than that deposit, they must wait until the following month to deposit more.

Stake limits may be seen as a way for gamblers not to burn through vast amounts of money very quickly, but have an effect similar to restricting game design. Economics dictates that stakes are linked to ‘wins’ or jackpots. The bigger the stake, the more you may win and the bigger the thrill. Lower the stake limit, and you lower the thrill and the incentive to play.

An associated measure to the above is the banning of credit cards to pay for gambling deposits, the theory being that players should not be allowed to borrow money to pay for gambling as gambling with money you do not have is seen as a main symptom of a gambling addict.

Player Registration and Monitoring

Increasingly, player registration is being required by regulators of online markets and to some extent in land-based casinos. Such regulations range from obliging the gambling operator to conduct age verification checks to monitoring player activity for signs of compulsive behaviors.

Monitoring player activity for signs of a gambling problem has been seen as a potential way to stop a problem before it becomes serious. In betting shops and casinos, some jurisdictions require staff be trained to help spot when players may not be in full control of their impulses, such as looking for signs of intoxication or working with a compulsive or addictive gambling prevention program. This is similar to how a responsible bar owner operates. If they see a customer who has had too much to drink, they have the opportunity to talk and suggest they stop, or to stop serving them altogether. It is a case of knowing regular customers and being responsible as a business owner and member of society.

When it comes to online gambling, things become a bit trickier as the operator will rarely, if ever, speak to their customers. There is no one bringing drinks or checking on their customers in a personal way, as would happen in a casino or betting shop. Nevertheless, some regulators require operators to spot those players who exhibit signs of problem gambling. Where required, this is usually achieved by registering players and electronically logging and monitoring their playing habits. It is also common for gambling regulators to require operators to offer players the chance to ‘self-exclude’, effectively banning themselves from gambling with an operator, or across several operators, for a set period of time or permanently. To be excluded across multiple operators of course requires more information on the player to be gathered and either shared or put on a central register, such as with the United Kingdom Gamstop system or in Denmark with ROFUS.

Game Design

Technological, web-based companies are known for designing website text, graphics, sounds and functions to give endorphin ‘hits’ to their users or enticing them to ‘click’. This makes the user feel good when using their site and encourages further use. Perhaps this is best illustrated by claims of vast amounts of effort going into seemingly immaterial elements of social media websites and apps such as ‘like’ buttons or the way pages ‘scroll’. The design of such features is not by accident: they are there to give the user the greatest satisfaction when using their platform and increase their use. Such features play on users’ subconscious, involuntary reactions in order to increase revenue, much in the same way advertisers of goods have done for generations.

When it comes to gambling, especially with regards to machine and online gambling, there are a multitude of text, graphics, sounds and functions which a designer can utilize in order to get the customer to keep playing and to entice them to keep handing over their money. This is not necessarily a conscious decision of all game designers but the race to make more appealing games in order to beat the competition may play a part in a trend towards more addictive games.

Gaming companies want to entice customers away from their competition and, more importantly, keep their existing customers. In order to do so the offer of a more thrilling gaming experience is required and so the introduction of ‘non-essential’ gaming features is introduced. Such non-essential features may include flashing graphics, satisfying sounds indicating an imminent ‘win’ or faster, more intense gameplay.

Some of the thrill of the game will be consistent with how the average person would feel when participating in any form of gambling, but there should at least be concern over the non-essential parts of the gambling experience which proliferate in a competitive environment. Although, as previously stated, the evidence as to the link between an increase in gambling variety and an increase in problematic gambling is sparse, there is not enough evidence to conclude that these non-essential gaming features do not cause an increase in problematic gambling.

There is also the possibility that legislating against such gambling features may help with the aforementioned ‘base rate’ of problem gamblers, by prohibiting the most enticing elements of the games.

It is not just the stylistic representation of the game that can entice gamblers to play more, but how representative a game is of a player’s chances of winning. In other words, the fairness of how a game is presented also plays a part in the field of responsible gaming. Regulations that make sure that a game does not entice players with statements such as ‘near miss’ in a completely random game or a misrepresentation of chances such as weighted wheels are used so players are not enticed to gamble thinking that their chances of winning are more than they are.

