Marketing managers and responsible gaming managers have the same ultimate goal

Player protection has typically been viewed as a compliance activity by online operators. This was re-affirmed to me following a recent discussion I had on the benefits of player behaviour tracking with a marketing manager. A summary of our conversation will be familiar to many in the industry;

• The use of behaviour tracking technology is primarily used for detecting VIP players (such as grinders at poker) in order to quickly identify them and retain them before they slip away 
• Acquisition costs are high and these types of players are difficult to get
• A relatively small percentage of players deliver the largest share of revenues
• Therefore focusing on VIPs is not an unreasonable strategy 

But what about the vast majority of players that do not fall into this VIP category? Are operators realising as much value from these relationships as they could be? If the answer is no then could responsible gaming and player protection be better leveraged to manage the customer lifecycle? And what if the the marketing and responsible gaming managers were measured using similar KPIs (key performance indicators)?

Marketing 101 text books will teach you the importance of STP; segmentation, targeting and positioning. If executed well STP can move an organisation from differentiation to customisation, the holy grail of marketing. But this is very hard to get right. Take an industry that has been here for a long time such as financial services. To do this well the organisation must be able to collect customer data from all channels, monitor significant triggers in a customer’s life (e.g. change of job, significant credit), track key events and react accordingly (mortgage expiry), offer logical selections (such as savings v. competitors) and undertake propensity modelling based on key variables (such as credit company risk profiling). Whilst the best organisations can do this and do put more emphasis on maintaining the most profitable customer relationships they also put serious effort into making all customer relationships profitable and sustainable if possible.

 Applying these principles to online customer relationships could help convert some of the short-term player relationships to more sustainable relationships. How? For example, if one of your newly acquired non-VIP players was demonstrating early signs of problem gambling behaviour would it make more sense to send an undifferentiated marketing offer to this player or to send more personalised and meaningful tips on their game play and how they could keep it fun? In other words would you rather keep this type of player for a month or as an active player for 12+ months?

With this in mind why shouldn’t the responsible gaming manager also be measured and rewarded on player retention rates as well as their other responsibilities? And why shouldn’t the marketing manager be encouraged to design a sales campaign for a new regulated market that emphasises innovative player education features? Marketing is about meeting customer needs (and not primarily advertising) and responsible gaming should focus on all aspects of the customer lifecycle (and not solely compliance). Whilst marketing and responsible gaming managers' have different management responsibilities they ultimately have the same goal – building sustainable customer relationships.

‘The Hidden Addiction’ - National Problem Gambling Clinic 1st Annual Conference, London

Yesterday I attended the National Problem Gambling Clinic’s first annual conference at the Royal Society of Medicine in London and I wanted to share some highlights from the day.  The clinic is headed by Dr. Henrietta Bowden-Jones and provides treatment services for people with gambling disorders in the UK. 

Mark Griffiths, a professor in gambling studies at Nottingham Trent University, was the first speaker and talked predominantly about the impact of technology on the gambling industry and the opportunities and threats that this poses.  Mark shared with us his predictions on the trends he believes are going to shape gambling in the future, such as an emphasis on location-based marketing, greater use of behavioural tracking of player data and the growth of the in-play mobile market.

Professor Jim Orford from Birmingham University (recently awarded the Jellinek award for his academic contributions to addictions) talked about some of the key themes from his new book called ‘An Unsafe Bet’ and the dangers that gambling poses to public health.  The key takeaways from this talk were that over the years there has been an extraordinary increase in the gambling within society and that this causes concerns given gambling is dangerous and addictive.  He also argued that the public’s resistance to gambling is being eroded and that government and society are compliant in supporting industry interests in making gambling more socially acceptable, with one explanation being ‘Adaptation Theory’, which stipulates that an increased prevalence in gambling is coupled with society developing an ‘immunity to gambling’.  He shared an interesting statistic from the Australian Gambling Productivity Commission Report; "40% of gambling was problem gambling", which generated some debate.  A very frank and thought-provoking (and arguably controversial) talk indeed.

Back in June I wrote a short blog about a fascinating article in the Economist about the joys and perils of a near miss and I was delighted to have the opportunity to meet and listen to one of the key figures behind the research, Dr. Luke Clark from Cambridge University.   Amongst other findings from his research, Luke shared some very interesting brain imaging data looking at how the brain responds to near misses.  I would advise those interested in reading more about Luke’s research to read the original Economist article I referenced earlier in the year.  

