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Teaming with gain: Are daily fantasy sports a form of gambling?

Fantasy sports games have been popular for many years and involves individuals assuming the role of a professional sports team manager (typically football) and assembling a virtual team of sportsmen to compete against other players within a private or public league. For decades, the game was played out across the whole season with the winners being those that had accumulated the most points (with the points gained being based on the real-life statistics of individual sportsmen using a predetermined scoring system).

However, fantasy sports have changed dramatically over the last few years. Although the game can still be played over a whole season, the playing of daily fantasy sports (DFS) has become increasing popular (particularly in countries such as the USA, Canada, and Australia) and can operate over much shorter time periods. In DFS, players can pay to play and this has led to the blurring of lines of whether the activity is a game or whether it is gambling. As Dr. Dylan Pickering and his colleagues noted in a 2016 issue of Current Addiction Reports:

“Daily fantasy sports (DFS) is the most recent and controversial of FS games…It is an accelerated version of FS conducted over much shorter time periods: generally a single game (per day) or weekly round of competition. Users pay entry fees ranging from US 25 cents to US $5000 per league, which is deposited into a prize pool typically paid out to the highest ranked users in the contest. A portion of the entry fees also goes to the operator as commission. Accordingly, DFS, as such, is most associated with wagering. Currently, the US DFS market is dominated by ‘FanDuel’ and ‘DraftKings’ (combined with about 95 % of the market)”.

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According to figures in the same paper, in the USA, the fantasy sports (FS) market is currently estimated to be between $3 billion and $4 billion. In 2015, approximately 57 million Americans played FS. Research suggests that the prevalence rates are higher in North America than elsewhere with 19% of Canadian adults and 16% of American adults engaging in FS compared to 10% of British adults and 6% of Australian adults (Pickering et al., 2016). However, these figures relate to FS rather than DFS and many FS players do not pay money to participate in the game and simply play for fun. Some research by Dr. Joris Drayer and colleagues in a 2013 issue of the European Sport Management Quarterly also suggests that those who engage in playing DFS do not typically engage in other forms of gambling. Furthermore, in a 2011 issue of Journal of Sport Management, Dr. Brendan Dwyer and Dr. Yongjae Kim reported that compared to more traditional forms of gambling, the elements of fun, excitement, competition play a bigger role than winning money in the playing of DFS games.

A study carried out by Dr. Ryan Martin and Dr. Sarah Nelson published in a 2014 issue of Addictive Behaviors found that college students who were FS users (free and fee-based) were five times more likely to incur gambling problems than non-FS users, and students who played FS for money had significantly higher rates of gambling problems than those who played in free leagues. A more recent 2016 study by Loredana Marchica and Dr. Jeff Derevensky in the International Journal of Mental Health and Addiction examined data from national surveys of collegiate athletes and reported a steady rise in FS participation among college students between 2004 and 2012. They reported that approximately half of the male and a quarter of the female college athletes who qualified as at-risk or problem gamblers also reported wagering on FS.

There has been much debate (particularly by US legislators) as to whether playing DFS for money is classed as a legitimate form of gambling. If gambling is defined as “an agreement between two or more parties to deliberately stake something of value (typically money) with intent to profit on the outcome of an event that is determined wholly, or partially by chance” (by Pickering and colleagues), then DFS could well be a form of gambling as they argue:

“DFS can be construed as representing a form of gambling: (a) DFS includes an agreement between an individual and others, (b) money is staked on the relative performances of athletes across a certain number of sporting events with the outcome determined by both chance and skill, and (c) chance is involved given that multiple unknown factors can influence outcomes. In this regard, similarities are found in horse and sports wagering where some skill in selecting horse/sports outcomes is present, but unpredictable variables influence results (i.e., chance)…Literature from the legal field asserts that gambling must contain three elements: (a) consideration (staking something of value in order to participate), (b) chance (luck is a substantial factor in determining results), and (c) prizes (cash, merchandise, services, or points) are redeemable…While the first and third elements are clearly present in DFS, the second element, chance, is the source of current disagreement”.

