Tag Archives: social gaming

A dollar won is twice as sweet as a dollar earned

So said Paul Newman as pool player Fast Eddie Felson in the 1980s movie ‘The Color of Money’. Fast Eddie was referring to playing a game of skill but the truism in there about the sensation of winning, of beating the odds, sums up the allure of gambling.

Gambling, or ‘gaming’ as it has been rebranded, is the ultimate exemplar of an entire industry predicated on the assumptions of behavioural economics.

Gambling is inherently irrational. You choose to gamble to win. Yet the thrill comes with knowing there’s a real chance of losing, that you pit yourself either against other people or ‘lady luck’. Indeed that thrill is at the heart of gambling and the reason many of us do it again and again even when we are losing believing it is just a ‘streak of bad luck’ and ‘bound to change’ at some point (the gamblers fallacy). The pattern of neurological stimulation that gambling engenders can be habit forming, even addictive. There are the rituals and build up to the gambling event, the tension rising as, suddenly, … ‘they’re off!’ … the ball spinning round and round before imperceptibly it begins to roll slower and slower until … the last card is drawn … the die is cast… the share price is fixed … the last scratch on the card made … and the outcome rests in the hands of fate. Will the climax be a flush of elation or the flop of failure? That release when the games outcome is finally known can be intoxicating!

Indeed an entire multibillion dollar gambling industry exists that is based on these most irrational of decisions – you hand over your money to someone else on the promise that if something extremely improbable was to happen, like the roulette ball landing in the number you have chosen and not one of the other 36 it could have done, then you would get more cash back. In terms of ‘nudging’ gambling provides a brilliant example of an industrial choice architecture that encourages people to do something completely irrational and against their own best interests, to seek out risk against the odds in a system designed to ensure the house does not loose. And because gambling has long been considered a potential social vice leading to excessive risk taking, government has also long sought to regulate it (for example in bacchanalian Rome and paternalist Victorian Britain).

These debates have often been bound up with conceptions of competence and class, that some categories of people (for Victorian patricians this was the ‘working classes’) are more prone to giving in to their vices and need protecting from themselves. More recently government has sought to even turn vice into virtue by legitimising some forms of gambling and positively encouraging its conversion to ‘gaming’ (a form of mass entertainment) through directing the profits of gambling to providing social goods through taxation of gambling profits and more recently the National Lottery.

Now behavioural economics suggests ways of interpreting and even explaining people’s gambling behaviours. It points to the way people proportionately discount distant rewards in the future more than those that are nearer (termed hyberbolic discounting). In other words, in making choices we will tend to choose imminent smaller rewards and immediate gratification over greater deferred ones. This ‘shortsighted brain’, as Natasha Schull and Caitlin Zaloom (2011) describes future discounting, sits at the heart of the problems of liberal governance – how do we tackle climate change or personal investment in pensions when we choose behaviours that reward us now, when our supposedly rational brain reaches irrational conclusions? Because in addition to future discounting we also overestimate the probability of winning or have an over confident belief in our skill than is actually the case. If we can impose an illusion of control on our gambling, for example by releasing the dice ourselves or timing the press of the button ‘just right’, we can manufacture a fiction that somehow we are playing the slot machine rather than the machine playing us. We tend to emphasise our victories and small successes and loose sight of the losses. Similarly we believe that some numbers are ‘lucky’, that in playing a game of chance a pattern is present behind the randomness. So we stick to ‘our’ lottery numbers and bet repeatedly on those numbers for fear that if we change them our investment in them will have been wasted.

Significantly the gambling industry knows all this. It is designing ever more sophisticated apparatus to help people spend their money or time; be it in banks of multi-line slot machines, Fixed Odds Betting Terminals, increasing online and mobile means of making ever more diverse types of bet, the development of ‘player tracking systems’ that monitor players’ preferences, play style, wins and losses, spending across gaming platforms and gaming locations, allowing gambling corporations to better target resources to extracting that cash, appealing to massively differentiated gaming markets (social bingo, solitary poker) – and all embedded in immersive real and virtual environments that stimulate and satiate the punter in equal measure. In exchange the punter is entertained. They may experience the thrill of the win, however small it may be, however much rationally they know that the house always wins in the end. Seemingly we are content to pay out £5.7 billion per year* for this neurological stimulation.

So in a real sense the gambling industry has been a laboratory of behavioural economics for decades, indeed millennia. More recently the way in which it operates has leapt into the 21st century the sites of gambling given a makeover, the machines and software mentioned above found in betting shops, bingo halls and increasingly in the living room.  At the same time the logic of behavioural economics is also informing the way policies are developed to limit or ameliorate the potential harm of ‘gambling gone bad’ to individuals and society. In the UK this has mainly been through the practice of self-exclusion, where punters voluntarily exclude themselves from gambling places (real and online) for a fixed period of time to try and get their habit under control. But the gaming industry and regulators have also seen the potential for technology, particularly in the online world, to increase the nudgeability of people to police themselves. For example online industry best practice includes mechanisms for age verification, ‘reality checks’ and the use of ‘defaults’ such as time and deposit limits to ensure gambling remains gaming, reminders that require players to acknowledge how long they have been playing and confirm they wish to continue, and an ability to self-exclude.

Screen Capture 07-11-11

The internet and the rise of ‘social gaming’ has meant not only is ‘real gambling’ now more available in more places, (the development of mobile apps to enable sports betting and mobile casino gaming on the move makes it available in all places at all times), but increasingly people can play risk free ‘simulated gambling’ games at any age. Simulated gambling has long been a means of promoting products; from collecting cards and bottle tops to win prizes in the 20th century to texting a code from a drinks can or getting a Monopoly scratch card on your burger box. While it is tempting to look at online gambling as the most obvious growth market and means for normalising gambling as an everyday social activity if we look around us we see it has become much more pervasive than that. In today’s consumer culture such marketing and social network based gambling really is everywhere, a supplementary tool for increasing sales and promoting brand loyalty, a background habit to our virtual lives. Indeed ‘social gaming’ on websites like Facebook has increasingly tapped into the demand for simulated gambling with games such as Zynga Poker, online ‘slots’ machines, and scratchcards all prominently promoted. These are games you can play for free in a limited manner or use your credit card to purchase additional ‘credits’, where you are not playing to win money but to win more credits or to progress in the game. Quite how that embedding of ‘gambling as gaming’ into the social lives of us all is changing our relationship to gambling and the space-times of our own decision making is surely a question we would do well to begin asking.

* the Gross Gambling Yield of the gambling industry as calculated by the Gambling Commission’s Industry Statistics 2009/10.

Marc Welsh