A Gambling Harm Fund

Despite no evidence that gambling related harm is increasing, it is clear that for some people, gambling causes problems. Even if a substantial body of evidence could be gathered to show that legalization, regulation and new inventive forms of gambling do not cause an increase in gambling related harm, there will always be a ‘base rate’ of the population who suffer gambling problems. One of the opportunities in adequately regulating the gambling industry is the opportunity to use some of the tax revenue generated to help those who it adversely impacts the most.

No matter how much regulation is imposed, the most serious gambling addicts will just look for another opportunity to get their fix. Financing organizations that help treat the psychological forces that drive addiction and even providing, as some jurisdictions require, direct ‘in game’ links to these organizations is perhaps one of the least intrusive and proven ways in which a government can minimize gambling harm. By directing a percentage of tax revenues derived from gambling towards mental health and addiction organizations, government officials can help the most severely affected whilst allowing those who can control their gambling impulses to enjoy an exciting gambling experience.

Advertising

There is some evidence to suggest that problem gamblers, particularly men, begin to develop symptoms of their compulsion as children or young adults. This has led to advertising being high on the gambling regulation advocates in countries such as the United Kingdom and Spain.

As with much surrounding this subject, the scientific evidence on gambling advertising and its connection to the prevalence of gambling problems is not particularly robust, however, this has not prevented heavy scrutiny of the advertising industry and media coverage relaying concerns about exposure of advertising to children for example, professional football games.

Finding the balance

Perhaps the most obvious danger to the gambling industry is over-regulation. Over-regulating an industry to the point of making a product unavailable, either by making it explicitly illegal or by stifling the market to the point it becomes economically unviable, does not stop the problem of addiction.

The measures taken against ‘fixed odds betting terminals’ (FOBTs) in the United Kingdom are a good example of this. Paternalist lobbyists and negative media coverage led to a campaign against what was described as the ‘crack cocaine’ of gambling, FOBTs. Opponents of increased regulation pointed out that there was little, if any evidence that such machines increased problem gambling at a time when gambling revenue and rates of problem gambling remained steady. Their voices went unheard and FOBTs were legislated out of existence but rates of problem gambling went unchanged.

Addicts or even those with moderate symptoms of developing an addiction do not stop when one avenue closes. They simply look for a new source to feed their addiction. Over-regulating the land-based gambling market pushes addicts to underground betting shops or onto online gambling. Over-regulating the online market pushes addicts onto the online black market where the challenge of protecting consumers becomes much more difficult.

Addicts will find a way to get what they want on the black market. Revenue from gambling will simply disappear from the regulated books, where it could have been used to help treat addicts, and into the pockets of unregulated, offshore entities. In prohibition America, alcohol was freely available, pushed by legislators into the domain of violent criminal gangs. The drug addict will get his drugs despite hefty penalties for possession even from behind the iron bars of a highly secure prison.

Evidence as to the effect of responsible gaming measures is lacking. As with the introduction of any legislation, even with the very best intentions, what can seem a common sense measure may cause unforeseen harm, whether it be by pushing vulnerable addicts into the arms of criminal gangs and more addictive forms of gambling, or in the loss of jobs in the gambling sector on which many thousands of working class, low income people depend on to feed their families.

Similarly, legislating against the ‘non-essential’ game features mentioned previously is a delicate balancing act. In attempting to help those who may be more naturally inclined to addiction by prohibiting the more exciting, enticing and possibly addictive gaming features, one does so at the expense of those who enjoy those features but have more control over their gambling impulses. This also runs the risk of making the market so bland that problem gamblers will look to illegal and black-market forms of gambling in order to fulfil their addiction. This means less oversight of those most at risk of gambling, potentially more money going into criminal enterprises, and less fiscal revenue, leaving less funding for organizations that help diagnose and treat gambling addicts.

