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Bonus bawl: Are online gambling promotions socially responsible?

Many online gaming sites use a wide variety of promotions as a way of attracting new clientele and/or as a way of generating repeat patronage. Such promotions include welcome bonuses, initial deposit bonuses, retention bonuses, re-activation of account bonuses, and VIP bonuses. Here are a few I have come across online:

  • Players receive a 10% cash bonus on an initial deposit of $20 or more (however, the bonus and deposit combined must have a 15 times rollover. A ‘rollover’ refers to the amount of times an online gambler must wager a certain amount during a promotion)
  • Players receive a 100% match-up bonus on deposits (up to $225) (however, the bonus and deposit combined must have a 12 times rollover)
  • Players receive $100 free on initial deposit (however, the bonus and deposit combined must have a 20 times rollover)
  • Players receive 100% deposit bonus of up to $200 (however, the bonus and deposit combined must have a 40 times rollover)
  • Players receive 100% first deposit bonus up to £50 in free chips and players must deposit a minimum of £10 (however, bonus must have a 15 times rollover)

The issue here is to what extent the use of promotional ‘hooks’ to generate new custom or maintain repeat patronage can be regarded as a socially responsible strategy. Previous writings about advertising and marketing from a social responsibility perspective have noted that it is entirely appropriate for the gaming industry to advertise and market their products as long as it conforms to the relevant codes of compliance, is fact-based, does not oversell winning, and is not aimed at (or feature) minors.

Dr. Jonathan Parke and I have noted that in gambling there is a fine line between customer enhancement and customer exploitation particularly when it comes to facilitating new clientele and repeat patronage. Given the political sensitivities around the liberalization of gambling, the perception of what others think about a particular practice are sometimes given more weight than what it actually means in practice. However, irrespective of whether something is introduced in a socially responsible way and/or introduced into an environment with an embedded socially responsible infrastructure, there is always the possibility of a ‘PR own goal’ that may do more financial damage in the long run to the online gaming operator.

Given there is little empirical research on the effect of bonuses on vulnerable and susceptible gamblers, the implications relating to social responsibility are, at best, speculative. There are some academic writings on the use of bonus promotions in offline gambling environments but these are based on observational anecdotes rather than empirical research. For instance, Dr. Parke and I noted that the frequency of bonuses in offline gambling environments varies (depending the establishment) but can occur hourly, daily, weekly, or seasonally. We reported that such bonuses are often used to entice the consumer in several retail environments. What make them especially appealing in a gambling environment are the obvious similarities of the structural characteristics of such bonuses and gambling events in general (e.g., risk, uncertainty, interval-ratio reinforcement etc.). Furthermore, the appeal is strengthened since gamblers feel they are “getting something for nothing”.

We also distinguished between two fundamentally different forms of bonus – the ‘general bonus’ and the ‘proportional bonus’. These different types of bonus may have different implications in terms of social responsibility. General bonuses are those offers that are provided irrespective of the type of player (e.g., an occasional gambler is as equally entitled to the bonus as a ‘heavy’ gambler). Proportional bonuses are those offers that depend on how long and/or frequently the player gambles with a particular gaming establishment. This means that ‘heavy’ gamblers would receive disproportionately more bonuses than an irregular player. Given that a significant proportion of the ‘heaviest’ gamblers (sometimes referred to as ‘VIP gamblers’) may be problem gamblers, it raises questions whether rewarding people the more they spend is the most socially responsible strategy.

In relation to the use of promotional bonuses, there are two basic issues that arise. The first one is whether bonuses should be offered by online gaming companies if they are perceived by some to be ideologically incompatible with being socially responsible. The second is whether some types of bonus are less socially responsible than others. In the absence of empirical evidence, it could be argued that general bonuses that target potential adult online gamblers irrespective of play frequency and/or type, are acceptable within online gaming environments that have a good social responsibility infrastructure. However, bonuses that reward the biggest spenders could be argued to be much less socially responsible. Although this model is well accepted in most commercial environments (i.e., loyalty reward schemes), gambling is a commercial activity that can result in problems for the heaviest gamblers.

Applying these views to promotional bonuses in online gaming environments would mean that some bonuses appear generally acceptable from a social responsibility perspective (e.g., a $10 tokens, 100% welcome bonuses, and possibly re-activation offers) whereas others may be considered less socially responsible and potentially exploitative (e.g., retention offers, VIP offers). It may be the case that other socially responsible measures implemented by an online gaming company (such as the use of a behavioural tracking tool like mentor and PlayScan) may help mitigate the potential exploitation of problem gamblers, however, empirical research is needed to confirm such speculation.

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

Further reading

Griffiths, M.D. (2001). Good practice in the gaming industry: Some thoughts and recommendations. Panorama (European State Lotteries and Toto Association), 7, 10-11.

Griffiths, M.D. (2005).  Does advertising of gambling increase gambling addiction? International Journal of Mental Health and Addiction, 3(2), 15-25.

Griffiths, M.D. (2008). ‘Foot in the door’: Player enhancement or player exploitation? World Online Gambling Law Report, 7 (7), 15-16.

Griffiths, M.D. (2012). Internet gambling, player protection and social responsibility. In R. Williams, R. Wood & J. Parke (Ed.), Routledge Handbook of Internet Gambling (pp.227-249). London: Routledge.