Other speakers also included Dr. Neil Smith, principal psychologist at the clinic who discussed research into three approaches to cognitive-behavioural therapy undertaken by Robert Ladouceur, Nancy Petry and Tian Oeiand.  Also, Professor Wim van den Brink from the Amsterdam Institute for Addiction Research shared insights from his research into addictions, discussing how genes and heritability, risk factors and social and environmental factors all play significant roles in determining addictions.  Henrietta wrapped-up with a presentation outlining research on what is known about social issues and pathological gambling, specifically discussing homelessness, physical health, crime and domestic violence.  Henrietta also paid tribute to Malcolm Bruce (Head of Sustainable Gambling at Betfair) who was instrumental in helping to arrange the funding for the clinic when he worked at the Responsible Gambling Fund before joining Betfair. 

A final note to two ex-gamblers who have received treatment at the clinic and who shared their experiences with the conference.  Nothing quite brings home the negative consequences of problem gambling as hearing first-hand the pain it can cause to people and their friends and families.  So a great conference which focused  on interesting themes and exciting research – I look forward to next year!

Using Complexity Theory to Help Navigate the Future of iGaming Regulation

The online gaming industry regulatory debate has received significant media attention recently following the German court ruling between bwin and Westlotto, with bwin CEO Norbet Teufelberger calling for “modern regulations for online gaming” to ensure “suitable standards of gambler protection”. From a player protection perspective much debate has centred around whether more open regulated markets offer players greater protection compared with either monopolistic or unregulated markets.

But what exactly are “modern regulations” and how can they be applied to the online gaming industry to ensure players are suitably protected? Because of the increasingly complex operating and regulatory environment in online gaming answering this question is not straightforward. I attempt to frame an approach as to how the industry can best embrace “modern regulations” to protect players using the concept of Complexity Theory, which has been used to help large organisations, which are inherently complex, to produce effective results from complex interactions.

Today’s regulated markets (highlighted in green in the diagram below) offer a range of player protection requirements, approaches and codes of conducts developed either by regulators or by industry bodies (e.g. eCOGRA). Such codes of conduct have broad agreement across the industry and are relatively easily implementable and enforceable. These are necessary, and even strict regulations, as long as they are aligned to player needs, should be encouraged. Debate continues regarding the justification of monopolies on the grounds of player protection, with accusations from the commercial operators that this is being used a political weapon to justify the maintenance of state monopolies (a debate that I won’t get into in this blog). Either way, whilst necessary, key draw-backs of today’s regulated markets are i) regulations remain static for too long, ii) whilst responsible gaming standards can be met on paper, the players’ experience can differ widely, and iii) international operators are having to provide different levels of player protection due to a player’s nationality because of differing national requirements.

At the other end of the complexity theory paradigm is where I place the current unregulated markets (highlighted in red). Whilst some argue over-regulation can lead to less sustainable practices in that regulations can create the opposite of the intended outcome as organisations look to find ways around the rules (e.g. banking), the vast majority of regulators, academics and operators believe that leaving player protection in the sole hands of market forces is wrong. I agree.

So where does this leave us? Well, how about complexity, ambiguity, uncertainty and turbulence? Without doubt there is no ‘silver bullet’ approach as to how to address the limitations of today’s current regulated markets. It’s also quite clear that nobody really knows where we are heading as change is constant and unpredictable and technological innovation is explosive and on a steep gradient. However, at the heart of this chaos, complexity and uncertainty lies an enormous opportunity to build more safe, informative and fun experiences for online gamblers. Grasping this opportunity however requires vigorous debate, innovation, research, experimentation and collaboration (this is highlighted in blue). Whilst we won’t always be right first time, we will be heading in the right direction. And we are now seeing evidence of the industry increasingly taking the lead in this space.

“Modern regulations to suitably protect players” in online gambling therefore requires not just an adaptation of existing regulations, but a new approach that in parallel encourages industry self-regulation, collaboration and innovation. It’s not a straightforward answer but it’s not a straightforward problem to solve. Despite the challenges, I’m encouraged to see continuing innovation within the industry and believe we will find the right direction, as in the words of Dimitri Kondratiev, the economist, “progress is an irreversible trend”.

The Forces Shaping the Online Gambling Industry

Whilst the online gambling industry has witnessed tremendous growth in the past 10 years it remains a very young industry, currently capturing c.6% of the gambling industry’s total gross gambling yield of c.$336bn (Barclays Capital). As the industry continues to grow and mature, an increasingly complex operating environment is presenting both challenges and opportunities to operators. This blog entry seeks to examine the key forces that are shaping the online gambling industry today.

