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Can gambling be sustainable?

Sensemaking / Can gambling be sustainable?

Anna Simpson weighs up the odds of responsible practice in the betting industry.

20 Feb 2012

Anna Simpson weighs up the odds of responsible practice in the betting industry.

"To err is human. So is to gamble", writes John Adams, Emeritus Professor at University College London, in his influential book, 'Risk'. Very few of us like to lose, he argues, but many do like to gamble. We've all felt the thrill of different possible outcomes as the dice roll across the table, or the ball nears the goalposts. The more we care about the result, of course, the greater the thrill – and for some, putting money on it is a simple way to feel more involved in the game.

We're talking big money. Globally, this is a €260 billion industry

But at what cost? For those who casually pick up a lottery ticket or pop into the betting shop before 'Match of the Day', the answer is, relatively little. They risk what they can afford to lose, and feel that the chance of winning is worth the hole that (more often than not) is left in their pocket.

All very well. But when someone develops a problem with gambling – spending much more than they can afford – they pay a high price. It can be the respect of a partner, the security of a job, the basic comfort of a bed at night. And the ripples spread to family, friends and colleagues, too. The actions of one problem gambler typically impact the lives of between five and ten others. That's the estimate of the Australian Government, which faces one of the highest rates of problem gambling in the world: 10% among regular gamblers, compared to 0.5-2% in Europe – ascribed by many to the omnipresence of 'pokies' (slot machines) in pubs and clubs.

With so much at stake, is 'sustainable gambling' an oxymoron? It's hardly an industry with social objectives at its heart, or even basic needs. Indeed, its very success rests on the fact that the house usually wins…

But, in recent years, some gambling companies have shown an increasing interest in sustainability. In 2005, Bwin, one of Europe's largest online providers, entered into a research partnership with Harvard Medical School's Division on Addiction, with the aim of developing a "gaming line-up that is as safe as it is entertaining…based on empirical evidence". Since 2009, Betfair – another large online gambling provider – has set up a Corporate Responsibility Committee, and won Carbon Trust Standard certification for its CO2 reduction plans.

Before we sweep these efforts aside (…green wash, clean wash, call it what you will…), it's worth asking what 'sustainability' could mean for this industry. Is it possible to gamble within our means – social, economic and environmental?

The idea of responsible gambling is growing up against the backdrop of widespread indignation against 'casino bankers'. Public awareness of the risk embedded in our financial system has risen steeply in the last few years. We know that the bankers went too far, and we'd certainly like to see tighter regulation in the future. But we also know that taking a risk can leave us better off... Where's that happy balance, we wonder?

Let's take a closer look at the balance sheet.

We know we're talking big money. According to data from H2 Gambling Capital, the gross revenue of the global gambling industry was over €260 billion in 2010, and this is expected to grow to €340 billion by 2015.

For national economies it's a net gain, even factoring in the expense of lost work days and problem-related demands on health services. Deloitte estimates the total contribution to the British economy from the betting industry at 0.5% GDP and 0.3% total employment, including a relatively high number of unskilled jobs. Providers are also obliged to make returns through levies: an estimated £1.5 billion a year is paid in gambling taxes in the UK – although many see this as a regressive tax, in which the poor punter pays much more, relative to their takings, than their wealthy counterpart.

Currently, betting shops account for over 50% of the UK market value, followed by casinos (14%). Then there are lotteries, which draw the most players but make up only 3% of the market. They bask in the high profile of the positive initiatives they fund, alongside the odd rags-to-riches tale. Camelot's National Lottery gives 28p in every pound to 'good causes' – with 50p going to the winners, 12p in tax, and the rest on sales commissions and overheads. But many critics would rather folk enticed by the feelgood factor simply popped their £1 directly in the donations box. A rival 'health' lottery set up by Richard Desmond of Express Newspapers, which will donate only 20p in every pound, has been rejected as "deeply unhelpful" by Stephen Bubb of the Association of Chief Executives of Voluntary Organisations.

This charitable veneer means little to any investment fund with an ethical tinge. They lock gambling firmly away in that pantheon of social evils, along with arms, alcohol and drugs. Even those that profit from it do so with a defiant shrug: take the Dallas-based Vice Fund, which invests in alcohol, tobacco, gaming and defence, and brands itself as 'socially irresponsible'. (Incidentally, the Vice Fund does well enough, with returns a couple of points ahead of the S&P Index. But ethical funds, such as the top 100 in the Newsweek Green Rankings, do better still, outperforming the S&P by nearly 7% in 2010.)

It comes as no surprise that neither the Green Party nor Greenpeace is offering its support to Green Bet, an online bookmaker that channels all its profits to environmental causes or renewable energy investments. But then, why shouldn't the gambling industry align itself with the green agenda? Surely a little bet has a lower carbon footprint than, say, a shopping spree or a weekend break?

Well, yes and no. If you're betting at the races, there's a whole infrastructure to take into account: everything from maintaining the track, to food and travel for every man and his dog. And take Las Vegas. It's the epitome of excess: gawdy neons and flashy fountains consuming vast amounts of energy and ravaging scarce water resources in the Mojave Desert. You won't find natural light in those casinos, there's no sun to tell the time by as the days and dollars slip away…

But its reputation may be set to change. In the last couple of years, casino company Caesars Entertainment Corporation has scooped up several environmental accolades for changes to its Las Vegas venues, with awards such as Green Apple, Golden Pinecone and Water Hero recognising progress on several fronts. These include water-saving solutions (from laundry to landscaping), low-energy lighting, extensive recycling and even a tree planted for every bill presented to diners at its restaurants.

