July 1, 2018 by

Balancing Soft and Hard Regulations to Curb Problem Gambling

In a recent article in The Regulatory Review, writer Danielle Lazarus reports on a paper by Jim Leitzel, director of public policy studies at the University of Chicago, who argues that casino regulations could and should “nudge” casino gamblers into safer, less obsessive behavior.

Nudge

The idea of a “nudge” was developed by two behavioral scientists, Cass Sunstein and Richard Thaler. They define the idea thus: “A nudge….is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.”

In the context of casino gambling, nudges might be the lack of clocks, the intensive lighting in the casino which gives gamblers the illusion that it is daytime when it is very late at night, the no-limit policy on time spent playing any single casino game, and the availability of free alcohol.

Unwitting Nudges

There are other activities casinos, both land based and online, can use as nudges. These nudges may be entirely unintended. For instance, an online casino can make a pop up offer of a large casino bonus in which the player is urged to use the correct bonus codes to access the bonus. The bonus offer is thus delivered in two stages: the actual offer and then the direction to use the bonus code to get it.

While casino bonuses are promoted as a way to enlarge a player’s bankroll, they are also an incentive to continue playing. The bonus code is required so the casino can keep track of all its different bonus offers. It is merely a signal to the casino’s software to “send” the bonus request to the correct “pocket”. But it’s also a positive reinforcement technique in which the player is nudged to feel good about following instructions in order to get a reward, namely the bonus.

Casinos may be unwittingly activating behavior in problem gamblers by requiring a bonus code in order to get a bonus. Non-problem gamblers are not affected and they can easily get the bonus and then close their gambling session because they have no problem stopping when they should stop. A problem gambler, who knows that he or she is engaged in undesirable behavior, that is, gambling too much, is made to feel better simply by following instructions.

Dealers

Another unwitting casino nudge toward gambling behavior is the way dealers or croupiers are trained to look and act while they are working with the public. Their behavior is a combination of impartiality, control over boredom, friendliness without actually being friendly, and perfectly executed repetitive behavior.

The dealers and croupiers are perfectly dressed. In “real life” we never come across people who combine all of these qualities. The combination of attributes that casinos work so hard to impart to dealers, nudge gamblers to continue to stay at the table in order to continue to experience this combination of behaviors that they encounter nowhere else. Finally, the cultural directive to tip dealers nudges gamblers to stay and gamble some more in order to win more so they can tip more.

Benign Manipulation?

The notion of using casino regulations to softly alter gamblers’ behavior was proposed to find a way for states and casinos to alter the gambling behavior of problem gamblers. Casinos actually have an incentive to nudge problem gamblers into problem gambling behavior.

Mr. Leitzel argues that in the long run it is in the public’s interest to ease problem gamblers away from gambling excessively. He divides the nudges he supports into three categories.

Information

Regulations can force casinos to state openly the return to player rate for every game. This idea would target primarily slots which are the game of choice of most problem gamblers. Regulations can also force casinos to inform gamblers of the consequences of irrational gambling decisions.

Leitzel also urges regulators to compel casinos to track gamblers’ betting activity. A study in 2017 found that problem gamblers wildly underestimate the amount they had gambled at any given session. So, the casinos should inform the gambler when he or she reaches a set boundary between “safe” gambling and “problem gambling”.

Commitment

Another regulatory idea is to get all gamblers to commit beforehand to a specific gambling limit. The limit could be in money gambled regardless of wins and losses or a commitment to a specific amount of time spent gambling regardless of wins and losses. The commitment protocol would then end a gambling session at a pre-determined moment irrespective of how lucky or unlucky the gambler has been.

Education

This is the area that is the most anti-casino and anti-gambling of the three. It urges regulators to educate gamblers about how casinos manipulate them. The regulation would not force casinos to put in clocks; it would teach gamblers that the absence of clocks is a manipulation to get them to forget how long they have been gambling.

The regulations would not force casinos into putting in windows or dimming the lights. It would teach gamblers how no windows and excessively bright lights manipulate them. A gambler who says that he or she will only gamble today may be tricked into thinking that it is still today even though tomorrow began hours before.

Regulatory Future

We may see more regulation in the future and it may follow some of the lines presented in Leitzel’s paper. It might be however that any regulations that promote the desired effect of changing problematic gambling behavior into safe gambling behavior would be less “nudge” and more forced change.

That the state and society have an interest in reducing problem gambling, even as states increasingly rely on the taxes paid by casinos from losses incurred by problem gamblers, cannot be denied. The experience in reducing smoking has shown that it is a trans-generational matter. Problem gambling may be reduced in the future; we might find that it is the children of today’s problem gamblers who learn the lessons the regulations intended for father or mother to learn.