Regulation

The regulation of online gaming markets is opening up opportunities for legalised online gambling in European markets, which is primarily being driven by the need for governments to effectively manage the taxation of the online industry. The regulatory map in Europe remains complex and in flux following a series of European Court of Justice rulings during the past 2 years. The spectrum of regulation across Europe is wide, ranging from online gambling being banned, such as in Germany, to liberal regulatory regimes like in the UK. In between are countries that have regulated online gambling with varying licensing and taxation regimes.  Whilst growth of the online market in Europe will continue with the further opening of markets, online gambling in all forms remain illegal in the USA.  Despite opposition to legalising online gambling in the US, it is expected that the trend towards regulation will continue over the next 2 years.  Whilst a more uniform regulatory playing field in Europe remains at least 5 years off, Michel Barnier’s Green Paper on European online gambling is due to be published at the end of this year and is being eagerly awaited by the industry.

Technology

At the 2010 EIG product development was highlighted by Mark Blandford (Sportingbet founder and Valhalla Investments) as more important than marketing as players demand richer, more varied and more mobile gaming experience. Advances in technology is allowing game developers to take 3D gaming to new levels, and this trend of enriching the user experience will spread to the online gambling sector. The number of mobile broadband subscribers is rapidly increasing i.e. there were 257m subscribers in 2009, which is predicted to expand to 2.5bn by 2014. Operators are also investing heavily in developing advanced analytics solutions to better understand customer behaviours to make marketing campaigns more targeted and meaningful. Whilst there has been a large focus on customer acquisition in the past 5 years, operators are now focused on reducing player churn during key phases of the customer lifecycle. No one operator will be able to develop market-leading technology capabilities across all these areas in isolation therefore best-practice collaborations with specialists will be required to remain competitive. Potential new competitors are emerging as social media technology platforms mature and attract more users and gamers, with the distinction between legalised gambling and gaming with virtual currencies becoming increasingly blurred.

Consolidation and Convergence

The industry is now entering a phase of consolidation as brand, capital and scale become key levers to entering new markets and attracting customers through competitive prizes, odds and gaming variety and experience. The biggest moves in the market in 2010 included PartyGaming and bwin’s merger to create the world’s largest listed online gaming firm and Betfair’s recent flotation on the London Stock Exchange, signs that access to capital and scale will become increasingly important to succeed. Sportingbet and Unibet are also in discussions regarding a £600m tie-up. As well as revenue generating synergies, consolidation will provide vital cost reduction opportunities through economies of scale which will become increasingly important. Sales and marketing costs typically make up between 30-40% of an online operator’s costs and it is likely that retaining these budgets will remain an important weapon in the battle for market share. Further competitive pressures will result from the continuing trend of convergence, with land-based operators looking to leverage their brands and gain market share in the online sector. Convergence within the industry between B2B and B2C will also continue as online operators look to expand their business models and find new revenue sources to augment existing revenues from players.

Corporate Transparency and Trust

Given numerous corporate crises across many industries over the past few years there is an increasing expectation that all corporations should be ‘whiter than white’ and operate in a socially responsible manner. The online gaming industry has in recent years increased its focus on delivering a socially responsible industry for players. The regulators who license operators have responsible gaming codes of conduct in place that operators must adhere to which are both prescriptive (e.g. age verification, self-exclusion) and open to interpretation (e.g. prevention of problem gambling). Whilst it is difficult to predict whether recent economic and corporate failures will result in a permanent change in the corporate attitude towards CSR or tougher regulations, focus from the media and policy makers will continue to grow on industries with perceived reputational issues, such as gambling. The internet also offers an unparalleled level of transparency to customers, whether it’s comparing operators’ odds, prizes or which organisations they are accredited by. Given increasing competition and very low switching costs associated with online gaming, customer loyalty cannot be guaranteed solely by brand awareness marketing and customer inertia. Brand equity will remain incredibly important and nurturing customer loyalty and trust will play a key role in growing an online operator’s brand value.

Can Loss Chasing be explained by Behavioural Economic Theory?

Research by Xuan and Shaffer (2009) from The Division on Addictions (a Harvard teaching affiliate) sheds interesting light on our perceptions of loss chasing in relation to behavioural economic theory. Xuan and Shaffer analysed the play patterns of 226 online bwin gamblers who closed their accounts due to gambling problems. Their findings state that whilst players experienced increased monetary loss and increased their stake size prior to closing their accounts, they did not chase longer odds.

