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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.

Inter-bet gambling: The psychology of online sports betting

Until the early 2000s, there appeared to be a commonly held perception that consumers viewed the Internet as an information gathering tool rather than a place to spend money. The explosive growth in online gambling and betting shows this is no longer true. For me, one of the interesting questions is how gaming companies use the psychology of people who like to gamble on sports events to get them to access sports betting sites (especially if it is done in a socially responsible way that enhances the punter’s experience rather than exploits them).

Trust and reliability: Let’s look at sports betting from an individual level. A sports fan has logged on to the Internet and is in the process of deciding which online sports betting website to make a beeline for. What kinds of things influence their decision? A recommendation from one of their friends? Advice from a gambling portal? An advert they saw in a magazine? From a psychological perspective, research on how and why people access particular commercial websites indicates that one of the most important factors is trust. If people know and trust the name, they are more likely to use that service. Reliability is also a related key factor. Research shows that many people (including sports bettors) still have concerns about Internet security and may not be happy about putting their personal details online. But if there is a reliable offline branch nearby, it gives them an added sense of security (i.e., a psychological safety net). For some people, trust and security issues will continue to be important inhibitors of online gambling. Punters need assurance and compelling value propositions from trusted gaming operators and operators to overcome these concerns.

Personalization: One of the growth areas in e-commerce has been personalization and most online commercial organisations now have a personalization strategy as part of its business plan. However, this practice is a double-edged sword that can prove to be a large logistical problem for companies who use such a strategy. Tracking every move for marketing purposes is one thing. Using these data for personalization purposes can sometimes prove troublesome. The amount of data is potentially enormous. Producing personalized pages for everyone is also logistically difficult and may even turn potential punters away. The key is knowing what to ask the punter. Those in the gaming industry have to think intelligently and creatively about what to ask their customers in a way that the information gained can be used effectively. Attracting customers and providing recommendations relies on the those in the gaming industry putting punters first. Integration can also be a factor here. The industry has to think of creative ways to make the website experience more personal.

Imprinting: One of the most important marketing strategies that companies engage in is “imprinting” new customers. Online punters quickly adopt predictable Internet usage patterns and evidence suggests that they don’t switch online allegiances easily. Smart gaming operators will work at becoming a starting point for the novice gambler and capitalize on this opportunity for capturing player loyalty. The emerging post-teenage market is a key consideration although from a social responsibility perspective thought needs to be given so that teenagers are not exploited. There is a whole Internet generation of people coming through who have a positive outlook on online commercial activities. They may be happier to enter credit card details online and/or meet others online. This has the potential to lead to major clientele changes as the profiles of these people may be radically different from previous punters. The problem is that the young don’t tend to have much disposable income and are less likely to own credit cards. Therefore, another market segment that operators need to target to are the over-50s who are starting to use the Internet for shopping and entertainment use. Early retirees have both time and money. This is why gaming operators need to strategically target the ‘grey pound.’

Contextual commerce: So what can operators do next? Contextual commerce may be one avenue that gaming operators will need to go down. In most retail outlets, shoppers notice what other people are buying and this may influence the purchaser’s choice. Companies are now using software that allows customers to do this online including interacting with other like-minded people. Seeing what everyone else is betting on may influence the decision process. There is also the potential to bring in techniques used on home television shopping channels. Presenters tell viewers how much of a product has been sold with viewers to instil a sense of urgency into the buying process, along with an element of peer review. This could be applied by gaming operators if people are gambling as part of a sports betting community.

Getting the balance right on the chance-skill dimension: All forms of gambling lie on a chance-skill dimension. Neither games of pure skill nor games of pure chance are particularly attractive to sports gamblers. Games of chance (like lotteries) offer no significant edge to sports gamblers and are unlikely to be gambled upon. While games of skill provide a significant edge for the gambler, serious gamblers need more than an edge – they often need an opponent who can be exploited (which helps explain the popularity of online poker). Serious gamblers gravitate towards types of gambling that provide an appropriate mix of chance and skill. This is one of the reasons why sports betting – and in particular activities like horse race betting – is so popular for gamblers. The edge available in horse race gambling can be sufficient to fully support professional gamblers as they bring their wide range of knowledge to the activity. There is the complex interplay of factors that contributes to the final outcome of the race.

Inter-gambler competition and the exercise of skill: Over the last few years I have often been asked by the media about the increasing popularity of online sports betting, particularly in relation to betting exchanges. Psychologists claim that male gamblers are attracted to sports betting because they love competitiveness. Sports bettors clearly feel that gambling via betting exchanges provides value for money and an opportunity to exercise their skill. Another important factor that I feel is really important in the rise of sports betting is not just the inherent competiveness but also the inter-gambler competition. Obviously there is an overlap between competitiveness and skill but they are certainly not the same and operators need to show how the sites they recommend feed into the psychological needs and desires of the sports bettor.

I’m sure many people’s view of psychology is that it is little more than common sense (and to be honest, some of it is). However, I hope that some of what I had to offer in the rest of this blog was more than just common sense.

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

Further reading

Auer, M. & Griffiths, M.D. (2013). Behavioral tracking tools, regulation and corporate social responsibility in online gambling. Gaming Law Review and Economics, 17, 579-583.

Griffiths, M.D. (2005). Online betting exchanges: A brief overview. Youth Gambling International, 5(2), 1-2.

Griffiths, M.D. (2007). Brand psychology: Social acceptability and familiarity that breeds trust and loyalty. Casino and Gaming International, 3(3), 69-72.

Griffiths, M.D. (2009). Social responsibility in gambling: The implications of real-time behavioural tracking. Casino and Gaming International, 5(3), 99-104.

Griffiths, M.D. & Whitty, M.W. (2010). Online behavioural tracking in Internet gambling research: Ethical and methodological issues. International Journal of Internet Research Ethics, 3, 104-117.

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. & Irwing, P. (2004). Personality traits in pathological gambling: Sensation seeking, deferment of gratification and competitiveness as risk factors, Addiction Research and Theory, 12, 201-212.

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. (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.