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About a month ago, Flutter, the world’s largest gambling company, announced a new responsible gambling strategy. Going forward, 10% of its employees’ bonuses will be tied to how many players’ use of responsible gambling features.
Among cynics and hardcore critics of the industry, this might come across as just so much virtue signaling. What it really seems to demonstrate though, is an admittance, both within the industry and among regulators, that something needs to change. In Europe, the US and elsewhere, stakeholders need to find a more viable route to sustainability.
Similarly, when Paf announced in September 2020 that they’d be adjusting their loss limits yet again, to €20,000 (down from €30,000 in 2018, then €25,000 in 2019), it wasn’t just self-congratulatory but a calling out for a more unified call to action.
As Christer Falhstedt, CEO of the Aaland Islands-based operator, told the media back then:
“We see that our maximum limit effectively stops big-spending players and prevents the personal tragedies that can occur when huge amounts are lost.
We are now lowering the loss limit further to show that it is possible to survive as a gaming company without income from the biggest big players. We are a gaming company that sells exciting entertainment for adults without trying to squeeze the last drop of money out of them.”
Beneath all the humble-bragging, though, was a sincere plea for solidarity. The message to the industry was: let’s share our collective data, our ideas, our academic studies, and establish best practices. If we don’t, governments, regulators and others with various axes to grin will impose all kinds of restrictions.
Paf’s Communications Director Ludvig Winberg thinks Flutter’s bonus plan is “a good initiative” that will help call attention to their broader responsible gaming work. He told Online Poker Report:
A gaming company should highlight the importance of responsible gaming measures for their employees, recognize that it is an important matter and that we as gaming companies are playing a key role. If you as an employee are to take actions that reflect responsible gaming, you will do more of that if you know that this is what your employer also emphasizes.
As for Paf itself, since its new limits went into effect last January, no one can really say for certain if they’ve improved gamblers’ lives. Therein lies only one of the rubs of this whole self-policing effort on the part of gambling industry operators.
There’s certainly been a financial impact. Despite a record increase in online customers for 2020, Paf saw a 1.1% drop in revenue that year, to €113 million. On a per-customer basis, the drop was 17%.
With those sorts of financial consequences, where might Paf stop? At €15,000? €10,000? €5000?
Paf has more flexibility than most operators in that regard. It’s owned by the Aaland government, having been founded in 1966 by the Finnish Public Health Service (in conjunction with a group of charities, including the Red Cross). As such, it’s not purely driven by profit.
When Paf cut the loss limit to €25,000 in 2019, we covered the news here at Online Poker Report. Alex Weldon (now managing editor, then the lead writer) wrote:
“Private companies are profit-driven and will not always do the right thing independently. And for publicly traded companies, any decision that affects the bottom line has to be justifiable to shareholders.”
Even so, it may not be able to keep lowering the limit indefinitely.
Paf may have reached their own sort of loss limit. But for Flutter – owner of FanDuel, Fox Bet and PokerStars, among other brands – an adjustment of no more than 10% of their employees’ bonuses may not make a huge difference on their bottom line.
On the other hand, the timing of their announcement is very interesting.
In less than two months, the United Kingdom is expected to make some big regulatory changes. Great Britain is home to the world’s largest regulated online betting market. However, because of the way some operators have gone after problem gamblers, the rules are likely to get tighter. Possible changes include mandatory checks on what online users can afford to bet, or limits on stakes.
That may be part of the impetus for Flutter’s latest olive branch. As CEO Peter Jackson told the Financial Times in February, Flutter spent more than £45 million last year on more responsible gambling programs. And those “levels of expenditure will grow,” he added. This is despite the likelihood that curbing those at-risk players might “moderate growth” in other crucial markets.
By 2030, Flutter hopes that 75% of its players will be using at least one of its safer gambling tools. As of now, the number is a mere 35%. The tools at users’ disposal include:
In US regulated states, on the other hand, most rules are still on the loose side. It hasn’t officially experienced any sort of gambling crisis yet, though some states are reporting increased call volumes to gambling help lines. Worryingly, most American gamblers seem unaware of the existence of responsible gambling tools such as Flutter’s.
Flutter’s plan has received praise in some circles. Sally Gainsbury, Director of the Gambling Treatment & Research Clinic at the University of Sydney, had mostly good things to say about it:
“In my opinion, it is good to see gambling operators pay more attention to gambling problems and make attempts to prevent problems among customers. Initiatives to prevent and reduce gambling harms need to be top-down and encouraged throughout an organisation. Efforts to promote use of consumer protection tools such as deposit limits and time-outs are useful as these are effective in reducing harms and by normalising the use of these across a large proportion of players this reduces the stigma associated with consumer protection tool use.
Having specific aims and tying bonuses to harm prevention efforts will hopefully enhance innovation and ways to increase consumer protection tool use among customers. Efforts will be needed to look for unintended consequences, for example, ‘toggling’ of deposit limits whereby players set a limit and subsequently increase or remove this or set an artificially high limit.
