Category Archives: Online gambling
One of the most psychologically interesting questions concerning poker is ‘Why do so many people play so badly?’ It’s clear that most players know better, but they appear to make the same mistakes repeatedly. Given the hundreds of thousands of poker strategy books that are sold every year, we can only reach the conclusion that just a small percentage of poker players apply the skills they have read about. My hunch is that most people understand what they have read but when it comes to playing a competitive hand it’s simply more ‘fun’ to play badly than to play well. I’m not saying losing is more fun than winning (because quite clearly it isn’t), but the pursuit of profit maximization forces players to do things they don’t like doing. On a psychological level, maximizing profit makes extreme demands. Therefore, only a few, extraordinarily disciplined people play their best game most of the time – and nobody always plays it.
Most economists claim that gamblers are primarily driven by the profit motive. However, the psychological evidence is overwhelming that other desires affect gambling actions. Put simply, for most gamblers, our actions contradict the desire to maximize profits. Whilst I am no Freudian, there appear to be a whole range of unconscious factors at play in gambling situations.
One of the basic mistakes is playing too many hands. All the self-help books warn players against it but it is a common behaviour. In general, poker players find it boring to fold hand after hand. Players become more reckless and instead of folding, risk all in an attempt to get themselves out of a boredom rut. Even after losing, the poker player may ‘congratulate’ their play by defining it as ‘courageous’ when in the cold light of day, it was stupid. This type of adaptive thinking is common amongst gamblers who lose and should be avoided. Poker players often chase with weak hands for the same reason. Players will throw good money after bad in an effort to get even. Occasionally the strategy will pay off, but most of the time it won’t. In these situations, gamblers will invariably focus on the few times that chasing has got them out of a hole – but conveniently forget the many times that it didn’t.
Another common mistake is to playing too aggressively. Not only is this a male characteristic but is often the strategy of the game’s very top players. Again, such tactics occasionally pay off for the player in very tight games. However, in most gambling situations, playing aggressively is simply not called for yet players continue to do it. On the other hand, gamblers can sometimes play too passively. Gamblers constantly find good excuses to justify their playing styles. In these situations, gamblers simply remember the times they saved money by not betting or raising, ignoring the pots they lost by giving away free or cheap cards.
It’s also tempting to show your cards and most players will do it occasionally. If players make a successful bluff, it’s human nature to want to let people to know how smart they are. The golden rule in poker is never to give anything away but the human psyche works in such a way that we usually want to show off once in a while. Our psychological make-up also means that we let pride get in the way of minimizing losses. There are always games that should have been avoided but players end up staying in them long after they knew it was a mistake. None of us like to lose to who we think are weaker players, or admit that the game was too hard. How many times does a player continue playing because they want to try and get the better of a great player or show off because there is someone they are trying to impress? Although it’s a cliché, pride before a fall is commonplace. These short-term psychological satisfactions will almost always have a negative impact on long-term profits.
Because there are many non-financial types of rewards from many different sources while playing poker, some people view losses as the price of entry. To these players, winning may be a bonus. However, most of us don’t like losing – and we especially don’t like persistent losing, regardless of whether there are other types of reinforcement. In the cold light of day, we are all rational human beings. In the height of action, rationality often goes out the window. I’ve done it myself at the roulette table and standing in front of a slot machine. While gambling I have felt omnipotent (and wrote about this experience back in 1990 in an article on the dangers of doing observational research in amusement arcades). It is only after I walk away penniless that the non-financial rewards are short-term and not worth it.
Understanding our own psychological motives is clearly important while gambling. Most players know the strategies they should be adopting but fail to apply them in real gambling situations. Players do not lack the information. It is far more profitable to learn why we don’t apply the lessons we have already learned, then ensure that we apply them. Until we understand and control our own motives – including the unconscious ones – we cannot possibly play to our best ability.
Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
Additional input from the writings of Alan Schoonmaker
Biolcati, R., Passini, S. & Griffiths, M.D. (2015). All-in and bad beat: Professional poker players and pathological gambling. International Journal of Mental Health and Addiction, 13, 19-32.
Griffiths, M.D. (1990). The dangers of social psychology research. BPS Social Psychology Newsletter, 23, 20-23.
Griffiths, M.D., Parke, J., Wood, R.T.A. & Rigbye, J. (2010). Online poker gambling in university students: Further findings from an online survey. International Journal of Mental Health and Addiction, 8, 82-89.
McCormack. A. & Griffiths, M.D. (2012). What differentiates professional poker players from recreational poker players? A qualitative interview study. International Journal of Mental Health and Addiction, 10, 243-257.
Parke, A. & Griffiths, M.D. (2011). Poker gambling virtual communities: The use of Computer-Mediated Communication to develop cognitive poker gambling skills. International Journal of Cyber Behavior, Psychology and Learning, 1(2), 31-44.
Parke, A. & Griffiths, M.D. (2018). Identifying risk and mitigating gambling related harm in online poker. Journal of Risk Research, 21, 269-289.
Parke, A., Griffiths, M., & Parke, J. (2005) Can playing poker be good for you? Poker as a transferable skill. Journal of Gambling Issues, 14.
