Remote control: ‘Cashing out’ in sports betting
“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
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Game on: A brief look at gambling on eSports
Like daily fantasy sports, betting on eSports (i.e., professional video gaming) has increased in popularity over the last few years and has given rise to allegations of unregulated and underage gambling. The eSports market is large. According to a 2016 report by Superdata, professional eSports is growing exponentially and is worth an estimated $612 (US) million a year. Furthermore, Eilers and Krejcik Gaming estimate that real money betting on eSports betting will reach $10 billion (US) by 2020. The professionalization and sportification of this entertainment form has brought sports-world elements to it: stadium-like facilities, cheering stands, sponsors, big rewards, and competition. Instant replays, jumbotrons (i.e., super-huge television screens), and referees add to the sport dramatisation. In some notorious cases, prizes have gone beyond the $10 million [US] threshold in a packed arena housing 73,000 fans. According to by John McMullan and Delthia Miller in a 2008 issue of the Journal of Gambling Issues, sportification is the process of incorporating the logics of sport to non-sporting contexts (e.g., poker, eSports. This can materialise in many ways but most commonly occurs when (i) other industries capitalise on the positive attributes of sport (e.g., popularity, engagement, or sanity and health inferences); and (ii) non-sport fields try to increase the entertainment and playability of their products and their association with joy and excitement.
Twitch, an online platform that streams live video gaming, informs its’ advertisers that it has 100 million monthly viewers, who watch for an average of 106 minutes a day. Betting on eSports presents new challenges. As a news report in Bloomberg news observed in relation to betting on the game Counterstrike: Global Offensive (CSGO):
“Gambling – licensed, regulated, and by adults – is generally accepted in eSports. There is growing concern, though, that teenagers are being attracted to different forms of betting facilitated by third-party providers. One such platform is CSGO Lounge (an independent site not affiliated with Valve Software, which develops the game itself). The site allows spectators to bet in-game add-ons known as skins – weapons, tools and the like – on the results of matches. Not all skins are created equal, and the rarity of some means they can cost hundreds of real dollars on marketplace sites like SkinXchange.com. The temptation is too much for some”.
Put simply, skin gambling is the use of virtual goods and items (typically cosmetic elements that have no direct influence on gameplay) as virtual currency to bet on the outcome of professional matches. The Bloomberg article also claims on the basis of interviews with industry insiders that underage skin gambling is a “huge problem”. Justin Carlson (lead developer of SkinXchange) claims there are “countless” parents whose children have used their credit cards without their knowledge to buy skins and bet on gaming on other sites. Although anecdotal, Carlson claims that some minors have “racked up hundreds or thousands of dollars in skins on ‘SkinXchange’ just to lose them all on some betting or jackpot site”. It’s clear that people trading skins in eSports has grown over the last few years and various regulators around the world – such as the UK Gambling Commission (UKGC) – are considering regulation and says it is an “emerging product” and an “area for continuing future focus”. More specifically, the UKGC’s 2016 Annual Report notes:
“The growing market in esports and computer gaming has scope to present issues for regulation and player protection – issues which are being examined by gambling regulators in other international markets…These issues range from the emergence of real money esports betting markets, to trading in-game items which blur the lines between gambling and social gaming. Our focus will be to understand developments, including engaging with key stakeholders, and we will work wherever we can to ensure the risks associated with these, particularly to children and young people, are minimised”.
One of the complicating factors for eSports gambling is that while cash is the currency for many gamblers, there is a growing trend towards the use of virtual currencies, or ‘in-game items’ which, according to the UKGC, can be “won, traded, sold or used as virtual currency to gamble with and converted into money or money’s worth”. These, according to the UKGC, “include digital commodities (such as ‘skins’) which can be won or purchased within the confines of computer games and can then be used as a form of virtual currency on a growing number of gambling websites”. No academic research has examined underage skin gambling but this is an issue that is unlikely to diminish over the coming years.
It is also worth noting that this massive interest in eSports followed by a massive audience has led most major betting operators to include eSports in their daily gambling offer. However, the singularities of eSports market pose new challenges that conventional online betting sites struggle to address. Suraj Gosai, co-founder of Blinkpool, an eSports dedicated betting platform, laid out two main problems: in-play betting limitations and odds algorithmic programming. For in-play betting to be viable, companies need to get access to reliable, instantaneous, and unambiguous data that can settle bets and separate winners from losers. Data companies like Perform do that in sport, and betting operators rely on their data to offer in-play action to gamblers. The problem in eSports is that actions are not as quantified and standardised as in real-life sports. To counteract that, Blinkpool created a computer vision technology that extracts data from real-time action and promotes hyper-contextual opportunities, that is, 10- to 45-second in-play betting mini-markets concerning very specific developments in the narrative of the games.
Odds programming in sports betting is fundamentally based on historical data from hundreds of thousands of games, from which each factor (home advantage, table position, head-to-head, etc.) is weighted in to determine the probability of an event occurring. In the fixed-odds betting market, the bookmaker makes available to bettors that probability plus a benefit margin. When placing a bet, an individual bets against the probability that the house has predicted. This is not yet feasible in eSports because the historical data are scarce and the modelling is complex. Companies are circumventing this problem by offering exchange betting rather than fixed-odds. This method comprises peer betting, that is, bettors do not bet against the house but between one another. This way, the house gets a commission from winning bets and operates a much less risky business.
Dr. Mark Griffiths, Professor of Behavioural Addictions, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK
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