Insider on gambling's paradox: why players choose the worst bets

Key topics:Players prefer high-volatility thrills over steady returnsOperators profit from riskier games and big-win marketingResponsible gambling efforts clash with industry incentives.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Steve Hall*.An insider’s view on volatility, psychology, and the responsible gambling contradictionThe prolific rise in gambling spend specifically online is driving the conversation in South Africa and globally about the cause of this explosion and how to manage it, as well as the damage done by it.Gambling is a legitimate pastime; it is legal and legislated, and much like alcohol, can be great fun in measured doses. Full disclosure includes noting that I have made an income from various sectors of the gambling industry for a number of decades. But even I think we need a review.Go back a few years and the problem gambler faced a series of challenges, “Where will I play, how will I sneak away from my job to get to the Casino or Bookies, is there a game going on which I can place a bet, will I get spotted coming in or out of the gambling establishment, and can I get there before they close?”. These were challenges that helped to keep the number of problem gamblers down.As luck would have it, the industry has found solutions to those challenges and the regulators have licensed them, and not just the traditional casino, bingo or bookmaker bets. Now one can bet on anything at any time right from your phone, and that’s true freedom.But these freedoms still don’t force anyone to gamble; it remains a matter of player choice. Players are rational beings that make decisions based on their needs and wants…, or are they? I have had personal experience in Online and Table-based game design, and I have made a profit, but I had expected more players to be looking for maximum time on device – more bang for the buck. I had assumed that if I were to create a game that allowed extended play with a limit on total losses, but still a fun experience, a path would be beaten to my door. But no. Surprisingly, that’s not how it works here in the real world.Players, it seems, based on levels of play across various games, don’t want to be merely entertained, but instead demand high volatility which means games with huge prizes, which by their very nature almost never pay out. I have watched as initially additional roulette and blackjack side bets, which themselves carried a much larger House Edge than the main game, became the most popular bets in the casino (on both sides of the table). Then the betting on the outcome of Lottery bets – which are just fixed-odds bets based on statistical chance (less a healthy house edge) but offer fifty or one hundred million (places a pinky in corner of mouth) to one payout. Players loved nearly winning a large jackpot more than they loved actually winning a smaller one. It seems these players are not in it for the money but for the thrill. And thrills can only come at a cost – or they fail to thrill..Vanishingly remote.Then there are those who are betting to finance a lifestyle, or meeting a budgetary shortfall, and this should be the shortest-lived strategy as it is almost immediately apparent that it doesn’t work and spectacularly so. But even those gambling to cover the bills are choosing to play the high-volatility games which offer the vanishingly remote chance of a life-changing win. As luck would have, it the operators also prefer the high volatility games, as not only do they produce higher profits, but once in a blue moon, when there is a big winner, they are able to use this Big Winner as the perfect advert for the game. “Mrs X wins big on our Super Slots – you could be next.” Operators who offer low volatility, fun games designed to create a night’s entertainment at a reasonable price find themselves with a losing hand.Recently Crash Games, such as the infamous airplane game and other ‘perceived skill’ games, have taken thrills to a new level. In these games players are almost winning from the get-go and need to choose when to bank the money before it’s too late. But bank too early and you lose out on the big money, while bank too late and you just lose. These games generate maximum emotional stress and thus maximum entertainment value. It is well proven that the dopamine value of a loss of X is far greater than that of a win of X. Combine this with In-Play bets which can be placed on games that are already underway – the next throw-in will be for the Blue Team, or the batter will swing and miss at the next ball. These are bets that cause a mild panic in the bettor, “Will I place it in time, will it win, what is my next bet going to be” – wow what a rush (especially if it loses).So there it is, what’s the problem? Both the players and the operators want high volatility, low RTP (return to player) odds. Build anything else and they just won’t come. It seems surprising that there is less predatory instinct to the design of games than a well-read person would imagine. Although operators clearly design games to win and win fast, any other design is broadly ignored by the serious punter. The answer to why we don’t see socially aware Gambling Operators offering low- stakes fun bets and making a profit, is that there is no market for them. Big players simply don’t want a safe bet, and small players want life-changing wins.But this doesn’t mean that the operators are not absolutely and shamelessly cashing in; they are. They are just fortunate that the average gambler is bad at maths and even if he wasn’t, is not really even playing to win – just to be thrilled. This is why we demand that licensed Gambling Operators create Responsible Gambling programmes, and further that they enforce them..Sound ridiculous.However, I am eagerly waiting to see a fat guy turned away at a McDonalds Drive-Thru, or a phusa-faced customer refused service at a bottle store, or how about a visibly dysmorphic gym addict banned from the free weights? These all sound ridiculous and Big Brother-ish, but this is exactly what we demand from the gambling industry. Which other industry is mandated by law to stop their best clients from freely spending more money on their products, and where is the incentive for them to do this with any actual effort? If you held shares in a business in which the CEO introduced an innovative programme to reduce the spend of your top 10% of clients, would you invest in the share, would you even keep the CEO?This meteoric rise in gambling seems not one that is forced on the player, and it seems that the volatility of the games is also self-selected. It is an alignment of technology, human psychology and economic incentive. Just the luck of the draw.But this doesn’t mean there is nothing at all we can do about it. One of the last the last remaining shields is definitely the management of gambling advertising. If the chance to bet AND WIN BIG wasn’t visible on every news website pop-up, sports team kit or stadium, bus shelter, tik tok, Facebook, Instagram, influencer timeline, bumper sticker and billboard, perhaps gambling would be less prevalent. It is your right to be bad at maths and seek instant gratification, but do you really need to be talked into it? I say talked; what I mean is Shouted into it. In the last financial year, the South African gambling industry spent two billion rand on advertising alone. That’s enough to fund 20 000 degree-students or 80 000 cataract treatments, or 250 000 comprehensive problem gambling interventions.What would also help is if the wolves weren’t directly resourcing the sheep defence fund. If the National Responsible Gambling Programme wasn’t beholden to the industry for its revenue. I think the single most telling failure of the National Responsible Gambling Foundation can be seen in its long-standing slogan – “Winners Know when to Stop.”.Tick the box.“Winners know when to stop”. Do they? How? I’d like to meet these winners, so I can ask how they know when to stop. Also, I’m glad to be told that there are winners and that if I could only work out when to stop, I could be a winner too. Sounds as if I shouldn’t quit now – sounds as if I just need to get more practice, then I too would know when to stop. No, this is not a slogan designed to reduce excessive gambling, this is a slogan designed to meet the needs of the industry; tick the box, but don’t reduce the take. I’m suggesting as replacement “Almost all bets are losing bets”, or what about: “You are more likely to be struck by lightning”, or simply “Have you paid your rent yet?”.It is ridiculous to expect the punters or the industry to manage responsible gambling. It is in neither of their interests. It is then up to the regulators to remain at arm’s length from the industry, tax them efficiently without choking legitimate operators into going underground, and most of all, place reasonable restrictions on advertising including enforcing the no BS rule in gambling advertising. Sure Mrs X won a squillion from a R2 bet – but you almost definitely won’t. .*Steve Hall has worked in the gambling industry since the early 1990s, his experience spanning casinos, betting, online platforms, and game development..*This article was originally published by Daily Friend and has been republished with permission.

Insider on gambling's paradox: why players choose the worst bets

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