Recher, J. & Griffiths, M.D. (2012). An exploratory qualitative study of online poker professional players. Social Psychological Review, 14(2), 13-25.
Wood, R.T.A., Griffiths, M.D. & Parke, J. (2007). The acquisition, development, and maintenance of online poker playing in a student sample. CyberPsychology and Behavior, 10, 354-361.
Wood, R.T.A. & Griffiths. M.D. (2008). Why Swedish people play online poker and factors that can increase or decrease trust in poker websites: A qualitative investigation. Journal of Gambling Issues, 21, 80-97.
A couple of days ago, Simon Stevens, the Chief Executive of the British National Health Service (NHS) said that foreign-owned betting companies who sponsor British football clubs should financially contribute to paying for gambling addicts’ treatment. I am all in favour of this, although I think some money should also be allocated to education, prevention, and (predictably) research. This is also an area that I have written about recently.
More specifically, I and my colleague Dr. Hibai Lopez-Gonzalez published a paper earlier this year entitled ‘Betting, forex trading, and fantasy gaming sponsorships – A responsible marketing inquiry into the ‘gamblification’ of English football’ in the International Journal of Mental Health and Addiction. Using data about sponsorship deals from English Football Premier League, we demonstrated that gambling marketing has become firmly embedded in the financial practices of many Premiership football clubs. We argued that these associations are not trivial, and that the symbolic linkage of sport and newer gambling forms may become an issue of public health, especially affecting vulnerable groups such as minors and problem gamblers.
A major preoccupation regarding gambling intersection with sports has been the marketing of betting as an experience inherently associated with the symbolic culture of sport. By emphasising its connections with sports, the marketing and advertising of betting has been theorised to pursue the ‘sanitation’ of gambling, transferring the health-related symbolic attributes of sport and physical exercise to betting behaviour. In this regard, of great concern is the effects that an excessive volume of betting marketing might have on vulnerable groups such as minors and young adults and individuals suffering or recovering from gambling disorder. Furthermore, additional issues might arise in the event that those new categories that extend the definition of sports gambling (i.e., trading, other gambling forms such as poker, and fantasy games) seeking to market their products in alignment with (or appropriation of) sports’ core values and positive attributes. Early examples of this marketing strategy can be found in the sport stars’ endorsement of poker brands such as the footballers Neymar Jr. and Cristiano Ronaldo, and the tennis player Rafael Nadal.
We asserted in our paper that football shirt sponsorship is arguably a good proxy to calibrate the volume of gambling marketing in English football. Table 1 shows the shirt sponsor evolution over a decade (from the 2007/2008 to 2016-2017 seasons). First team shirt sponsorship with gambling companies evolved from four deals in 2008, six deals in 2012, to ten deals in 2017, accounting for half of the 20 English Premier League teams. The saturation of shirt logos owned by gambling brands has evolved rapidly over a relatively short period of time. However, some industry voices have been anticipating a decline in the numbers of shirts being sponsored by gambling firms due to their incapacity to compete with other business sector, although such a decline has yet to materialise.
In the same vein, it has been noted that most of the football teams with shirts sponsored by gambling companies are among the less powerful in the league, both in terms of economic profitability and sporting success. Analysing the data from end of season table positions indeed demonstrates a bias of gambling companies sponsoring teams towards the bottom of the table. Thus, the four teams (out of 20 in the English Premier League) with gambling logos in 2007/08 finished the league 6th, 7th, 11th, and 15th. In 2011-12, the six teams sponsored by gambling companies finished 10th, 11th, 13th, 16th, 18th, and 20th. In 2016/2017 season, the ten teams with gambling sponsors showed an almost perfect inverse correlation between table position and gambling-origin shirt sponsor, ranking 9th, 10th, 11th, 13th, 14th, 15th, 16th, 17th, 18th, and 20th (19th being a money loan company).
This could be interpreted as a nuanced strategy. More specifically, gambling operators might believe they have enough global exposure that the league as whole offers, without needing to pay premium sponsorship deals to attach their brand to the most supported and successful teams (because all the lower ranked teams have to play all the upper ranked teams and therefore get equal advertising exposure during televised games).
Table 2 shows the breadth of the gamblification process by focusing on sponsorship deals running through 2016-17 season in the English Premier League. As can be observed, all teams secured at least one official betting partner, with some of them having multiple partners due to regional deals in strategic markets to provide so-called ‘geo-targeted’ betting experience. An illustration example is Arsenal club’s deals with 12Bet company in Asia, Betfair in Europe, SportPesa in Kenya, and Tempobet in Oceania. Altogether, the 20 English Premier League teams totalled 20 different betting brands, with 12 brands sponsoring only one team, five brands sponsoring two teams, and three brands sponsoring three different teams. Despite how fragmented the betting market might look, these brands represent only a small fraction of the actual number operating in association with the English football. In fact, betting brands are generally considered to offer poorly differentiated products in highly competitive markets. Consequently, marketing plays a significant part in artificially creating singular attributes that facilitate the acquisition and maintenance of customers.