The authors frame their findings in the context of the work in the 1970s by Kahneman, Tversky and Slovic who analysed behavioural concepts and decision making, with Kahneman and Tversky’s paper in 1979, Prospect Theory: An Analysis of Decision under Risk, arguably one of the most important to be published in this field (Kahneman was awarded the Nobel prize for economics for his work in this field).

The group of gamblers in the Xuan and Shaffer study tried to recoup losses by increasing their stake on events with higher probabilities of winning i.e. they become more risk averse and, therefore, they bet more conservatively. However, the players did continue to bet with a greater stake size, albeit with less risky odds. Therefore whilst choosing less risky odds supports the theory of loss aversion, the fact they continued to bet using a different betting pattern perhaps adds less weight to the theory.  So I have an alternative theory that builds on this.

An additional explanation for the gamblers’ behaviours in this study could be the influence of cognitive biases such as regret theory, self-deception, over-confidence, and the sunk cost fallacy, rather than loss aversion. Jacobsen et al’s (2007) analysis of the influence of cognitive biases demonstrated that they play an important role in the development of problem gambling behaviour.  A study by Shefrin and Statman in 1984 that focused on loss realisation provides interesting insight into why investors tend to hold on to stocks that continue to lose value whilst selling performing stocks. One theory relates to avoiding regret, in that investors may resist realising losses as it is proof that their judgement is wrong. Their research also examined other emotional and psychological factors, such as mental accounting, where professional traders use heuristics, such as never letting their losses reach 10%, as a benchmark or anchor when to sell falling stocks.

Xuan and Shaffer’s paper provides a great insight into the gambling patterns of problem gamblers and their reference to loss aversion to explain gambling behaviours is very interesting and carries weight. In addition to loss aversion, other cognitive biases could have played an important role in the decision making process for gamblers as if they were truly loss averse, one can make the case that they would seek to limit their losses (like Shefrin and Statman’s traders) rather than to continue betting. Whilst many people today think there is very little difference between an investment banking trader and a casino gambler, I appreciate a direct comparison is too simplistic. One thing for sure is that this highlights the complexities involved in trying to get beneath the mind of a problem gambler.

It’s hard to know when to stop – especially on Everest!

The Bet Buddy homepage uses my own images from an expedition climbing Lobouche East in Khumbu region in Nepal. The analogy of mountaineering and gambling may not be obvious. Mountaineering gives me an edge, a feeling of excitement, frustration, achievement and is quite addictive once you get into it. It’s the same kind of feeling my brother Rad gets with gambling (he is a horse racing fanatic!). But knowing when to stop, rather than pushing yourself all the way, is important in mountaineering, gambling and many other aspects of life.

In 2007 I remember sitting down and taking a breather at 4am in the morning just below the 2nd Step on Everest’s North East ridge at around 8,600m. I desperately wanted to carry on that extra 250m and stand on top of the world but alas, it wasn’t meant to be for me that day (it would take way too long to explain why!). I was fortunate to have Sherpa Sonham with me to help me take the right decision. Looking back, although I remain frustrated at falling short of the summit that morning, I’m quite relieved I stopped and am here to tell the tale. You can see a short slide show on the expedition with some interesting facts and figures on Everest and mountaineering if you are interested (if you are interested in things like ‘death to summit ratios’ and the costs to climb Everest then you should read it). We are all human and occasionally we all need some advice, a tap on the shoulder, or a helping hand when things get a little too much for us...

The FarmVille Slot Machine - A Billion Dollar Game?

Keeping on the social media, gaming and gambling theme from my previous blog I wanted to highlight a video on TED that gives us a perspective on the future impact of technology and games on us. It’s given by Jesse Schell, a game designer who has worked at Disney and who teaches at Carnegie Mellon. He is quite an energetic and entertaining speaker, although be warned, this TED talk lasts nearly 30 mins... In his talk he makes some interesting predictions about how technology and games will influence and affect us in the future. They will become even more authentic and real and will reward people with points for good behaviour because tracking all of our behaviours will become ubiquitous e.g. taking your medicine on time and walking rather than driving (which will be tracked by the ‘digital shoes’ you will be wearing) will in turn reduce your health insurance. This will come for sure he says!

