Did you know that Australians spend the most money per capita on gambling? It’s true that Australians are some of the biggest spenders when it comes to their favourite pastime. But here’s the twist: They’re also the biggest losers per capita when it comes to gambling, with average annual gambling loss per person being $1635 (more than twice the US average!). Gambling has been allowed to run rampant in Australia causing the broader community to bear the brunt of the cost. This continued ignorance, has further led to evolution of the gambling industry from what was just a few slot machines, into a multimillionaire juggernaut. With this new evolution came both optimising of digital and land-based gambling which each entice consumers into gambling in similar and different ways. Furthermore, there is also the issue of gambling operators which capitalise on behavioural economic concepts such as heuristics to motivate players to continue playing and depositing cash creating implications for addiction and problem gamblers. Finally, from these problem gamblers, what can we say about the countrywide economic and social impacts and their long term implications?
How Do Gambling Companies Draw in Consumers?
You might wonder, how do gambling companies lure Australian consumers into engaging in gambling? One method is through ease of access. In Australia, moreso than other countries both physical and digital types of gambling have refined their product to make it irresistible to the average Australian consumer.
Digital Gambling
Digital gambling, one source claims as more risky to the average Australian than land-based gambling. Let’s consider why that is through sports betting as an example. Many companies such as Ladbrokes and Sportsbet have digitalized their services such that the average consumer need only make an account and download their app to gain access to 1000s of betting markets. Take into account that these apps are available to over 19.9 million Australians who own a smartphone and there are clear implications for a massive proportion for the population.
Another way that they’re influencing the minds of consumers is through persistent advertising. One study notes that the sports betting industry has collectively spent 287.2 million dollars on advertising in Australia. These ads are often humorous and even feature celebrities to make sports betting seem like a fun social activity.
But that doesn’t change the fact that these ads are near unavoidable to anyone who uses social media. In fact, around ¾ of Australian adults reported seeing or hearing sports and or betting advertising at least once a week in the past 12 months. The Australian Institute of Family Studies notes that these same Australians were much more likely to have spent money on gambling and on sports racing compared to those who were exposed to advertisements less than weekly.
Land-based Gambling
Physical forms of gambling also use ease of access to influence the average Australian. One example is, the availability of slot machines (colloquially known as ‘pokies’). Whilst in most other countries, slot machines are exclusively restricted to casinos, they can be found everywhere in Australia. The fact that pokies can be seen in bars, clubs and hotels across the entire country (except Western Australia) where they are only available in casinos), speaks volumes for how most Australians can become enticed into physical gambling and be further at risk of addiction.
One can also consider the implication that the widespread accessibility of slot machines throughout the country can accelerate the normalization of hitting the slots as a part of Australian culture. One study studied the factors of normalization of gambling on young women. Participants attributed widespread availability to the increasing normalization of gambling at the pokies among other forms of gambling. As the use of poker machines and gambling in general become more normalized, so will the incentive increase for non-gamblers to try their luck, in an attempt to conform.
Gambling Addiction and Behavioural Economics
Why do gambling addicts irrationally continue to gamble past their means? The most obvious answer as to how gambling becomes addictive is it stimulates the brain’s reward system, releasing dopamine and causing the person to feel good, similar to other addictive activities. Addiction can arise from continually chasing that high of dopamine rush, which in this case, is done by continually sinking more and more money until a win is reached.
How gambling operators hijack the decision making of individuals to continually chasing of that high, can be seen through how it influences their heuristics. Heuristics is a behavioural economic concept which describes shortcuts that consumers take to simplify decisions when the situation becomes uncertain.
One study notes that the ‘illusion of control’ heuristic is a factor in gambling addiction. Bias that players resort to is that they have an enhanced belief in their ability to get the jackpot/win, or stop playing to save their losses, relating to biases such as overconfidence. Perhaps, the most famous example of this concept comes from the stopper buttons found on many slot machines which seemingly stop the spins early, but in fact do not change the outcome at all. This false sense of control can deceive consumers into believing that they would have a higher chance of winning and thus, motivates them to continue playing.
Slot machine stopper buttons example, Source: Alamy
Another factor fuelling gambling addiction is the ‘mental accounting’ heuristic. This refers to when people perceive money differently depending on factors such as origin form or intended use. How gambling operators take advantage of this is by making the ‘pain of paying’ significantly ‘less painful’. Gambling companies which have digital platforms are notorious for this. For example, Sportsbet launching the Cash Card, allowing instant fund transfers for gambling. This can amplify the risk for online users with gambling problems as evidence suggests that they commonly report using electronic funds to transact increases their gambling expenditure more than cash transactions.
Broader Economic and Social Impacts in Australia
The overall impacts of gambling industry can be dependent on the context, but are overall negative. It had produced 17 billion AUD in 2020 and 420 million AUD in 2022 contributing positively to consumption spending and government tax revenue, the negative social and economic effects overshadow this.
The economic effects can come from the gambling industry’s effects on vulnerable households. One recent study investigated the effects of sports betting on vulnerable households’ investments, spending and debt management decisions, and concluded that sports betting significantly reduced savings allocations, increased credit card debt, and increased overdraft frequency. This within an Australian context, where sports bettors lost $6billion in 2021-2022 and a third of the gambling population spent money on sports bets in the last 12 months could suggest long term impacts for household savings, interest rates, and productivity.
The social effects are represented by major public health concerns from problem gamblers and their impacts on various interest groups. Let’s consider families as an example. Whilst, problem gambling can harm the parents themselves through intimate partner violence, PTSD, and depression, there can also be an effect on the children. Another study investigated the amount of children at-risk of being exposed to parental gambling in Australia, concluding that 4% of all Australian families including almost 200’000 children are exposed to serious gambling harm. With potential for the normalization to further accelerate in Australian culture can suggest negative implications for youth development in a society where gambling is becoming more widespread.
Conclusion
In closing, the gambling industry influences consumer psychology in various ways, enticing individuals to engage in gambling. Key factors include the widespread availability of digital betting markets and slot machines, extensive advertising campaigns, and the growing normalization of gambling as a part of Australian culture. Moreover, by leveraging the behavioural economic concepts of the ‘illusion of control’ and ‘mental accounting’ heuristic, gambling operators effectively tap into the brain’s reward systems of both high-risk and low-risk gamblers, leading to increased engagement for longer periods of time and increased risk. Additionally, the undeniably negative economic and social effects present complex issues with long-term implications. This prompts the question: Can government policy effectively regulate this industry to serve the interests of both social and economic stakeholders?
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