Sponsorship deals with trading companies are not as prevalent as betting sponsorships. However, 14 out of 20 English Premier League teams have linked partnership deals with trading companies – most notably forex trading – for 2016/17 season. Only one trader (EZTrader) sponsors two different teams, while the rest are unique sponsors. Arguably, the same betting market attributes of low product differentiation and competitive environment also applies to trading firms.
Fantasy gaming is rapidly becoming a large component of sports appreciation, especially in the USA where fantasy sports appears to have partially absorbed the consumer base for online sports betting, an illegal activity in most states. Although still in its infancy in Europe, eight out of 20 English teams already have agreements in place with fantasy sports companies, some of which include a deal with DraftKings, the leading company along with FanDuel in USA’s fantasy gaming market. The concentration of brands here is slightly higher than in the case of betting and trading sponsorships, but six different brands still populate the growing fantasy gaming market in the English Premier League.
The detrimental effect on public health of an increase in the sports betting marketing volume is difficult to demonstrate. British data collected by the Gambling Commission is inconclusive due to the lack of definition of what constitutes gambling on sports. In general, research has found difficult to substantiate the causal association between gambling advertising exposure and behaviour, particularly when the effects of such exposure might take place weeks or months later. Despite the difficulties of finding empirical evidence of the real impact of marketing on betting behaviour, many authors have acknowledged that the association between marketing and gambling disorder is plausible, at least theoretically.
The sports betting marketing and advertising growth could be theorised to have two effects. First, an increase in gambling advertising exposure will lead to a higher prevalence rate of problem gambling. Many scholars have indicated that problem gamblers are usually more exposed to advertising (e.g., they visit more frequently gambling websites or watch more sport events), therefore it cannot be established whether they gamble more because they are exposed to more marketing instances or the are more exposed because they gamble more. However, a study I published with my Norwegian colleagues at the University of Bergen conducted among 6,034 Norwegian gamblers found that problem gamblers had a greater involvement with gambling advertising even when they were similarly exposed than regular non-problem gamblers.
Second, an overall rise in the consumption of gambling products following more aggressive marketing strategies, even while maintaining stable the percentage of people experiencing gambling-related harm, would lead to a rise in absolute numbers of people developing gambling problems. Simply put, keeping problem gambling rate constant, the more people that bet on sports, the more problem gamblers.
There is a wide consensus that sports betting marketing (and advertising) must be regulated, and is the case in most jurisdictions including the UK. However, there is no specific protection concerning the marketing of trading and fantasy gaming as a specific product category associated with sports. Finally, our paper noted that although there is no scientific evidence the marketing agreements between football clubs and the gambling industry are actually having a detrimental effect on the aforementioned vulnerable groups, it makes theoretical sense to think that they might potentially cause harm.
Note: This article was co-written with Hibai Lopez-Gonzalez
Dr. Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
Griffiths, M.D., Estévez, A., Guerrero-Solé F. & Lopez-Gonzalez, H. (2018). A brief overview of online sports betting advertising and marketing. Casino and Gaming International, 33, 51-55.
Lopez-Gonzalez, H., Estévez, A. & Griffiths, M.D. (2017). Marketing and advertising online sports betting: A problem gambling perspective. Journal of Sport and Social Issues, 41, 256-272.
Lopez-Gonzalez, H., Estévez, A. & Griffiths, M.D. (2018). Controlling the illusion of control: A grounded theory of sports betting advertising in the UK. International Gambling Studies, 18, 39-55.
Lopez-Gonzalez, H. & Griffiths, M.D. (2016). Is European online gambling regulation adequately addressing in-play betting advertising? Gaming Law Review and Economics, 20, 495-503.
Lopez-Gonzalez, H. & Griffiths, M.D. (2018). Betting, forex trading, and fantasy gaming sponsorships – A responsible marketing inquiry into the ‘gamblification’ of English football. International Journal of Mental Health and Addiction, 16, 404-419.
Lopez-Gonzalez, H. & Griffiths, M.D. (2018). Understanding the convergence of online sports betting markets. International Review for the Sociology of Sport, in press.
Lopez-Gonzalez, H. Guerrero-Solé, F., Estévez, A. & Griffiths, M.D. (2018). Betting is loving and bettors are predators: A Conceptual Metaphor Approach to online sports betting advertising. Journal of Gambling Studies, in press.
Lopez-Gonzalez, H., Guerrero-Sole, F. & Griffiths, M.D. (2018). A content analysis of how ‘normal’ sports betting behaviour is represented in gambling advertising. Addiction Research and Theory, 26, 238-247.
“Cash Out lets you take profit early if your bet is coming in, or get some of your stake back if your bet is going against you – all before the event you’re betting on is over. Cash Out offers are made in real time on your current bets, based on live market prices. Whenever you are ready to Cash Out, simply hit the yellow button. Cash out is available on singles and multiples, on a wide range of sports, including football, tennis, horse racing, and many more! You can Cash Out of bets pre-play, in-play, and between legs” (Definition of ‘cash out’ betting on Betfair website, 2017).
Most European sports betting operators now feature ‘cash out’ functionalities in their online platforms. This means that bettors can withdraw their bets before the event bet upon has concluded, obtaining a smaller but guaranteed return if the outcome of the bet is going their way, or, conversely, cutting down the monetary impact of a foreseeable loss. The ‘cash out’ functionality has rapidly become popular among sports bettors that bet in-play (i.e., during the game on things such as soccer matches and horse races) as a way of maximising value on the bets they have made.
