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Should "win limits" or "prize targets" become a part of responsible gambling

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Should "win limits" or "prize targets" become a part of responsible gambling

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Should "win limits" or "prize targets" become a part of responsible gambling
Dr. Douglas Walker, College of Charleston

Presented at the New Horizons in Responsible Gambling Conference in Vancouver, February 1-3, 2016

Should "win limits" or "prize targets" become a part of responsible gambling
Dr. Douglas Walker, College of Charleston

Presented at the New Horizons in Responsible Gambling Conference in Vancouver, February 1-3, 2016

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Should "win limits" or "prize targets" become a part of responsible gambling

  1. 1. Should “Win Limits” Become a Part of Responsible Gambling? Presented by Doug Walker College of Charleston New Horizons in Responsible Gambling Conference February 1-3, 2016 Vancouver, B.C., Canada
  2. 2. “Responsible gambling” • Strategies to prevent gambling disorders – Akin to limits for low-risk alcohol consumption (Currie et al. 2008) • A focus on self-imposed gambling limits… – Setting a monetary loss or deposit limit – Limiting time spent gambling • Time per session • Frequency of sessions Win Limits - New Horizons 3
  3. 3. Win Limits - New Horizons 4
  4. 4. “Responsible gambling” • “Win limits” haven’t been mentioned in academic literature until recently – The Everything Casino Gambling Book: Feel Confident, Have Fun, and Win Big! (2004) – Yet, “stop when you’re ahead” seems like obvious advice Win Limits - New Horizons 5
  5. 5. American Gaming Assoc. (2003) • Four key characteristics of responsible gaming – Responsible gamers understand that gambling by its nature entails risk and that the odds of winning are with the house – Responsible gaming is done socially, with family, friends or colleagues – Responsible gaming is done for limited amounts of time, both in frequency and duration – Responsible gaming always has predetermined acceptable limits for losses
  6. 6. A typical casino visit • Consider a “responsible gambler” – Player starts with $200 chips and loss limit – Player plans to stop gambling after 2 hours, or until they’ve lost budgeted $200 – Responsible gambler may be likely to lose all budgeted money at the casino • Former title: “How do casinos make money?” Win Limits - New Horizons 8
  7. 7. Intro to win limits • Commitment to stopping gambling after winning a certain amount – “Prize target” or “prize cash-out point” may be better names • Decreases expected loss from gambling – effectively reduces time spent gambling • Use of win limit would result in higher % of people leaving casino as winners – Relative to other betting limits used alone – And when used with other betting limits Win Limits - New Horizons 9
  8. 8. Probability distribution, roulette (house advantage 5.26%) Source: Hannum & Cabot (2005, p. 22) Win Limits - New Horizons 10
  9. 9. Players’ loss and win limits Win Limits - New Horizons 11 loss limit win limit -5%
  10. 10. Simulated slot machine • Slot machine – $1 per play, single line – 6 seconds per play – Random number generator, 0.000-1.000 – Player’s expected value is -0.05 Random Number Net PayoffMinimum Maximum 0.00000 0.75000 $ (1) 0.75001 0.90000 $0 0.90001 0.97000 $1 0.97001 0.99897 $20 0.99898 0.99997 $45 0.99998 1.00000 $160 Overall expected value: $ (0.05) Win Limits - New Horizons 12