There is a danger that responsible gaming measures may impinge on civil liberties with a potential expansion of ‘the surveillance state’. Player registration and monitoring, even when conducted by gambling operators, is a requirement of the state and this data will often be reported back to state authorities. Depending on the nature of a particular government or political culture in a country, this may raise concerns about an overreach of the state into the private lives of citizens. Some responsible measures actively require increased monitoring of citizens, such as imposing monthly deposit limits. Should a player reach their limit with one operator, there may be the opportunity simply to open another account with a different gambling operator, or even the same operator under a different name or email address. To prevent this, ever greater powers of control over citizens are needed. The question quickly becomes, is it right that anyone wishing to bet a small amount on a horse race must provide their passport and bank details to the operator or regulator? What about their bank statements or even their monthly expenses which are considered by some regulators? This method also raises challenges in countries with strict data protection laws such as in the European Union.

Conclusion

Whilst gambling businesses continue to navigate the ever-evolving player protection regulatory landscape, they also need to be confident in finding a balance between innovation and player protection. Without a doubt, player protection regulation will continue to be a multifaceted challenge that requires ongoing collaboration, adaptability, and vigilance. By adopting a risk-based regulatory approach, fostering open dialogue with industry stakeholders, leveraging data-driven insights, and promoting responsible gaming tools and education, regulators and gambling businesses can effectively address player protection concerns without stifling the industry’s innovative potential. Ultimately, this delicate balance will allow the gambling industry to continue to offer engaging and entertaining experiences to players, while safeguarding their well-being and minimizing the risks associated with gambling-related harm.

References

Report from the Gambling Related Harm All Party Parliamentary Group: Online Gambling Harm Inquiry, Final Report, June 2020 http://www.grh-appg.com/

Patrick Sturgis, Department of Methodology, London School of Economics: An assessment of the accuracy of survey estimates of the prevalence of problem gambling in the United Kingdom, March 2020

https://about.gambleaware.org/media/2179/an-assessment-of-the-accuracy-of-survey-estimates-of-the-prevalence-of-problem-gambling-in-the-united-kingdom.pdf

Christopher Snowdon, Institute of Economic Affairs: Fixed-odds betting terminals, September 2016 https://iea.org.uk/wp-content/uploads/2016/09/FOBT-Briefing-PDF.pdf

Christopher Snowdon, Spiked: FOBTs: a middle-class moral panic https://www.spiked-online.com/2018/05/17/fobts-a-middle-class-moral-panic/

Harriet Dennys, This Is Money: We’re fighting for our lives, says bookie, as four betting shops a DAY are shut down in war on gambling https://www.thisismoney.co.uk/money/news/article-7718253/Four-betting-shops-DAY-shut-war-gambling.html

Problem Gambling Foundation of New Zealand: Maori and gambling, November 2017 https://www.pgf.nz/uploads/7/1/9/2/71924231/fs08-maori_and_gambling.pdf

Directorate General for the Regulation of Gambling: Study on the prevalence, behavior and characteristics of users of games of chance in Spain, 2015

Directorate General for the Regulation of Gambling: Study and analysis of risk factors for gambling disorder in a Spanish clinical population, 2017 https://www.ordenacionjuego.es/en/estudio-prevalencia

Filipa Calado and Mark D. Griffiths, Journal of Behavioral Addictions 5(4): Problem gambling worldwide: An update and systematic review of empirical research (2000–2015), 2016

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5370365/pdf/jba-05-04-592.pdf

American Gaming Association: Responsible Gaming Regulations & Statutes, August 2016

https://www.americangaming.org/wp-content/uploads/2019/01/Responsible-Gambling-Regulations-WEB.pdf

Gamstop https://www.gamstop.co.uk/

Steven Stradbrooke, CalvinAyre: Spain says new rules will prohibit 80% of online gambling ads, February 2020 https://calvinayre.com/2020/02/21/business/spain-new-rules-prohibit-online-gambling-advertising/

United Kingdom Gambling Commission: October 2019: Industry Challenges Progress update, June 2020 https://www.gamblingcommission.gov.uk/PDF/Challenges-Progress-Update.pdf