Industry voices such as David O’Reilly, from Colossus Bets, have identified four major benefits of cash out features for bookmakers: (i) reducing the volatility of the operator’s revenue; (ii) increasing the recycling of player returns, with more players banking smaller amounts; (iii) enabling players to avoid their ‘near miss’ frustration; and (iv) improving the player engagement with the platform by introducing a mechanism that promotes constant checking. However, for sports bettors, cashing out strategies might typically involve cutting down the profit while being ahead but rarely reducing the loss when going behind. In this regard, cashing out does not appear to differ greatly from other new internet-based betting forms (e.g. so-called ‘exotic’ or multiple bets), which have been found to possess, in general, higher expected losses for gamblers and greater profit margins for operators.
However, beyond the feature’s financial rationale, cash out affects the nature of sports betting in more meaningful ways. It is, arguably, a game-changer, that leads (along with other features such as ‘edit my acca’ features in which specific bets can be removed from ‘accumulator’ bets) to the transformation of sports betting from a discontinuous to a continuous form of gambling. Here, our contention is that cash out is a key component of the contemporary bettor-bookmaker interaction, and that the widespread adoption by devoted sports bettors merits a closer look into the implications of such an interaction from a problem gambling perspective. Such an examination also suggests that regulators and policymakers need to think about how to protect gambling consumers from the potential harm caused by this new type of betting.
Structural characteristics have been proposed as a determining factor that can influence problem gambling behaviour. Structural characteristics are those associated with the design of a gambling product that shape the way gamblers interact with it. Typical structural characteristics include, but are not limited to, bet frequency, bet duration, event frequency, near misses, stake size, jackpot size, probability of winning, and interface design (e.g., the use of music and colour stimuli in the design of slot machines).
The internet has altered significantly the structural characteristics of gambling and sports betting more specifically. For example, in a number of European countries, the football (soccer) pools used to comprise bets placed during a weekday on the outcome of a game played typically on a Saturday or Sunday (i.e., a once a week wager). This reward delay was a major protective factor against excessive gambling, which on a psychobiological level has been theorised as an imbalance in an individual’s dopamine receptors, and therefore, highly sensitive to shorter bet reward periods. Betting via the internet has reduced such delays in receiving rewards from gambling, thus modifying a major structural characteristic of betting from once a week to (in some instances) every few minutes.
In parallel to the increased uptake of Internet betting in many jurisdictions, a second dynamic, namely globalisation, has further widened the possibilities of betting across countries, sports, and time zones, ultimately transforming sports betting into a 24/7 activity where the bookmaker never closes the shop any day during the year. For the first time, if a gambler has a craving to bet, the market is able to respond to that demand anytime and anywhere via a range of Wi-Fi enabled portable devices (e.g., smartphone, tablets, laptops, etc.). Virtual sports have expanded the availability of betting options even more, eliminating the need to bet on real world sport events.
Although the time between bets (i.e., bet frequency) was effectively reduced to near zero, the time within bets (i.e., bet duration) changed little until cash out functionality was first introduced by the gaming operator William Hill in December 2012. With cash out features, sports betting has become a potentially continuous gambling activity, one that resembles the playing mechanics the stock market. As with investing in stocks, bet values in in-play sports betting are re-calculated seamlessly. The outcome of a sport event might not be as relevant for many bettors as the value their bet will acquire in the next few seconds, even if that bet turns out to be erroneous at the end of the game. As in stock market investing, betting becomes continuous because non-actions also qualify as actions in themselves. Every single second that a bettor decides not to cash out, a new bet takes place. Eventually, cash out features introduce the notion that it is the bet itself the commodity that is being traded in the sports betting market. This new continuous type of sports betting raises questions concerning the gambling-related harm that could be associated with it. It also suggests that the kinds of regulation found widely in the stock market investment sector might have some utility if applied to this new form of gambling.
From a marketing perspective, cash out functionality is often advertised as a control-enhancing mechanism for bettors. Given that cashing out is typically presented in television advertisements as a risk-free operation, the product is likely to be perceived as reimbursable if the client is not happy with it, arguably promoting less planned gambling behaviours. Some gaming operators use the alternative name of “edit my bet” to refer to cash out, focusing on the capacity of bettors to correct later possible errors of judgement. The problem is that (and as happens in stock market investing), cashing out is only possible at the current value of the stock (which may be inferior to the purchasing price). Additionally, and contrary to what happens in stock market investing, betting operators automatically devalue the bet price immediately after the purchase. For example, a bookmaker will typically offer to cash out for $0.95 or similar a $1 bet placed one second ago, a price devaluation unmotivated by any new information or event actually affecting the predicted value of such a bet.
Beyond its most apparent attributes, we have demonstrated that cash out within in-play gambling is a pivotal feature that has been introduced by the sports betting industry to transform sports betting from what was traditionally a discontinuous form of gambling into a continuous one. It is contended that, although cashing out presupposes more engaged gamblers that feel more in control of their bets, the emotionally charged context in which it is often used and the structural attributes of the product itself might actually make some bettors lose control over their gambling wagers. Consequently, gambling policymakers and regulators should be cognizant of the challenges of this transformation of sports betting and consider the implications for the protection of gambling consumers.
