'Nudge vs. sludge in gambling warning labels' by Newall, Ludvig, Walasek and Rockloff

Words Matter: UK Study Finds Transparency Problems In How Operators Convey The Odds To Their Players

Researchers in the UK and Australia have found that online casino operators typically present information about game odds in a way that is “ineffective and too difficult to find.”

The study in question was a collaboration between four researchers at three universities in the UK and Australia. The researchers published their findings in the journal Behavioral Science and Policy, titling the study Nudge Versus Sludge in Gambling Warning Labels.

The United Kingdom Gambling Commission has rules about where and how operators must display their game odds. It seems, however, that the majority of operators do whatever they can to obfuscate the odds while remaining in technical compliance with those rules.

Such studies are becoming increasingly common in the UK. The country is in the midst of a bit of a gambling crisis, and moving in the opposite direction from the US.

Over on this side of the Atlantic, legal gambling is expanding rapidly and online casinos are a novelty. In the UK, gambling has been a part of mainstream culture for decades. Now, there is increasing backlash over high rates of problem gambling and an industry that has tried and failed to self-regulate.

One result of that is that the UKGC is attempting to become a more hands-on regulator. It will rethink its policies based on studies like this one. US regulators, for their part, may want to keep a close eye on what works and what doesn’t in the UK, and use those lessons to inform their own policies.

A narrowly focused study

Online gambling is a topic in dire need of more independent research. What there is, is often very broad in scope, but shallow by the same token. It’s therefore refreshing to see a study which dives deeply into one narrow but important aspect of the business.

The study focuses exclusively on how operators present information about a game’s house edge or return to player. Though the researchers describe this as a “warning label,” it’s perhaps more apt to compare it to the nutritional information displayed on food packaging. This, too, is important for consumers’ informed decision making, yet poorly understood by many of those same consumers.

The researchers chose to focus on roulette products, since they have a consistent house edge and are found at every online casino. They looked at 363 separate roulette titles, spread across the sites of 26 major operators.

Unsurprisingly, operators don’t go out of their way to make this information easy to find or to interpret. It’s to their advantage when players choose games with higher house edges. 98.3% had the required information, but most adhered only to the strict letter of the rules.

All but one of the games used the least bold font weight allowed by the regulator. 95% also used the smallest allowable font size.

Most buried the relevant information inside a wall of text, with an average of 2,078 words – more than twice the length of this article. Only about 38% placed the information towards the top of the text, with the middle third being the most popular place to put it. Some also required more than one click to navigate to the information, starting from the main game window.

Given the chance, operators choose obfuscation

Most telling, perhaps, is the language the operators used to convey the information. The UKGC allows operators to choose between disclosing the game’s return to player, or its house edge.

These are two sides of the same coin. Let’s say a slots title pays out 92 cents on the dollar. That same fact can equally be expressed as a 92% RTP, or an 8% house edge.

Operators clearly aren’t indifferent between these optionsWithout exception, those examined in the study chose to use RTP.

Those making the decisions will probably claim that it just feels more positive to talk about statistical winnings than statistical losses. However, it’s also an established fact that gamblers have a harder time understanding RTP.

A previous study, cited by the researchers, found that about two-thirds of gamblers were able to correctly answer a multiple choice question about odds after reading a statement about a game’s house edge. Conversely, less than half were successful in answering a similar question after reading an equivalent statement using RTP.

Operators presumably know this. Given that precisely zero of them elected to provide the more easily understood information, it’s hard not to interpret this as a case of deliberate obfuscation.

RTP may be less important than gambling literacy

It’s debatable how important RTP or house edge actually is when it comes to problem gambling. All other things being equal, it’s true that a player will lose money faster at a game with a larger house edge. When it comes to addiction and related harms, however, it’s not the whole story.

Things like pace, session length, stakes and volatility may be more important. Volatility in particular can be a greater factor than RTP in determining a player’s median short-term losses and provoking compulsive behavior.

Consider state lotteries, which infamously have the stingiest RTPs of all major forms of gambling. Despite that, gamblers who exclusively play the lottery tend to be among the least likely to develop a problem. Statistical loss per bet doesn’t seem to be the most important thing. In fact, emphasizing it too much could lead to players selecting their games on that basis alone. That would mean overlooking things like volatility and gameplay, which might have a greater impact on their enjoyment.

Ultimately, though, what’s really important is gambling literacy. Other studies have found that the less players understand the game they’re playing, the higher risk they’re at. In the US, younger players in particular struggle with this, and they form the bulk of online casino users.

Presumably, there is a way for operators to help players understand the odds of the game they’re playing, while still encouraging them to consider other factors in making their choice. However, the experience in the UK makes it clear they won’t find this solution on their own. Regulators will need to be more specific in spelling out how operators must communicate this information. That goes for the US as much as for the UK.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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