Gambling and Gaming

The increasing convergence of the gambling and gaming industries has raised questions about the extent to which social casino gameplay may influence gambling.

This study aimed to examine the relationship between social casino gaming and gambling through an online survey of 521 adults who played social casino games in the previous 12 months. Most social casino game users (71.2%) reported that these games had no impact on how much they gambled.

However, 9.6% reported that their gambling overall had increased and 19.4% reported that they had gambled for money as a direct result of these games. Gambling as a direct result of social casino games was more common among males, younger users, those with higher levels of problem gambling severity and more involved social casino game users in terms of gameplay frequency and in-game payments.

The most commonly reported reason for gambling as a result of playing social casino games was to win real money. As social casino games increased gambling for some users, this suggests that simulated gambling may influence actual gambling expenditure particularly amongst those already vulnerable to or affected by gambling problems.

Social network gaming, which refers to playing games that are connected to social networking services (SNS) directly, or through mobile applications (apps), is a popular online activity. Social network games (SNG) are generally free-to-play and do not award monetary prizes, but users can make in-game purchases to advance within the game, customize the game, give gifts to friends, and access other exclusive benefits and features, leading to these games being referred to as ‘freemium’.

Although SNG are connected to an SNS and encourage users to interact with their connections, most SNG can be played without any social interaction. SNG has grown rapidly in popularity and the global SNG market is predicted to grow annually at 16% from 2013-2019 to reach a total market value of US$17.4 billion (Transparency Market Research, 2015).

A survey of Facebook users in Australia in November 2012 reported that there are over 3.5 million social gamers across Australia and almost 70% play SNG daily (Spiral Media, 2013), and it is highly likely that the use of SNG has increased since this time. One of the most popular and profitable SNG genres is games that simulate casino or other gambling (or betting) activities. Such games are referred to as social casino games.

These games generally appear to replicate the basic structural design of gambling activities (i.e., betting mechanics, chance-determined outcomes), but are free to play and the prizes awarded are generally virtual currency that has no value outside of the game.

Thus, while they resemble gambling activities, they are not legally classified or regulated according this category. Gambling and gaming market convergence The proportion of SNG users who become paying customers is generally small, with estimates suggesting that only 2.3% of all users made in-app purchases with real money.

Despite the small proportion of paying users, the massive number of users means that the global social casino market generated an estimated US$2.8 billion in revenue in 2014, a 37% increase from 2013 and revenue was expected to reach US$3.4 billion in 2015.

Not surprisingly, the high profitability of the social casino market has attracted international interest, most notably from gambling operators who have, through partnerships, mergers, and acquisitions, now become the dominant players in the social casino market.

For example, Playtika, owned by Caesars Interactive Entertainment, a subsidiary of Caesars Entertainment Corporation, the world’s largest gambling company, was estimated to account for 22% of the entire social casino game market, whereas DoubleDown Casino, owned by gaming machine manufacturer IGT, accounted for 11%.

An increasing number of land-based gambling venues are also now offering social casino games, often linked with player loyalty programs, for marketing and customer engagement purposes.

However, despite apparent convergence between the gaming and gambling markets, several online gambling operators that have established online gambling on social casino games or directly on SNS have ceased these operations. The lack of success of these online gambling operations may indicate that the cross-over between the gambling and gaming markets does not necessarily translate to being able to ‘migrate’ social casino game users to a gambling product.

To date, little research has examined the convergence between gambling and gaming, although early evidence provides some grounds to justify more detailed investigations.

For example, correlational studies show that young people who play gambling-themed games, including social casino games, are more likely to also engage in gambling and experience gambling problems. A study of 2,010 Australian adult gamblers found that 13% also played social casino games, and these were more likely to be younger respondents, males and Australian born.

They were also more likely to gamble online and be involved in all forms of gambling assessed, as well as smoke daily, use illicit drugs, experience gambling problems and have higher psychological distress.