[Note: This article was co-written with Dr. Hibai Lopez-Gonzalez]
Dr. Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
Betfair (2017). Sportsbook: What is cash out and how does it work? Retrieved March 1, 2017, from: https://en-betfair.custhelp.com/app/answers/detail/a_id/4/~/sportsbook%3A-what-is-cash-out-and-how-does-it-work%3F
Gainsbury, S. M. (2015). Online gambling addiction: The relationship between internet gambling and disordered gambling. Current Addiction Reports, 2(2), 185-193.
Griffiths, M.D. (1993). Fruit machine gambling: The importance of structural characteristics. Journal of Gambling Studies, 9, 101-120.
Griffiths, M. D. (2005). A biopsychosocial approach to addiction. Psyke & Logos, 26(1), 9–26.
Griffiths, M.D. & Auer, M. (2013). The irrelevancy of game-type in the acquisition, development and maintenance of problem gambling. Frontiers in Psychology, 3, 621. doi: 10.3389/fpsyg.2012.00621.
Lopez-Gonzalez, H., & Griffiths, M. D. (2016). Understanding the convergence of online sports betting markets. International Review for the Sociology of Sport. http://doi.org/doi:10.1177/1012690216680602
Lopez-Gonzalez, H. & Griffiths, M.D. (2017). ‘Cashing out’ in sports betting: Implications for problem gambling and regulation. Gaming Law Review: Economics, Regulation, Compliance and Policy, 21(4), 323-326.
McCormack, A., & Griffiths, M. D. (2013). A scoping study of the structural and situational characteristics of internet gambling. International Journal of Cyber Behavior, Psychology and Learning, 3(1), 29–49.
Newall, P. W. S. (2015). How bookies make your money. Judgment and Decision Making, 10(3), 225–231.
Newall, P. W. S. (2017). Behavioral complexity of British gambling advertising. Addiction Research & Theory. http://doi.org/10.1080/16066359.2017.1287901
Parke, J., & Griffiths, M. D. (2007). The role of structural characteristics in gambling. In G. Smith, D. Hodgins, & R. Williams (Eds.), Research and Measurement Issues in Gambling Studies (pp. 211–243). New York: Elsevier.
Sports Trading Life. (2015). Is “cash out” actually BAD for betting punters? Retrieved March 1, 2017, from http://sportstradinglife.com/2015/03/is-cash-out-actually-bad-for-punters/
Last week I was approached by Rupert Wolfe-Murray, a PR representative of a well-known addiction treatment clinic (Castle Craig) asking what my views were on Bitcoin and cryptocurrency trading (colloquially known as ‘crypto trading’) and whether the activity could be addictive. More specifically he wrote:
“I write to you about the research we’re doing into addiction to Bitcoin and cryptocurrency trading. We’ve had an enquiry about this at Castle Craig and they would treat it as a gambling addiction. We think it’s a new type of behavioural addiction and we plan to publish a web page (and FAQ) with the intention of alerting people that the online trading of cryptocurrencies may be addictive. It would be very helpful if we could get a quote from you, putting it into perspective. Do you think it’s a growing problem? There’s very little information about this issue online but there is an active forum of ‘crypto addicts’ on Reddit, where I got some friendly feedback…The therapist I often turn to when writing about gambling and the behavioural addictions told me that it sounds like addiction to day trading. Would you agree?”
In short, I couldn’t agree more although my own view is that this is not a ‘new’ addiction but a sub-type of online day-trading addiction (on which I first published an article about back in 2000 for GamCare, the gambling charity I co-founded with Paul Bellringer in 1997) and/or stock market trading addiction (which I’ve written a couple of previous blogs about, here and here, and an article in iGaming Business Affiliate magazine). However, I decided to do a bit of research into the issue.
A recent January 2018 article in the Jakarta Post by Ario Tamat examined this issue which was a personal account of his own experiences (‘Bitcoin trading: Addictive ‘hobby’ that could break my bank’). He wrote:
“I was always interested in Bitcoin, not that I really understand the technology, but first impressions were appealing: a decentralized currency, mined by solving mathematical equations and potentially accessible to anyone…Fast forward to 2017. Discussions on cryptocurrencies had entered the public consciousness, Bitcoin prices were sky high… A few friends introduced me to a local site on cryptocurrency trading – the most suitable term for the entire affair, actually – bitcoin.co.id. Taking the leap, I took some money out of my measly savings and bought myself some Bitcoin…In three days, I had made 6 percent. I was hooked… I’ve noticed that the whole cryptocurrency trading trend is like placing bets on a never-ending horse race, where new horses are introduced to the race almost daily”.