Griffiths, M.D. & Parke, J. (2002). The social impact of internet gambling. Social Science Computer Review, 20, 312-320.

Griffiths, M.D. & Parke, J. (2003). The environmental psychology of gambling. In G. Reith (Ed.), Gambling: Who wins? Who Loses? pp. 277-292. New York: Prometheus Books.

Griffiths, M.D., Wood, R.T.A. & Parke, J. (2009). Social responsibility tools in online gambling: A survey of attitudes and behaviour among Internet gamblers. CyberPsychology and Behavior, 12, 413-421.

Way up the cost: Will the increased price of National Lottery tickets affect sales?

The following blog is based on a short article that I wrote for Nottingham Trent University’s Expert Opinion column published earlier this year (January 29, 2013) and is a written version of many of the comments I made in national and local  BBC radio interviews yesterday.

This week Camelot Plc increased  the price of a Lotto ticket from £1 to £2 – but will this 100% price increase have any effect on whether people play the bi-weekly game? My own view is that although there may be a dip in overall sales when the price of the tickets first increases, over time, sales are likely to return to pre-price increase levels.

The price of buying a lottery ticket is just one of many inter-connected structural characteristics that help determine whether potential players will play the lottery. Other structural characteristics in gambling activities include the size of the jackpot, the number of smaller prizes, the probability of winning the jackpot and / or smaller prizes, the speed of the game, how quickly players receive their winnings, the ease of playing the game, whether the game is chance-based or requires some skill, the number of chances to gamble on a single event, etc.

The chance of winning the bi-weekly lottery is an incredible one in 14 million. But is playing Lotto a tribute to public innumeracy and totally irrational? Not necessarily. Lotto offers a low-cost chance of winning a very large life-changing amount of money. Many psychologists would argue that playing Lotto is entirely rational behaviour given the small cost involved. Basically, it’s a small cost for millions of people buying hope. More importantly, we know that most players don’t think about the actual probability of winning but concentrate on the amount that could be won (i.e., the jackpot size). Players may also rationalize that the cost of a ticket is still cheaper than buying a pint of lager in a pub or a coffee atStarbucks.

Jackpot size is one of the most important factors in whether people play the lotto. The fact that the ticket price is doubling doesn’t take away the fact that there will still be an enormous jackpot. Additionally, to soften the blow of the increased price, the amount that can be won for matching three numbers will increase from £10 to £25. This again is likely to help sales maintenance. And if people do feel that £2 is too much for a single ticket, there are plenty of other games in the national lottery portfolio to choose from.

Another factor that is important in lottery profitability for the operators is that we tend to overestimate positive outcomes and underestimate negative ones. If someone is told they have a one in 14 million chance of being killed that day they would hardly give it a second thought because the chances are tiny. Given the same probability of winning Lotto people suddenly become over-optimistic (“It could be you!”).

The media also plays a part. By providing widespread coverage for the few huge winners, it helps us forget the millions of people who lost! Finally, for regular players who choose the same numbers every week, they become ‘entrapped’ fearing that the one week they don’t play will be the week their numbers will come up. Players who have picked the same numbers for years are still likely to play despite the price increase for the same reason.

The bottom line is that Camelot will have done lots of market research to determine whether players will be prepared to pay more money to play Lotto. Major decisions about pricing are key to future success and increased profits. If people stop playing Lotto in their masses, a return to a lower price will be inevitable. However, my guess is that most current Lotto players will continue to play a game as the thought of winning millions of pounds outweighs the price increase.

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

Further reading

Arkes, H.R. & Blumer, C. (1985). The psychology of sunk cost.  Organizational Behavior and Human Decision Processes, 35, 124-140.

Griffiths, M.D. (1997). The National Lottery and instant scratchcards: A psychological perspective. The Psychologist: The Bulletin of the British Psychological Society, 10, 26-29.

Griffiths, M.D. (1997). Selling hope: The psychology of the National Lottery. Psychology Review, 4, 26-30..

Griffiths, M.D. (2008). Problem gambling and European lotteries. In M. Viren (Ed.), Gaming in New Market Environment. pp. 126-159. New York: Macmillan Palgrave.

Griffiths, M.D. (2010). The effect of winning large jackpots on human behaviour. Casino and Gaming International, 6(4), 77-80.

Griffiths, M.D. (2011). Gambling, luck and superstition: A brief psychological overview. Casino and Gaming International, 7(2), 75-80.

Griffiths, M.D. & Wood, R.T.A. (2001). The psychology of lottery gambling. International Gambling Studies, 1, 27-44.

Kahneman, D. & Tversky, A. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5, 207-233.

Langer, E.J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32, 311-328.

Langer, E.J. & Roth, J. (1975). The effect of sequence outcome in a chance task on the illusion of control. Journal of Personality and Social Psychology, 32, 951-955.

Tversky, A. & Kahneman, D. (1971). Belief in the law of small numbers. Psychological Bulletin, 76, 105-110.

Walker, M.B. (1992). The Psychology of Gambling. Pergamon, Oxford.

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

Wood, R.T.A. & Griffiths, M.D. (2004). Adolescent lottery and scratchcard players: Do their attitudes influence their gambling behaviour? Journal of Adolescence, 27, 467-475.