A survey of US social casino game users found that over one-third (36%) of participants visited a land-based casino more than twice a year, and two-thirds (68%) were interested in gambling on their favorite social casino game.

Similarly, a survey of online gamblers found that more frequent participation in social casino games was associated with greater gambling involvement. These results suggest some cross-over between the social casino game and gambling markets.

In one longitudinal study, 409 US social casino gamers who had never gambled online were surveyed at two time-points.

About one-quarter of the sample of social casino gamers reported having migrated to online gambling over the six-month period and making microtransactions (payments) was the only unique statistical predictor of migration from social casino gaming to online gambling.

Theoretical links between gambling and gaming

The increasing convergence of the gambling and gaming industries has raised some concerns about whether social casino games might pose risks to certain groups in the community. One of the theorized consequences of gambling-themed games is the normalization of gambling behaviors.

If people play social casino games they may be more likely to view gambling as an acceptable everyday activity and develop favorable attitudes to gambling, transferred from their positive experiences with the games. One hypothesis is that social casino games may represent a gateway product that could precede gambling.

At present, however, evidence in support of migration from social casino games to gambling remains very limited. The notion of migration is complex and could involve transfers from social casino gaming to gambling activities while still remaining with the same operator, or it could refer to transfers to other available gambling activities.

This may include users who have not previously gambled, as well as existing gamblers for whom the games triggered engagement in discrete or ongoing gambling sessions. In this way, the term migration connotes the possibility that users may engage in social casino games, while also expanding their online activities to include gambling.

Apart from their shared commercial connections, another reason why social casino game users may migrate to gambling is that the activities have many characteristics in common, particularly in relation to structural design. However, unlike gambling products, social casino games may not involve randomly determined outcomes and there is no transparency about how outcomes are determined.

Conceivably, it is possible for social casino games to use algorithms that produce different outcomes in response to user behaviors to encourage continued play and in-game purchases.

Without the same regulatory oversight of game mechanics as in gambling, it is possible that social casino games may encourage misplaced confidence in users that they will be successful at gambling if they perceive the two experiences as highly similar.

Engaging in SNG may also encourage financial risk-taking, based on research that shows that online environments produce greater disinhibition and risk-taking and the establishment of online social interactions that might encourage financial risk-taking to appear courageous and skillful compared to other users.

It is possible that individuals who play social casino games are already interested in gambling. Given a demonstrated interest in gambling themes, social casino game users may be targeted with advertisements and promotional offers from gambling sites or directly encouraged to migrate to a gambling site based on their use of social casino games.

These issues were examined in a qualitative study with social casino gamers. Some participants reported that playing social casino games may lead to gambling because the similarity between the two activities may encourage user familiarity and transition in the hope of winning prizes of value. Other participants reported clearly understanding the differences between social casino games and gambling, and that if they were going to play games for money, they may as well gamble.

For some users with gambling problems, social casino games acted as a trigger and exacerbated gambling, and at least one participant attributed their gambling and associated problems to earlier social casino gaming experiences. Thus, a variety of effects may occur but limited research has quantified them or determined any differential effects on sub-populations.

The aim of this paper was to examine the relationship between social casino gaming and gambling. Australian adults have access to Internet gaming and gambling in multiple forms, including online gambling and were chosen as an appropriate population to examine the impact of social casino games on gambling.

The principal research question was whether social casino games influenced users directly to gamble or whether social casino games increase gambling (Rq1), and to investigate the demographic and playing patterns that characterized these affected social casino game users (Rq2). We hypothesized that, for the majority of users, social casino games would have little to no impact on their gambling, but that for a subset of users social casino games would lead to increase gambling and some users would gamble as a direct result of these games (Hp1).

A second hypothesis was that migration to or increased gambling as a result of social casino games would be motivated by a desire to make money and a belief that their experience with social casino games had increased their likelihood of winning when gambling (Hp2).

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