  11. 11. Simulated betting rules – Simulated player details • Each run includes 900 players • Each player can do 5,000 spins, if no limits set • Always adhere to betting limits – Simulated self-imposed betting limits [1] No win limit or loss limit (5,000 spins; 8.33 hrs of play) [2] Time limit of 1 hour (at 6 seconds per play = 600 plays) [3] $100 loss limit [4] $100 loss limit; $100 win limit [5] $100 loss limit; $100 win limit, “going down” [6] $100 loss limit; $200 win limit [7] $100 win limit Win Limits - New Horizons 13
  12. 12. Simulation # Winners (% Chance of Winning) Average $ Result Minimum $ Result Maximum $ Result Average Time Played (# Plays a) Maximum Time Played (# Plays a) Minimum Time Played (# Plays a) 1 No win or loss limits (5,000 spins; 8.33 hrs. of play) 159 (17.6%) $ (251) $ (843) $ 419 8.33 hrs. (5,000) 8.33 hrs. (5,000) 8.33 hrs. (5,000) 2 Time limit of 1 hr. (6 sec./play) 315 (35.0%) $ (30) $ (220) $ 233 1.0 hr. (600) 1.0 hr. (600) 1.0 hr. (600) 3 $100 loss limit 66 (7.3%) $ (76) $ (100) $ 382 2.38 hrs. (1,429) 8.33 hrs. (5,000) 0.25 hr. (147) 4 $100 loss limit; $100 win limit 275 (30.6%) $ (35) $ (100) $ 162 1.13 hrs. (677) 4.33 hrs. (2,595) 0.13 hr. (78) 5 $100 loss limit; $100 win “down” 286 (31.8%) $ (35) $ (100) $666 1.22 hrs. (730) 8.33 hrs. (5,000) 0.07 hr. (41) 6 $100 loss limit; $200 win limit 135 (15.0%) $ (53) $ (100) $ 254 1.81 hrs. (1,084) 7.46 hrs. (4,478) 0.26 hr. (156) 7 $100 win limit 435 (48.3%) $ (153) $ (858) $ 186 5.23 hrs. (3,135) 8.33 hrs. (5,000) 0.14 hr. (81) Simulation results summary 900 players, up to 5,000 spins each, 6 sec./play Win Limits - New Horizons 14
  13. 13. Simulation # Winners (% Chance of Winning) Average $ Result Minimum $ Result Maximum $ Result Average Time Played (# Plays a) Maximum Time Played (# Plays a) Minimum Time Played (# Plays a) 1 No win or loss limits (5,000 spins; 8.33 hrs. of play) 159 (17.6%) $ (251) $ (843) $ 419 8.33 hrs. (5,000) 8.33 hrs. (5,000) 8.33 hrs. (5,000) 2 Time limit of 1 hr. (6 sec./play) 315 (35.0%) $ (30) $ (220) $ 233 1.0 hr. (600) 1.0 hr. (600) 1.0 hr. (600) 3 $100 loss limit 66 (7.3%) $ (76) $ (100) $ 382 2.38 hrs. (1,429) 8.33 hrs. (5,000) 0.25 hr. (147) 4 $100 loss limit; $100 win limit 275 (30.6%) $ (35) $ (100) $ 162 1.13 hrs. (677) 4.33 hrs. (2,595) 0.13 hr. (78) 5 $100 loss limit; $100 win “down” 286 (31.8%) $ (35) $ (100) $666 1.22 hrs. (730) 8.33 hrs. (5,000) 0.07 hr. (41) 6 $100 loss limit; $200 win limit 135 (15.0%) $ (53) $ (100) $ 254 1.81 hrs. (1,084) 7.46 hrs. (4,478) 0.26 hr. (156) 7 $100 win limit 435 (48.3%) $ (153) $ (858) $ 186 5.23 hrs. (3,135) 8.33 hrs. (5,000) 0.14 hr. (81) Simulation results summary 900 players, up to 5,000 spins each, 6 sec./play Win Limits - New Horizons 15
  14. 14. $100 loss limit simulation • If everyone adheres, only 7% of players leave casino as winner • Average loss using this strategy is $76 Win Limits - New Horizons 16
  15. 15. Simulation # Winners (% Chance of Winning) Average $ Result Minimum $ Result Maximum $ Result Average Time Played (# Plays a) Maximum Time Played (# Plays a) Minimum Time Played (# Plays a) 1 No win or loss limits (5,000 spins; 8.33 hrs. of play) 159 (17.6%) $ (251) $ (843) $ 419 8.33 hrs. (5,000) 8.33 hrs. (5,000) 8.33 hrs. (5,000) 2 Time limit of 1 hr. (6 sec./play) 315 (35.0%) $ (30) $ (220) $ 233 1.0 hr. (600) 1.0 hr. (600) 1.0 hr. (600) 3 $100 loss limit 66 (7.3%) $ (76) $ (100) $ 382 2.38 hrs. (1,429) 8.33 hrs. (5,000) 0.25 hr. (147) 4 $100 loss limit; $100 win limit 275 (30.6%) $ (35) $ (100) $ 162 1.13 hrs. (677) 4.33 hrs. (2,595) 0.13 hr. (78) 5 $100 loss limit; $100 win “down” 286 (31.8%) $ (35) $ (100) $666 1.22 hrs. (730) 8.33 hrs. (5,000) 0.07 hr. (41) 6 $100 loss limit; $200 win limit 135 (15.0%) $ (53) $ (100) $ 254 1.81 hrs. (1,084) 7.46 hrs. (4,478) 0.26 hr. (156) 7 $100 win limit 435 (48.3%) $ (153) $ (858) $ 186 5.23 hrs. (3,135) 8.33 hrs. (5,000) 0.14 hr. (81) Simulation results summary 900 players, up to 5,000 spins each, 6 sec./play Win Limits - New Horizons 17