Another article by Douglas Lampi on the Steemit website noted that “the elements of addiction and gambling are a consistent risk that traders must always be on the guard against” and provided some signs to readers that they may be trading impulsively. These included (i) feeling muscle tension, (ii) feeling background anxiety, (iii) checking the price of Bitcoin and alt coins several times through the day, and (iv) thinking about trading while engaged in other activities. While these ‘symptoms’ and behaviours might be found among those addicted to crypto day trading, on their own they are arguably little more than mildly problematic. These signs applied to gambling or social media use would be unlikely to raise many worries among addiction treatment practitioners.
I also visited the online Bitcoin Forum where one of the topics was ‘Is crypto trading an addiction’ prompted by a Russian who allegedly committed suicide after losing all his money crypto trading. Most of the people on the forum didn’t think it was an addiction and claimed the suicide was reminiscent of the suicides that occurred at the time of the 2009 stock market crash (although a couple of individuals believed that crypto trading was a potentially ‘addicting’ activity). One participant in the discussion noted:
“Yes [crypto trading is] highly addictive, specially formulated if you start to notice that need, urge in side you, to check the price even in the middle of the night. Find yourself skipping your daily routines it is and can be addictive if you don’t know how to control you and your emotions. I have found somewhere that some say that it is like being in casino, betting, playing rules etc. because like every coin was made mostly for pure profit and it’s all speculation rather than to have their own sole purpose which when I think of it can make sense to even why it can be addictive”.
Another individual on the Bitcoin Pub website wrote:
“I think I might actually have an unhealthy addiction to [crypto trading]. I’d say 3/4 times when I unlock my phone I’m checking Blockfolio, when I’m at work, at home, with my girlfriend, or even between sets at the gym. I’m starting to think I need to discipline myself to NOT check it or limit it to maybe 1-2 times a day as its noticeably impacting my passions and in turn my mental state. I’m not a day trader, I hold all my coins in cold storage. So there’s really no reason for me to be checking that frequently, or watching crypto analysis YouTube videos, or reading articles about it several times a day”.
The issue was also discussed in a recent February 2018 article in the Irish Times by Fiona Reddan (‘It’s addictive’: Why investors are still flocking to bitcoin and crypto’). Interviewing Nicholas Charalambous (Managing Director of Alpha Wealth) was quoted as saying: “Previously, I would have described cryptos as ‘shares on steroids’; now I would say they’re shares with jetpacks and boosters and then some”. While Bitcoin shares have fallen, there are plenty of new cryptocurrencies that individuals can dabble buying shares in (ethereum, litecoin, ripple, putincoin and dogecoin) and all can be akin to gambling. Reddan also interviewed Jonathan Sheehan (Managing Director, Compass Private Wealth) who said:
“It has the exact same risk and return characteristics as a naive gambler, who has opened their first online betting account. There is absolutely no valuation metric for these currencies and allocating capital to them is an extreme and unnecessary risk”.
One country that has taken crypto trading addiction seriously is South Korea. Their government’s Office for Government Policy Coordination has introduced new rules to inhibit the speculation on cryptocurrencies. According to a Market Watch article:
“The proposed measures…range from levying capital-gain taxes on trading cryptocurrencies, to restricting financial firms from holding, acquiring and investing in them…The new regulations come amid mounting concern within South Korea about the potential for people to become addicted to bitcoin trading”.
The country’s prime minister Lee Nak-yon went as far as to say that the increasing interest in cryptocurrencies could “lead to some serious distorted or pathological phenomenon”.
I did quickly check what had been written about academically. I came across a couple of papers on Google Scholar that mentioned possible addiction to crypto trading. Justine Brecese (in a 2013 ‘research note’ on the socioeconomic implications of cyber‐currencies for ASA Risk Consultants) asserted that “risks with virtual currency include the potential for addiction and resultant over-spending” (but providing little in the way of empirical evidence for the claim). In a paper by Haraši Namztohoto on ‘cryptocoin avarice’, he noted:
“Reason often discretely quits the cognitive battlefield whenever hoarding tendencies of human beings are coupled with addictive behaviour which financial derivate trading surely is, thus leaving humans prone to caprices of mass psychology”.
Given that addictions rely on constant rewards and reinforcement, there is no theoretical reason why crypto trading cannot be addictive. However, there is only anecdotal evidence of addicted individuals and if they are addicted a case could be made that this is a type of gambling addiction.
Dr Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
Brecese, J. (2013). Research note – Money from nothing: The socioeconomic implications of “cyber-currencies”. Seattle, WA: ASA Institute for Risk & Innovation
Griffiths, M.D. (2000). Day trading: Another possible gambling addiction? GamCare News, 8, 13-14.
Griffiths, M.D. (2009). Internet gambling in the workplace. Journal of Workplace Learning, 21, 658-670.
Griffiths, M.D. (2013). Financial trading as a form of gambling. i-Gaming Business Affiliate, April/May, 40.