The US legislation on gambling rests on whether an activity is more skill than chance determined. If DFS is predominantly a game of skill it is not deemed to be a form of gambling. The DFS operators claim that DFS games are not gambling because of the “substantial” amount of skill involved in the selection and management of FS teams. But is this any different for the professional gambler who bets on horse racing given the many factors that the person gambling has to take into account (the form of the horse, the skill of the jockey, the weather conditions, the state of the track, the number of other horses involved in the race, etc.). Similarly, poker and blackjack are both games that players can win big if they are skilful. Personally, I believe that playing DFS games for money is definitely a form of gambling, and even if it isn’t legally classed as a form of gambling, the games contain structural elements (including high event frequencies, low entry fee per game, lots of games, etc.) that can facilitate excessive use and expose vulnerable players to harm. DFS operators also allow team line-ups from a previous sporting event to populate other events which increases the speed of play, another factor that can facilitate habitual use. Furthermore, as Dr. Samantha Thomas and her colleagues argued in a recent 2015 report, the enhanced participatory role that fantasy games introduce could facilitate the illusion of control as they perform actions, making bettors overestimate the importance of skills and knowledge for the outcome of the competitions.

Dr. Mark Griffiths, Professor of Behavioural Addiction, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Drayer, J., Dwyer, B., & Shapiro, S. L. (2013). Examining the impact of league entry fees on online fantasy sport participation and league consumption. European Sport Management Quarterly, 13(3), 339-335.

Dwyer, B., & Kim, Y. (2011). For love or money: Developing and validating a motivational scale for fantasy football participation. Journal of Sport Management, 25(1), 70-83.

Marchica, L., & Derevensky, J. (2016). Fantasy sports: A growing concern among college student-athletes. International Journal of Mental Health and Addiction, 1-15. Epub ahead of print.

Martin, R. J., & Nelson, S. (2014). Fantasy sports, real money: Exploration of the relationship between fantasy sports participation and gambling-related problems. Addictive Behaviors, 39(10), 1377-138.

Pickering, D., Blaszczynski, A., Hartmann, M., & Keen, B. (2016). Fantasy sports: Skill, gambling, or are these irrelevant issues? Current Addiction Reports, 3(3), 307-313.

Thomas, S., Bestman, A., Pitt, H., Deans, E., Randle, M., Stoneham, M., & Daube, M. (2015). The marketing of wagering on social media: An analysis of promotional content on YouTube, Twitter and Facebook. Victoria, Australia: Victorian Responsible Gambling Foundation.

Stock tales: Is financial trading a form of gambling?

One of the questions I am most asked by my students and the media alike is whether trading on the stock market is a genuine form of gambling. That might sound a simple question, but it all comes down to what definition of gambling you are using. My own view on gambling is that it boils down to the staking of money (or something of financial value) on a future event. When I first started my research into gambling back in the mid-1980s, there were four fundamental types of gambling:

  • Gaming – Staking of money during a game (e.g. slot machines, roulette, blackjack, etc.)
  • Betting – Staking money on a future event, typically sports events (e.g. horse race betting, greyhound betting, football betting, etc.)
  • Lotteries – The distribution of money by lot (e.g. National Lottery)
  • Speculation – Staking money on stock markets (e.g., investment in shares, day trading, etc.)

In a previous blog I briefly examined whether stock market speculation was a legitimate form of gambling. However, back in the 1980s, psychologists were only interested in studying the first three of these activities (i.e., gaming, betting and lotteries). Although a few academics accepted ‘speculation’ as a true form of gambling, the majority of researchers in the gambling studies field did not (including me). The prevailing view at the time was that ‘speculation’ was viewed as involving a fair amount of skill and/or relied on ‘insider information’ and therefore was not a legitimate form of gambling compared to other forms of gambling. Although there were clearly accepted forms of gambling that had skilful elements (e.g., poker, blackjack), academic psychologists still rejected speculation as a form of gambling worth investigating.

However, this all changed after the introduction of spread betting. I argued in a number of articles at the end of the 1990s that spread betting had taken the mechanics of stock market trading and applied it to sporting events. For me, this was a game changer in terms of studying the psychology of gambling. No longer could we say that speculation shouldn’t be studied because spread betting was clearly a form of speculation and it was something that appealed to a new type of gambler because it involved sporting events that many people think they know a lot about.

