This is a report from a serious study of online gambling. It sheds light on the strategies these games use to trick players.

 

It was conducted by Dr. Robert Ladouceur, the director of Centre québécois d’excellence pour la prévention et le traitement du jeu and author of a number of articles and works on excessive gambling.

 

“Internet gambling: misleading payout rates during the ‘demo’ period.” ¹

Since online gambling is not regulated internationally, it was thought that some gaming sites may take advantage of this lack of legislation to use questionable strategies in order to attract users. One of these strategies may be to use inflated payout rates during the demo or practice phase.

 

The “payout rate” is the amount of money won divided by the amount bet, multiplied by 100. To make a profit, casinos must use a payout rate below 100%. Obviously, no site can offer more than 100%, since it would lose money. Using inflated payout rates in demo mode can be a reinforcement strategy to convince potential players to start playing for real money.

 

Monetary reinforcements keep gamblers playing longer (Dickerson, Hinchy, England, Fabre & Cunningham, 1992; Ladouceur & Dubé, 1997). When players receive reinforcements (winnings), they tend to want to repeat the behaviour that brought them their winnings. Likewise, players who have misconceptions about gambling, such as the belief that they can control chance or the results of the game, tend to continue gambling (Blaszczynski, 2000; Ladouceur, Sylvain, Boutin & Doucet, 2002; Ladouceur & Walker, 1998; Milton, 2001; Toneatto, Blitz-Miller, Calderwook, Dragonetti & Tsanos, 1997).

 

When they log on to online gambling sites, visitors are offered the opportunity to try out the game for fun before playing for real money. Many gambling sites claim that their demo mode is the same as for real betting. However, there had been no research to determine whether the payout rate in demo mode truly reflected the programmed rate for real betting.

The purpose of the study was to verify whether slot machine websites inflated their payout rates in demo sessions. We also wanted to determine whether the payout rates were similar for users playing for fun (demo period) and those betting real money. The study was divided into two phases. Each bet was recorded, and the payout rate was calculated after 100 and 500 bets.

The results of phase 1 reveal that 45 sites (39%) used a payout rate over 100% for the 100 rounds in demo mode, which means the player makes a profit. Of these 45 sites, 21 maintained this profit rate for the full 500 demo games played. What happened when the players started betting real money?

 

In phase 2, five sites were randomly selected from among those using a rate over 100% in phase 1 (calculated at 100 and 500 rounds). To be selected, a site had to offer the same games in phase 2 as those investigated in demo mode in phase 1.

 

A descriptive analysis shows that for 4 of the 5 sites selected, the payout rate was below 100% during real gambling sessions. In all, we lost money on 4 sites and broke even on the 5th. In short, none of the sites visited used a payout rate high enough for players to make the same profits they made in demo mode.

 

Although real gambling was not profitable on the sites visited, it could be argued that the payout rates in phase 1 were due to chance. The researchers therefore returned to the 5 sites to verify whether the payout rates would again be inflated in demo mode. They all were. Can luck be on the player’s side only when playing for fun?

Some sites offer free credits when players create an account to play with real money. However, special rules apply to these credits. Under one rule, the sites only pay out the winnings after playing a minimum number of games or betting a minimum amount of money with the credits received.

 

Suppose a player puts $80 into an account and receives $50 in free credit. The account now has a balance of $130 that the user can bet. Interestingly, if the player loses $45, the site considers this loss the player’s own money ($45 of the $80) and will only allow a $35 cashout. But if the player wins $45 instead of losing it, the site will not pay out, claiming that the winnings were made with the $50 in free credit (not the user’s $80), and the user hasn’t played enough rounds to claim the winnings.

 

In addition, sites send a number of messages aimed at fostering misconceptions. For example, some sites emphasized the positive results achieved during demo rounds and encouraged players to use their skills in real betting (“Challenge your skill with real money”). A number of sites used popup windows to send messages prompting users to play for real money. We received thousands of emails during and after the experiment, often fostering misconceptions or the illusion of control: “Practice really does make perfect,” “You are one of our smartest fun players,” and “Based on your playing skills...”

This study demonstrated that some website operators used inflated payout rates in demo mode and false information to attract people to their sites. Inflated rates can affect people’s thinking, since they suggest that users who win in demo mode may also win real money. This type of reinforcement may encourage some players to try their luck with real betting, causing them to lose money.

 

What’s more, some operators don’t hesitate to encourage false impressions about gambling, likely in hopes that their messages will encourage players to visit their sites. Since gamblers’ beliefs are directly linked to their persistence in gambling (Blaszczynski, 2000; Ladouceur, Sylvain, Boutin, & Doucet, 2002; Ladouceur & Walker, 1998; Toneatto, Blitz-Miller, Calderwook, Dragonetti & Tsanos, 1997), it is highly likely that those who believe in these ads will lose when they play for real money.

 

To gamble responsibly, people must be aware of the dangers of online gambling, since it can put them at risk of gambling problems (Blaszczynski, Ladouceur & Shaffer, 2004). This is especially important for youth, since they are constantly enticed with direct links to gaming sites as they browse the Internet or play online games. Griffiths and Parke (2002) studied the possible negative impacts of online gambling.

 

Even if players don’t develop gambling problems, they will probably lose money if they don’t resist the temptation that certain website operators present. And even if they win small amounts of money, there’s no guarantee the site will pay out.

 

One solution to prevent people from losing large sums of money would be to ask the banks and companies that issue credit cards to help by refusing to provide credit to customers who exceed certain limits on the Internet. Would that be interference or prevention?