Importantly, responsible gambling and harm prevention and harm minimisation is not a competition. Companies should be encouraged to share strategies and techniques they have found to be effective so other operators can similarly reduce harms among customers. Efforts should be made across industry to reduce harms across operators as most customers have multiple accounts. Gambling industry should fund and share data with independent researchers to verify whether harm prevention strategies are working and how these can be improved.”
Flutter’s investors seem not to be worried about the impact on profits. As reported in City A.M.,“brokers at Peel Hunt stated that Flutter’s increased focus on safer gambling moving forward would be ‘key to the sustainability of the business,’ and stuck to its ‘Buy’ rating.”
That said, there are potential problems with Flutter’s approach. One that crops up frequently is the difficulty of collecting good data, and using it responsibly.
Scott Clark, co-founder of the model development platform company SigOpt, put it rather bluntly to Datanami back in 2018 in a discussion about machine learning:
“Tuning toward the wrong thing can actually make it look like you’re doing your job right. But in reality, you’re actually making things worse. Choosing the right thing to measure and getting the right metrics in place are extremely critical to succeeding.”
Richard Schuetz, longtime gaming consultant and former head of the California Gambling Control Commission, sees internal contradictions as well:
“The irony is that the industry uses AI to help maximize revenues, and then folks are expected to use this data to limit revenue.”
What’s more important than studies or tying in bonuses to employees or limiting loss limits is that all these actions relate to sustainability. They’re keeping the topic out there. And discussing this topic, says Schuetz, “is important both for establishing a sustainable industry and for allowing us to feel that what we are doing is ethical and appropriate as human beings.”
Facts are stubborn things, but statistics are more pliable.
That’s a line often attributed to Mark Twain. It brings us back to an issue Weldon brought up in OPR’s previous coverage of Paf’s efforts. That is, the trouble with studies in general.
It’s all too easy to twist studies and statistics to confirm or deny what you think you already know. Sometimes cause and effect are hard to tease apart. One of Paf’s findings, as OPR reported, was that:
“Self-imposed voluntary restrictions don’t do much to curb problem gambling on their own. If anything, they’re a more-useful tool for identifying it.”
If that’s true in general, then the tools Flutter is using may be more diagnostic than useful at limiting dangerous gambling.
Various studies have shown similar results. Setting a loss limit doesn’t do much to prevent someone from becoming a problem gambler. And yet, someone setting one unprompted is a good indicator that the person thinks they might be developing a problem. Later raising or removing that limit is even more of a red flag.
Yet more evidence for this comes from a 2020 study by Ekaterina Ivanova. As part of her master’s thesis, she asked online gamblers to rate their experiences with protective tools.
She found that:
“In general, non-problem gamblers were not more disturbed by protective measures than other categories of gamblers. More problem gamblers have previously abandoned a gambling service due to perceived overexposure to protective measures compared to non-problem gamblers.” She also found that “a prompt to set a voluntary deposit-limit of optional size did not appear to be effective in decreasing gambling intensity in online gamblers, indicating the need of evaluating alternative designs.”
Another study from 2020, conducted by the Centre for Gambling Research at the University of British Columbia, makes a point about the limitations of self-exclusion in its conclusion:
“Narrowly, our algorithm was built to predict self-exclusion status, and it is an empirical question whether such an algorithm has utility in predicting disordered gambling more broadly. Some self-excluders do not display evident gambling problems, and a significant proportion of problem gamblers do not self exclude, raising the possibility that self-excluders may represent a specific subtype of problem gambler.”
An even more recent study comes from Julie Caillon, a psychologist and researcher at the University of Nantes. In it, she writes:
“The results of our study demonstrated the limited impact of pop-up warning messages on gambling behavior and cognition in Internet gamblers according to the type of game and the status of gamblers. The limited impact of warning messages on gambling behavior and the inconvenience of the pop-ups for Internet gamblers lead us to only consider warning messages as one piece of a larger responsible gambling strategy.”
By now, industry and regulators alike can see the writing on the wall. Even so, instead of banding together to come up with new standards, they’re trying to solve the problem individually. On the industry side, that usually means coming up with whatever makes for good optics but causes the minimum financial pain.
Kindred, for instance, has turned to the complex and flashy world of artificial intelligence and has its own in-house academic, but is making limited progress. Flutter’s using a more simplistic metric, and aiming to get players to change their behavior, rather than adjusting its own.
As Paf’s Falhstedt told iGamingBusiness back in 2020:
“Our principle of openness is easy to understand for everyone. . . .We could, of course, choose to wait a few more years so we get a common scientifically-based table that all gaming companies can agree on before openly showing our numbers. Or we do something right now.”
“We do not need to be debating the solutions as much as we need to be working in developing an environment that allows us to understand the challenges and better develop the appropriate responses.
“Also,” he adds, “Also, the goal needs to be progress, not perfection. This then becomes as much about art as science.”