There was also one other key factor in changing psychologist’s perceptions of speculation as gambling – the ‘Nick Leeson effect’. In 1995, Leeson single-handedly brought down the UK’s oldest investment bank (Barings). Leeson was a derivatives broker whose fraudulent gambling caused the spectacular collapse of one of the UK’s most established financial institutions. From the early 1990s, Leeson made countless speculative (and unauthorised) gambles on the stock market that at first made large profits for his employers. However, as with most gamblers, his ‘beginner’s luck’ soon ran out and he started to lose huge amounts of money. Leeson’s losses eventually reached £827 million. Leeson’s psychology and behaviour was identical to that of a problem gambler (except he was gambling with much larger amounts of money and with someone else’s money).

There was perhaps another reason why speculation was seen as psychologically different from gaming, betting and lotteries. Unlike these other forms of gambling, speculation is a type of gambling where the gambler does not know how much they are going to win or lose on the gamble. If I put £1000 on a horse to win the Grand National or on black to come up on a roulette wheel, I know that losing will cost me £1000. On most stock market trades or spread bets, no-one knows beforehand what the losses could be. However, there are financial trades that could perhaps be argued to be more like betting than speculation. For instance, binary options look as though they are going to grow in popularity over the next year or two as the gambling payoff is more traditional than usual financial trading.

In binary option betting, a cash-or-nothing binary option will pay a fixed amount of money if the option traded on expires in-the-money (i.e., it is a simple ‘win-or-lose’ bet as the potential return it offers is certain and known before the purchase is made). One of the attractions of binary options is that they can be bought on virtually any financial product and can be bought in both up and down directions of trade. The simplicity is likely to attract more people especially if they feel they know something about the product being traded upon. This is the same reason why spread betting took off in such a big way because people feel they know about the market (e.g., football) that they are betting on, even if there is a huge element of chance (which there invariably is). My guess is that most people who work in the financial markets don’t see binary options as an investment opportunity – they see it for what it really is – a pure gamble.

Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Griffiths, M.D. (1991). ‘Gambling and Speculation: A Theory, History, and a Future of some Human Decisions’ by R. Brenner and G.A. Brenner. Journal of Economic Psychology, 12, 197-201.

Griffiths, M.D. (1998). Gambling into the Millenium: Issues of concern and potential concern. GamCare News, 3, 4.

Griffiths, M.D. (2000). Day trading: Another possible gambling addiction? GamCare News, 8, 13-14.

Griffiths, M.D. (2006). An overview of pathological gambling. In T. Plante (Ed.), Mental Disorders of the New Millennium. Vol. I: Behavioral Issues. pp. 73-98. New York: Greenwood.

Griffiths, M.D. (2007). Gambling Addiction and its Treatment Within the NHS. London: British Medical Association (ISBN 1-905545-11-8).

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.

Griffiths, M.D. (2013). Financial trading as a form of gambling. i-Gaming Business Affiliate, April/May, 40.

Basic Instinct 2: Counting the cost of blackjack (again)

In a previous blog I looked at the psychology of following ‘basic’ strategy and card counting based on the seminal work by Ed Thorp. Compared with other forms of gambling, there has been very little psychological research into blackjack – about one or two studies per decade by my reckoning. In the 1970s, Dr. Nicholas Bond (who at the time was at the California State University at Sacramento, USA) did some research asking blackjack players some simple questions like ‘When do you take insurance?’ and ‘What do you do when you have 7-7 and the dealer has 6 up?’ Bond’s results showed that most players did not know when to spilt pairs and had the wrong idea about the value of insurance. For instance, players often said that insurance should be taken “when the cards are running right” suggesting that players can predict the run of the cards and when the dealer will turn over blackjack. Although this research revealed strategy errors it didn’t give any insight into why such errors are made.

Dutch psychologists Dr Gideon Keren and Professor Willem Wagenaar went one stage further than Bond and examined in great detail the strategies and beliefs of regular blackjack players. They observed 112 players in the natural environment of a casino and then interviewed 149 players. They found that lots of blackjack players have many erroneous beliefs particularly if they claim they are following basic strategy. The most interesting findings were that players believed (i) a bad player could spoil a game for everyone, (ii) they felt worse if they lost on 20 than if they did with 13, (iii) they only knew if their decisions were correct after the round was over, and (iv) that if they were very unlucky on a particular day they should quit playing. While some of these beliefs may be understandable (and I’ll explain why below), if blackjack players follow basic strategy, none of these beliefs should exist. In short, the findings suggest that players believe in luck and conservatism as a legitimate strategic approach rather than the principles of basic strategy.