Namztohoto, H. (2013). Myth, machinery and cryptocoin avarice. Wizzion.com. Located at: http://wizzion.com/papers/2013/cryptocoin-avarice.pdf
Jeong, E-Y. & Russolillo, S. (2017). South Korea mulls taxing cryptocurrency trade as fears mount about bitcoin addiction, speculation. Market Watch, December 13. Located at: https://www.marketwatch.com/story/south-korea-mulls-taxing-cryptocurrency-trade-as-fears-mount-about-bitcoin-addiction-speculation-2017-12-13
Lampi, D. (2018). Two sure signs YOU are a crypto trading addict. Steemit.com. February. Located: https://steemit.com/cryptocurrency/@ipmal/two-sure-signs-you-are-a-crypto-trading-addict
Reddan, F. (2018). ‘It’s addictive’: Why investors are still flocking to bitcoin and crypto. Irish Times, February 13. Located at: https://www.irishtimes.com/business/financial-services/it-s-addictive-why-investors-are-still-flocking-to-bitcoin-and-crypto-1.3388392
Tamat, A. (2018). Bitcoin trading: Addictive ‘hobby’ that could break my bank. The Jakarta Post, January 8. Located at: http://www.thejakartapost.com/life/2018/01/08/bitcoin-trading-addictive-hobby-that-could-break-my-bank.html
The buying of loot boxes takes place within online videogames and are (in essence) virtual games of chance. Players use real money to buy virtual in-game items and can redeem such items by buying keys to open the boxes where they receive a chance selection of further virtual items. Other types of equivalent in-game virtual assets that can be bought include crates, cases, chests, bundles, and card packs. The virtual items that can be ‘won’ can comprise basic customization (i.e., cosmetic) options for a player’s in-game character (avatar) to in-game assets that can help players progress more effectively in the game (e.g., gameplay improvement items such as weapons, armor). All players hope that they can win ‘rare’ items and are often encouraged to spend more money to do so because the chances of winning such items are minimal. Many popular videogames now feature loot boxes (or equivalents) including Overwatch, Middle-earth: Shadow of War, Star Wars Battlefront 2, FIFA Ultimate Team, Mass Effect: Andromeda, Fortress 2, Injustice 2, Lawbreakers, Forza Motorsport 7, and For Honor. In short, all of these require the paying of real money in exchange for a completely random in-game item. In an interview with Eurogamer, psychologist Jamie Madigan said:
“Whenever you open [a loot box], you may get something awesome (or you may get trash). This randomness taps into some of the very fundamental ways our brains work when trying to predict whether or not a good thing will happen. We are particularly excited by unexpected pleasures like a patch of wild berries or an epic skin for our character. This is because our brains are trying to pay attention to and trying to figure out such awesome rewards. But unlike in the real world, these rewards can be completely random (or close enough not to matter) and we can’t predict randomness. But the reward system in your brain doesn’t know that. Buying [loot boxes] puts them into the same category of packs of Pokémon cards or baseball cards. Unlike gambling in a casino, you’re going to get something out of that pack. Maybe just not the thing you wanted”.
Although there are many definitions in many disciplines defining gambling, there are a number of common elements that occur in the majority of gambling instances that distinguish ‘true’ gambling from mere risk-taking. These include: (i) the exchange is determined by a future event, which at the time of staking money (or something of financial value) the outcome is unknown, (ii) the result is determined (at least partly or wholly) by chance, (iii) the re-allocation of wealth (i.e., the exchange of money [or something of financial value] usually without the introduction of productive work on either side, and (iv) losses incurred can be avoided by simply not taking part in the activity in the first place. Added to this it could be argued that the money or prize to be won should be of greater financial value than the money staked in the first place. Based on these elements, the buying of loot boxes (or equivalents) would be classed as a form of gambling, as would other activities such as the Treasure Hunter and Squeal of Fortune games within the Runescape videogame and online penny auctions (which I have argued in previous papers – see ‘Further reading’).
In the UK Gambling Commission’s most recent (March 2017) position paper on virtual currencies and social casino gambling noted:
“One commonly used method for players to acquire in-game items is through the purchase of keys from the games publisher to unlock ‘crates’, ‘cases’ or ‘bundles’ which contain an unknown quantity and value of in-game items as a prize. The payment of a stake (key) for the opportunity to win a prize (in-game items) determined (or presented as determined) at random bears a close resemblance, for instance, to the playing of a gaming machine. Where there are readily accessible opportunities to cash in or exchange those awarded in-game items for money or money’s worth those elements of the game are likely to be considered licensable gambling activities [Section 3.17]…Additional consumer protection in the form of gambling regulation, is required in circumstances where players are being incentivised to participate in gambling style activities through the provision of prizes of money or money’s worth. Where prizes are successfully restricted for use solely within the game, such in-game features would not be licensable gambling, notwithstanding the elements of expenditure and chance [Section 3.18]”.
Consequently, the UK Gambling Commission does not consider loot boxes as a form of gambling because (they claim) the in-game items have no real-life value outside of the game. However, this is not the case because there are many websites that allow players to trade in-game items and/or virtual currency for real money. The Gambling Commission appear to acknowledge this point and claim that the buying of in-game loot boxes (and their equivalents) are not gambling but if third party sites become involved (by allowing the buying and selling of in-game items), the activity does become a form of gambling. As Vic Hood (in a 2017 article in Eurogamer) rightly notes, this appears to be a case of the law struggling to keep pace with technology. There are also issues surrounding age limits and whether games that offer loot boxes (or equivalents) should be restricted to those over the age of 18 years.