  16. 16. $100 loss, $100 win limit simulation • If everyone adheres, 30% of players leave casino as winner – 4x as many as with loss limit alone • Average loss using this strategy is $35 – ½ as much as with loss limit alone Win Limits - New Horizons 18
  17. 17. Simulation # Winners (% Chance of Winning) Average $ Result Minimum $ Result Maximum $ Result Average Time Played (# Plays a) Maximum Time Played (# Plays a) Minimum Time Played (# Plays a) 1 No win or loss limits (5,000 spins; 8.33 hrs. of play) 159 (17.6%) $ (251) $ (843) $ 419 8.33 hrs. (5,000) 8.33 hrs. (5,000) 8.33 hrs. (5,000) 2 Time limit of 1 hr. (6 sec./play) 315 (35.0%) $ (30) $ (220) $ 233 1.0 hr. (600) 1.0 hr. (600) 1.0 hr. (600) 3 $100 loss limit 66 (7.3%) $ (76) $ (100) $ 382 2.38 hrs. (1,429) 8.33 hrs. (5,000) 0.25 hr. (147) 4 $100 loss limit; $100 win limit 275 (30.6%) $ (35) $ (100) $ 162 1.13 hrs. (677) 4.33 hrs. (2,595) 0.13 hr. (78) 5 $100 loss limit; $100 win “down” 286 (31.8%) $ (35) $ (100) $666 1.22 hrs. (730) 8.33 hrs. (5,000) 0.07 hr. (41) 6 $100 loss limit; $200 win limit 135 (15.0%) $ (53) $ (100) $ 254 1.81 hrs. (1,084) 7.46 hrs. (4,478) 0.26 hr. (156) 7 $100 win limit 435 (48.3%) $ (153) $ (858) $ 186 5.23 hrs. (3,135) 8.33 hrs. (5,000) 0.14 hr. (81) Simulation results summary 900 players, up to 5,000 spins each, 6 sec./play Win Limits - New Horizons 19
  18. 18. $100 win limit simulation • If everyone adheres, almost 50% of players leave casino as winner – 7x as many as with loss limit alone • However, average loss using this strategy is $153 – 2x as much as with loss limit alone • Maximum loss is greatest of any, $850 Win Limits - New Horizons 20
  19. 19. Cumulative distribution functions (CDFs) for different betting rules 0% 20% 40% 60% 80% 100% -$1,200 -$1,100 -$1,000 -$900 -$800 -$700 -$600 -$500 -$400 -$300 -$200 -$100 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 Cumulative%ofPlayers(withthatresultorless) Player's Monetary Result 5000 spins 1 hr time $100 loss $100 loss, $100 win $100 win Vertical distance between 100% line and curve is the probability a player has a better monetary result than the amount indicated on the horizontal axis (greater distance is better) Vertical distance (height under curve) is probability a player has that monetary result or less (lower height is better) Win Limits - New Horizons 21
  20. 20. Massachusetts gamblers’ survey • Nelson et al. (2013) summarize results from a 2012 survey of Bay State residents – Currently working with group on analyzing survey data • 273 of 511 respondents were past-year gamblers – These respondents were asked about their bet- limiting behavior, etc. Win Limits - New Horizons 22
  21. 21. Who sets betting limits? • 83% usually set a loss limit – 80% of those adhere or never reach limit • 25% usually set a win limit – 60% of those adhere or never reach limit Win Limits - New Horizons 23
  22. 22. Survey question categories • Demographics (sex, race, age, marital status, education employment, household size & income) • Leisure activities enjoyed over last 12 months • Types/amount of advertising seen for gambling • Gambling attitudes and beliefs • Gambling frequency, types of gambling, past year • Wager size, loss size over past year • Where you’ve gambled during past year • DSM disordered gambling criteria • Betting limit setting, adherence • When you started gambling, have you sought help, etc. • Familiarity with help for gambling problems • Drinking habits, drug use, other psychological problems • Saving for retirement, non-retirement savings Win Limits - New Horizons 24