It is clear from players’ feelings about “bad” players that they are displaying what we psychologists call a ‘self-serving bias’. Put more simply, when good players win they attribute the outcome as something that was deserved whether or not it came about through other players’ incorrect play. However, when another player plays badly by asking for too many cards, the game may be spoiled for the other (better) players. It will be spoiled when a good player loses because a poor player has taken one card too many. Such players ignore the role of the bad player when the “wrong” cards they receive lead to a win.

These findings also shown that regular blackjack players have the illusion that they can control luck by playing when their luck is in and quitting when their luck is out (although such a finding is not unique to blackjack and can be found among gamblers more generally). What is interesting is that blackjack players appear to conceptualise ‘luck’ as a personal characteristic that can come and go like emotional mood states. It is therefore little surprise if players believe bad players can spoil the game for others – they believe bad players can change the run of good luck for others simply by taking too many cards.

According to the late Australian psychologist, Dr Michael Walker (University of Sydney, Australia), another interesting implication of Keren and Wagenaar’s research is that players are clearly unconcerned about the long-term correctness of decisions but see each hand as a contest with the dealer that may be won or lost depending on the decision made by the player. Take the case of a player who has a hand of 13. Players in such a position will make a judgement concerning the likelihood that the next card will be a 10. Most players will not hit 13 against a dealer’s 7 or 8 if there has been a run of small value cards, but will hit 13 if they are convinced that the next card is not a 10. In such situations, players find out the accuracy of their decisions once the round is over. Most players (including myself) dislike holding on 13 – it is too far from 21 to be psychologically comfortable but there is still the possibility of busting if a 9 or 10 is drawn. If we are dealt 20, there is an elated state because we feel the dealer is unlikely to beat our hand. If the 20 is beaten, we feel psychologically cheated whereas on 13, players can blame themselves for not hitting.

A study by Albert Chau (University of Hong Kong) and colleagues at Monash University (Australia) carried out a blackjack study on a small number of university students. They wanted to investigate whether departures from rational play in blackjack reflected ignorance and/or fatigue. The students were taught basic strategy in blackjack and then asked to play a simplified version of blackjack on computer. Initially the students followed basic strategy but this was eventually discarded for much higher risk strategies. Irrational play didn’t affect ignorance or fatigue (and the student players didn’t perceive basic strategy to be effective). Chau and colleagues argued that “because basic strategy is not a personalized strategy, it seems less likely to be maintained in the face of losses – players were more optimistic that they might win when utilizing their personalized strategies”.

In summary, blackjack is clearly a game that the player can win if basic strategy is used as a starting point. The strategy can be modified as the deck composition changes and good card counters are able to extract an edge over the casino. However, psychological research has shown quite clearly that regular players deviate significantly from basic strategy and make sub-optimal decisions because they perceive themselves as being engaged in a hand-by-hand contest with the dealer. Dr. Walker makes the point that since the characteristics of good play can be specified, blackjack is a good example of the extent to which players can bring about their own losses through the false beliefs that they hold. These false beliefs are held tenaciously, and despite playing countless hands, the beliefs that bring about gambling losses are maintained in the face of failure.

Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Bond, N.A. (1974). Basic strategy and expectation in casino Blackjack. Organizational Behavior and Human Performance, 12, 413-428.

Chau, A.W.L., Phillips, J.G. & Von Baggo, K.L. (2000). Departures from sensible play in computer blackjack. Journal of General Psychology: Experimental, Physiological, and Comparative Psychology,127, 426-438.

Keren, G.B. & Wagenaar, W.A. (1985). On the psychology of playing blackjack: Normative and descriptive considerations with implications for decision theory. Journal of Experimental Psychology: General, 114, 133-158.

Thorp, E.O. (1966). Beat the Dealer: A Winning Strategy for the Game of Twenty-One. New York: Random House.

Wagenaar, W. (1988) Paradoxes of gambling behaviour. London: Erlbaum.