I bet some greens were gritting their teeth as they cheered. 'It's still gambling, right? The economy and the environment may do ok, but it can't be worth the social cost, can it…?'

So, down to the nitty gritty. What is it that distinguishes relatively benign gambling activities from those which ruin lives? And can anything be done to minimise the harm?

There's a common assumption that some forms of gambling are more problematic than others: the slot machines more than the dogs, say, and the dogs more than the lottery. For Mark Griffiths, a chartered psychologist and Professor of Gambling Studies at Nottingham Trent, the reality is more complex.

"It's not about sectors", he asserts. "I could design you a lottery that would be the most addictive game on the planet. The structural characteristics of the activity – such as event frequency, the probability of a win and the sensation of 'near- miss' – have a huge part to play [in whether a player develops a problem]."

The most potent factor, Griffiths argues, is the prospect of reward. The more often you might win, the more engrossed you will be.

"On slot machines you can potentially win 12 times a minute; on the internet it's even higher: 30 or 40 times a minute! If the rewards aren't that frequent, you can't become addicted. I've never met anybody who is genuinely addicted to a bi-weekly national lottery: the reason being that there are only two chances a week to find out the result."

One way forward, says Griffiths, would be to modify the design of games to minimise risk, but further research is needed to prove that this would be effective. It would also depend on regulation to enforce its implementation: it's unlikely a player will opt for the safe machine, if it gives fewer kicks…

The game is one thing. The gambler is another. However engrossing a game, not everyone will develop a problem. And for the problem gambler, it's not normally just about the one game, but a combination of a scratch card here, a bet or two there, a few hours on the web when the bookies close… So might it be possible to spot a problem player before the habit becomes a hazard?

There's no stock type, says Professor Leighton Vaughan Williams, Director of the Betting Research Unit, Nottingham. "Problem gambling can affect anybody, at any age, or of any sex. It's not about income, either." He cites Premier League footballer John Hartson, who used to earn thousands a week, but admitted to The Sun that he once owed over £300,000 to bookmakers. Nor is there any evidence that people turn to gambling because of poverty, or in an economic downturn.

But where demographics can't help, a better understanding of how people play might. This is the goal of the Transparency Project, the joint endeavour of Bwin and the Harvard Medical School. Gambling provider Bwin has made anonymous activity data generated by over 40,000 users available to researchers, so that they can study playing patterns.

Meanwhile, other solutions seek to help players understand their own behaviour. Ten years ago, when internet gambling first took off, behavioural tracking tools were introduced to get more money out of regular players. Griffiths saw potential to put this software to better use. He has been involved in the development of several responsible gambling tools, such as Playscan, which is designed to help people anticipate problems before they arise. It works by asking the player questions about their technique and habits, and comparing their responses to data generated as they play. If the software concludes that their play is safe, it gives them a green light, whereas a yellow or red light alerts them to a problem.

It's a voluntary tool, but – because it also gives the player tips and recommendations to help them win – it's an attractive one. Betfair is planning to integrate such software into its games.

Las Vegas"We want people to make an informed choice [about how they play]", explains Malcolm Bruce, Head of Corporate Responsibility at the company, and former Director of the Gambling Research, Education and Treatment Foundation. He wants to support regular gamblers to play within their means for a sustained period, without running into debt or going bankrupt. "If they do burn up, that's not in our interest. We want customers for life, not for two weeks."

But do consumers actually want such a tool? Yes, says Bruce: "I expected them to be fairly indifferent, but I was completely wrong. Out of 400 customers surveyed, 70% said this was really important. They probably don't see themselves as problem gamblers, but they want to ensure that there would be help for anyone who might need it."

Jonathan Parke, a Senior Lecturer in gambling behaviour at Salford Business School, is keen to see more solutions that empower the player, without limiting the appeal of the game.

"Many online providers now offer statements to tell the player exactly how much they've spent", he says, by way of example. "But there's no consistency in how these pages are set up. In some cases, they are extremely ambiguous and hard to find. Betfair is an example of good practice: the player's net expenditure statement is clearly visible, in the top left hand corner of the screen."

Another 'empowering' tool already on offer is the option to limit your own expenditure. So, a player could look at their monthly budget and decide they are happy to spend, say, £200, and no more. They could then modify their account so that it refuses play beyond this point.

"That's great", says Parke, "but a monthly deposit limit can be changed. In some cases, all you have to do is contact the provider, and they will change it for you within 24 hours… The devil is in the detail", he adds. "It comes down to things like whether you have to phone the company to limit your budget or self-exclude – which is embarrassing for you [and so may put you off] – or whether you can just click a button.

Of course, it's possible to limit your budget on one site, and then try another game offered by another operator, with nothing to hold you back. The best solution would be a self-limiting facility shared across operators – but data protection is a hurdle.

The crux of the matter is that none of these solutions can be effective without common enforcement. Further research is needed to find out just what will work, but Parke would like to see legislation and agreement across the EU, and he has some support from the industry.

"No one provider can be sustainable on its own", concurs Bruce at Betfair. "Good governance of gambling requires good regulation. We want to work within a regulated environment."

Of course Betfair does: no one wants to be the goody-two-shoes while the bad boys have all the fun.

Anna Simpson is Managing Editor, Green Futures.

Photos: thinkstock; Hemera / thinkstock; Ladbrooks; thinkstock; Kushch Dmitry / shutterstock

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