He also makes a point (which is really a joke...) to Brian Reynolds, Zynga’s Chief Game Designer, telling him he is stupid if he doesn’t develop a ‘FarmVille Slot Game’, where whilst you lose your virtual currency (remember you paid for this in legal currency), it pays out in real money. This, says Schell, will make Reynolds the richest man in the world! OK, so I’m not saying it will happen now but what’s the difference with 'FarmVille Slots' and buying virtual chips and playing poker if the player places equal value to legal and virtual currency? This area will surely get more attention from regulators and academics in the future.

Is playing with virtual currency gambling? Zynga and virtual currency.

An interesting article in TechCrunch on a move by Zynga to patent virtual currency.  Whilst the question of virtual currency and whether it can be patented in an interesting one, I was more interested in a couple of quotes within the patent application.   Zynga state that “in some cases, players want to play gambling-style games, but without the regulated gambling aspects” and that “one advantage of the approach described herein is that virtual currency can be used to purchase virtual items, but neither the virtual currency nor the virtual items can be transferred or redeemed in such a way that would be considered gambling proceeds.”  So purchasing $100 of virtual poker chips with legal currency and winning $200 of virtual currency isn’t considered gambling.  The first thought that sprung to mind was if such gambling and casino style games were designed in such a way that they payout in virtual currency more frequently and thus make the game more fun, then could this lead to more people moving to regulated gambling sites to try their luck?

Responsible Gaming is now on Wikipedia!

I've added a new entry for Responsible Gaming on Wikipedia.  It's not easy writing these articles, however there comes a time when you need to get these things out there and start getting the crowd to review and update articles.  So please take a look and get editing!

How Player Limits Boost Operator Profits

I was talking to an executive at the one of the leading online operators who explained to me why offering players responsible gaming features is good for business. Operators are very focused on reducing player churn during key phases of the customer lifecycle, such as in the initial month after customer acquisition when operators typically lose new players. For those who survive the first month, on average 35% of players remain with their operator after 3 months and this typically reduces to 15% after 12 months.

The executive explained to me that when players set limits (Player B), they are more likely to bet more often within their limits and are therefore less likely to become one of those players that the operator typically loses after the first month (Player A).

Quite a nice example of how responsible gaming and sustainable profits go hand-in-hand. The link between player protection and profits has received little or no research and is something that I’ll be focusing on from an analytical research perspective in the future.

EGBA Responsible Gaming Day – Thoughts from today’s conference at the European Parliament

I attended the EGBA Responsible Gaming Day today and I wanted to share some snippits and thoughts from the day. MEP Timothy Kirkhope set the scene by sharing his thoughts on the evolution of the European gambling industry. Internet gambling is a reality and the challenge is to figure out how to best to regulate the industry and manage risk.  There was also mention of the plan to consult the gambling industry and Member States on a Green Paper, which Commissioner Barnier intends to release by autumn 2010


The first panel discussion debate was centred on discussing the Schaldemose Report one year on and how best to protect vulnerable people. The debate involved MEPs Toine Manders, Christopher Fjellner and Ashley Fox, who challenged the industry to proactively keep innovating to protect vulnerable players whilst it continues to grow, warning that otherwise 5 years down the line the industry could find itself ‘clobbered’ with more onerous legislation.

During the second panel discussion we heard from Ken Ducatel about the EU’s digital agenda, emphasising the need for all online operators to place trust at the heart of their practices to encourage greater digital inclusion from society, a point re-iterated by the panellists, Peter Reynolds from PartyGaming, Benoit Cornu from PMU and Mark Healey from NEOVIA. Peter made a very good point about operators being too concerned about protecting data rather than using data to better protect the customer.

The final panel discussion included a defence for the right for jurisdictions to maintain the ability to locally regulate by Ana Paula Barros of Santa Casa and an overview of the CENs progress on defining Responsible Remote Gambling Measures by John Ketchell, the CEN’s Innovation Director. Finally, Simon Planzer of St Gallen University provided an overview of the research he is conducting in collaboration with The Division on Addictions, which amongst other things will examine the correlations between regulation and the levels of disordered gambling.

Bwin co-CEO Norbet Teufelberger wrapped-up the conference by noting that the industry is pleased to see more focus from the legislators compared with previous years. He stressed the need to develop open and regulated markets and praised the European online gaming firms for developing the online gaming industry's leading and most innovative companies, whose technology assets are being leveraged to help grow the global market in a responsible manner.

There was a very good turn out and it proved to be a very interesting, useful and enjoyable event. A big thanks must go to the teams from EGBA and Waggener Edtsrom on organising a great event, both the evening entertainment and the conference (although I’m not sure how much they had to do with the very entertaining Belgium v. Austria match which ended-up finishing 4-4 last night!).