Predictably, those in the videogame industry do not view the buying of loot boxes as gambling either. For instance, Dirk Bosmans (from PEGI [Pan European Game Information], the European-based videogame rating organization) stated in a recent interview with Eurogamer that:
“Loot crates are currently not considered gambling: you always get something when you purchase them, even if it’s not what you hoped for. For that reason, a loot crate system does not trigger the gambling content descriptor. If something is considered gambling, it needs to follow a very specific set of legislation, which has all kinds of practical consequences for the company that runs it. Therefore, the games that get a PEGI gambling content descriptor either contain content that simulates what is considered gambling or they contain actual gambling with cash payouts. If PEGI would label something as gambling while it is not considered as such from a legal point of view, it would mostly create confusion. We are always monitoring such developments and mapping consumer complaints. We see a growing need for information about specific features in games and apps (social interaction, data sharing, digital purchases), but the challenge is that such features are rapidly becoming ubiquitous in the market, yet they still come in very different shapes and sizes.”
This appears somewhat hardline given that PEGI’s descriptor of gambling content is used whenever any videogame “teaches or encourages” gambling. Such a descriptor would arguably cover gambling-like games or activities and the buying of loot boxes is ‘gambling-like’ at the very least. The same stance has been taken by the Entertainment Software Rating Board (ESRB) which rates videogames in Canada and the USA. A spokesman for the ESRB told Eurogamer that:
“ESRB does not consider [the buying of loot boxes] to be gambling because the player uses real money to pay for and obtain in-game content. The player is always guaranteed to receive something – even if the player doesn’t want what is received. Think of it like opening a pack of collectible cards: sometimes you’ll get a brand new, rare card, but other times you’ll get a pack full of cards you already have. That said, ESRB does disclose gambling content should it be present in a game via one of two content descriptors: Simulated Gambling (player can gamble without betting or wagering real cash or currency) and Real Gambling (player can gamble, including betting or wagering real cash or currency). Neither of these apply to loot boxes and similar mechanics.”
At present, there are a number of countries (mainly in South East Asia such as China and Japan) who do view the buying of loot boxes as a form of gambling and have incorporated such activities into their gambling regulation. However, most countries have either not considered regulating the buying of loot boxes at all, or (like the UK) have ruled out that buying loot boxes does not currently meet their regulatory definition of gambling. Although there has been little published in academic journals on loot boxes, a number of articles in the trade press have claimed that the buying of loot boxes can be problematic and/or addictive because they are designed using highly similar reward schedules to those used in the design of slot machines. This is something that have also pointed out in relation to similar activities to the buying of loot boxes where individuals play for points rather than money. Personally, I view the buying of loot boxes as a form of gambling particularly because the ‘prizes’ won are (in financial terms) often a lot less than that of the price paid. Obviously I am out of step in relation to the regulators in my own country, but if third party websites continue to host services where in-game virtual items can be bought and sold, the activity definitely constitutes a form of gambling by almost any definition of gambling currently used in the field of social sciences.
(N.B. This article uses material from a paper I recently published in Gaming Law Review)
Dr. Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
Alexandra, H. (2017). Loot boxes are designed to exploit us. Kotaku, October 13. https://kotaku.com/loot-boxes-are-designed-to-exploit-us-1819457592
Avard, A (2017). Video games have a loot box fetish, and it’s starting to harm the way we play. Games Radar, October 10. Located at: http://www.gamesradar.com/loot-boxes-shadow-of-war/
Gambling Commission (2017). Virtual currencies, esports and social casino gaming – position paper. Birmingham: Gambling Commission.
Griffiths, M.D. (2015). Adolescent gambling and gambling-type games on social networking sites: Issues, concerns, and recommendations. Aloma: Revista de Psicologia, Ciències de l’Educació i de l’Esport, 33(2), 31-37.
Griffiths, M.D. (2017). Is the buying of loot boxes in videogames a form of gambling or gaming? Gaming Law Review, 22(1), 52-54.
Griffiths, M.D. & Carran, M. (2015). Are online penny auctions a form of gambling? Gaming Law Review and Economics, 19, 190-196.
Griffiths, M.D. & King, R. (2015). Are mini-games within RuneScape gambling or gaming? Gaming Law Review and Economics, 19, 64-643.
Hood, V. (2017). Are loot boxes gambling? Eurogamer, October 12. Located at: Located at: http://www.eurogamer.net/articles/2017-10-11-are-loot-boxes-gambling
Lawrence, N, (2017). The troubling psychology of pay-to-loot systems. IGN, April 23. Located at: http://uk.ign.com/articles/2017/04/24/the-troubling-psychology-of-pay-to-loot-systems
Perks, M. (2016). Limited edition loot boxes: Problematic gambling and monetization. Cube, October 11. Located at: https://medium.com/the-cube/limited-edition-loot-boxes-problematic-gambling-and-monetization-756819f2c54f
Wikipedia (2017). Loot box (2017). Located at: https://en.wikipedia.org/wiki/Loot_box
Wiltshire, W. (2017). Behind the addictive psychology and seductive art of loot boxes. PC Gamer, September 29. Located at: http://www.pcgamer.com/behind-the-addictive-psychology-and-seductive-art-of-loot-boxes/