Basic instinct: Counting the cost of blackjack

Playing blackjack is relatively straightforward. Most of us played variations like ‘21’ and ‘pontoon’ as children. In the casino, all a player has to do is make a bet before a card is dealt and decide whether to ‘hit’ or ‘stand’ on the total. Simple. However, as with the psychology of all great games, the rules are easy enough for almost anyone to play but can take a lifetime to master.

One of the main reasons that blackjack attracts regular gamblers is that it is a game that the skilful player can expect a profit in the long run. It is the only game that casinos offer where the chances of winning favour the gambler. A gambler’s playing strategy is dictated by how they can influence the outcome simply by taking or avoiding extra cards. Research into the psychological strategies of blackjack playing have shown that gamblers fall into one of three main types. Firstly, there is the ultra-conservative “never bust” approach where the gambler sticks on any hand that could go bust on the next card (i.e., any hand of 12 and over). Since the dealer must draw until they reach 16, this approach will certainly pay off some of the time. A second popular strategy is ‘mimic the dealer’ where gamblers sit on 17 or more but draw to 16 or less. The psychology here is that if it’s good for the dealer it must be good for the gambler. However, very few regular players will follow either of these simplistic strategies.

Most gamblers adopt optimum “basic” strategies in which the decision to hit or stand depends on the ‘up-card’ held by the dealer. The player knows that as the game progresses, the number of cards left in the shoe is limited. If a player keeps count of the ratio of 10 value cards to non-10 value cards they can place minimum bets when the deck is favourable to the gambler and maximum bets when the ratio is favourable. The smaller the ratio, the richer the deck is with 10 value cards and the greater the advantage to the gambler. This well known card counting method was first laid out over 40 years ago by the mathematician Ed Thorp in his classic 1966 book Beat The Dealer.

Some people have said that the book stands in relation to gambling as Einstein’s theory of relativity does to physics – it changed perception of reality! More elaborate counting methods are available based on awarding points to low, medium and high cards and by keeping a running count of unseen cards. Over the years, many people have used elaborate systems in order to keep count.

The reaction of the casinos to card counting has been predictable. Many in the gaming industry view card counting as cheating and will ask players to leave the casino. Many casinos use up to eight packs of cards in the shoe to make counting hard. In casinos where only one or two decks are used, the cards are constantly reshuffled. Some casinos even teach the dealers how to card count so that they will only reshuffle when the odds are favouring the gambler. What’s more, the casinos find card counters easy to spot. They will make minimum bets on most hands and then occasionally make very large bets to take advantage of favourable decks. Therefore, really good counters must also be able to ‘camouflage’ their counting methods by being more variable in their betting strategy.

The good news for card counters is that most casinos prefer smaller decks so that more games can be played per hour (which means more money for the casino). Most casinos know that card counting gamblers may lose count or patience. Furthermore, some gamblers are competent in the short term but may crack under pressure with the long hours needed to make a consistent profit. It is estimated that one out of 20,000 players is a genuine counter and of these only one in twenty is a winner.

Research has been carried out into the most common errors that blackjack players make while gambling. One of the most well known was a study carried out in Holland by the psychologists Dr Gideon Keren and Professor Willem Wagenaar on 112 regular blackjack players. Wagennar showed that 44% of playing errors involved not taking an extra card when they should have and that 16% of errors involved taking an extra card when they shouldn’t have. They also found that the error rates were related to the value of the dealer’s up-card. When the players should have stood they were less likely to do so when the dealer’s up-card had a low value. Where they should have taken an extra card, they were also less likely to do so if the dealer’s up-card had a low value. Keren and Wagennaar also showed that players exhibited poor insurance strategies when the dealer’s up-card was an ace. These findings clearly show that most gamblers play conservatively in an attempt to stay in the game. They stand when extra cards should be taken, do not double up when they should do, and take out insurance unnecessarily.

Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Nicholas A. Bond (1974). Basic strategy and expectation in casino Blackjack. Organizational Behavior and Human Performance, 12, 413-428.

Keren, G.B. & Wagenaar, W.A. (1985). On the psychology of playing blackjack: Normative and descriptive considerations with implications for decision theory. Journal of Experimental Psychology: General, 114, 133-158.

Thorp, E.O. (1966). Beat the Dealer: A Winning Strategy for the Game of Twenty-One. New York: Random House.

Wagenaar, W. (1988) Paradoxes of Gambling Behaviour. London: Erlbaum.