  23. 23. Data, model • 247 survey respondents gambled in past 12 months – 264 of 511 did not, and are excluded – Lottery-only players also excluded • First looked at correlations between variables • Four logistic regression models – Set, win/loss – Adhere, win/loss • Preliminary results are shown – Adherence seems to be most interesting Win Limits - New Horizons 25
  24. 24. Set loss limit? • Females 2.2 x more likely to set loss limit, when controlling for other variables (e.g., age, household income, max. time spent gambling, etc.) Win Limits - New Horizons 26
  25. 25. Adhere to loss limit? • Individuals reporting income of $50-100K are 70% less likely to adhere to loss limits than those reporting higher income (i.e., >$100K) • People who don’t go to the ATM while gambling are 11 x more likely to adhere to loss limits Win Limits - New Horizons 27
  26. 26. Set win limits? • Females 90% more likely to set win limits • For each year older when first bet placed, 5% more likely to set win limit • Individuals reporting income of $20-50K are 2.4 x more likely to set win limit than highest income category (i.e., >$100K) Win Limits - New Horizons 28
  27. 27. Adhere to win limits? • Greater beliefs about “luck” in gambling positively related to adherence to win limits – One-unit increase on this subscale, 17% more likely to adhere (p=0.064) • Greater self-reported gambling problems negatively related to adherence to win limits – One-unit increase on DSM criterion, then 70% less likely to adhere Win Limits - New Horizons 29
  28. 28. Omitted variables • Drinking and drug use omitted – comorbidity rate >70% with disordered gambling • Anxiety and depression questions (4) omitted – Some potential overlap with DSM criteria Win Limits - New Horizons 30
  29. 29. Behavioral economics • “House money” effect – Difficult to adhere to win limits – Chasing losses • Prospect theory – Impact of loss > impact of symmetric win • Betting limits and breaks in play – Mental accounting – “Decision exercise” Win Limits - New Horizons 31
  30. 30. Future research • Finish research using Mass. survey data • Experimental/lab research is needed – Real players • Adherence to limits? – Real betting rules – Variable bets – Various slot machines types Win Limits - New Horizons 32
  31. 31. Contact Information Doug Walker Professor of Economics College of Charleston 66 George Street Charleston, SC 29424 WalkerD@cofc.edu WalkerD.people.cofc.edu +1 (843) 953-8192 Papers on Win Limits simulation Walker, Litvin, Sobel, & St-Pierre (2015) Setting win limits: An alternative approach to “responsible gambling”? Journal of Gambling Studies 31(3): 965-986. Stopping when you’re ahead: Win limits and responsible gambling, Responsible Gambling Review 1(2): 1-9. Survey data Nelson, Kleschinsky, LaPLante, Gray, Shaffer (2013) A benchmark study for monitoring exposure to new gambling opportunities: Final report scientific content. Cambridge, MA: Division on Addiction.
  32. 32. 1. Open New Horizons app 2. Select the Agenda button 3. Select This Session 4. Select Take Survey at the bottom To provide session feedback: If you are unable to download the app, please raise your hand for a paper version. If you are unable to download the app, please see one of our conference hosts located just outside the room.

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