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

2. 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

3. “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

4. Win Limits - New Horizons 4

5. “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

6. 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

8. 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

9. 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

10. Probability distribution, roulette
(house advantage 5.26%)
Source: Hannum & Cabot (2005, p. 22)
Win Limits - New Horizons 10

11. Players’ loss and win limits
Win Limits - New Horizons 11
loss
limit
win
limit
-5%

12. 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

13. 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

14. 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

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 15

16. $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

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 17

18. $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

19. 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

20. $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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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.

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