Your social media gaming avatar?

With the ever growing influence of social media it was interesting to read about a new application launched on Facebook called Piggyback which allows parents to monitor their child’s game play (thanks to @appleface_co for the tweet). The service is free and is targeted at the parent’s of kids who participate in social media learning games. Without doubt a very useful service for parents.

But what about the rest of us who play online games but who are past the age where it’s ‘cool’ to have your parents watching over everything you do on the web? Today around 58% of social network users play at least one game and a check on the social media application leaderboard shows us that Texas Holdem Poker is the third most popular social media game with over 35 million active users. Given growing concerns about the impact of social media on youth gambling and given the power of technology, is it not inconceivable that millions of gamers will soon have their own virtual gaming avatar keeping an eye on their gaming to help keep it safe and fun?

The Stacked Odds in Casino Gaming

Nice of Guy Kawasaki to tweet this blog from onlineblackjack.com yesterday which explains in simple terms how casinos are guaranteed to make money. I’m not sure how they have estimated the slots house edge at 5-17% (I thought it was impossible to determine this as the events are unknown) but I’d be interested to see how many punters are aware of the average loss rates per game i.e. you are expected to lose 5x as much playing slots as blackjack over a 16 hour period. I think this raises again an interesting point about how operators best educate gamblers, a point discussed in my recent research paper. For anyone interested in knowing more about house edge and the properties of games I’d recommend reading In The Pursuit of Winning by Zangeneh, Blaszczynski and Turner, which in chapter 3 explains house edge in detail with some great examples. Does this kind of information change my approach to gambling? For me personally no, as I have never really been a slots man and will always like to play a bit of black jack.

Changing Health and Wealth Behaviors with Analytics

I read an interesting article on the HBR about how the growing importance of analytics in helping people to make more informed choices about health and wealth. The authors state that consumers respond differently to different interventions designed to change their behaviors, and because some consumers have greater problems than others in health and wealth, analytics can be extremely helpful to prioritize efforts and to determine just what works with whom. Whilst I wholeheartedly agree, their point that traditional approaches (e.g. face-to-face support and educational initiatives) won’t work in the future fails to highlight the fact that these interventions are and will remain critical, even though they are costly to scale. Therefore support and interventions for those most in need should always be available. The challenge is to use more advanced approaches that leverage technology and data to ensure people take more control of their health decisions on a day-to-day basis and do not fall into this category.

EASG Conference – Some Links to Interesting Presentations

I was fortunate enough to attend the European Association of Gambling Studies conference in Vienna a couple of weeks back and the EASG have kindly posted the presentations on their website. There is a lot of really interesting information posted, and whilst it will take a long time to review them all, I’m going to give you some links to some of the sessions I attended.

Alex Blaszczynski from the University of Sydney gave a thought-provoking presentation on approaches to better understand the relationship between internet addiction and gambling whilst John McMullan from Saint Mary’s University (Canada) demonstrated an immense knowledge and understanding of online poker marketing and promotion and what this means from a responsible gambling perspective.

For a more detailed look at new thinking into problem gambling detection, I heard Tony Schellinck from Dalhousie University (Canada) give an overview of the work they are undertaking on developing FLAGS, a screen which acts as an early warning system to measure problem gambling risk. Joerg Haefeli from Lucerne University (Switzerland) gave an interesting overview of early detection research based on call centre data and his colleague Suzanne Lischer built on this when talking about early detection processes for problem gambling.

An increasing area of interest in academia is the link between youth gambling and social media, with presentations from Jani Kinnunen from the University of Tampere (Finland) and Jennifer Reynolds from the University of Toronto.

Finally, Sally Gainsbury from Southern Cross University (Australia) in Parallel Session 1 talked about the effectiveness of online interventions in the treatment of problem gambling and Henrietta Bowden-Jones told us about the great work she and her team are undertaking at the UK’s first NHS National Problem Gambling Clinic.

I could go on and on as there were many many other interesting talks and presentations but I would be here for some time!

Can the online gambling industry continue to grow profits whilst protecting players?

I’ve now completed my interviews with senior stakeholders this summer and the report is now available to view at Cass Business School’s website. First I’d like to thank the participants for taking part in this phase of my research. I interviewed representatives from the commercial sector, including Tim Phillips, Betfair’s Director of European Public Affairs, Clive Hawkwood, CEO at the Remote Gambling Association and Jean Moreau Jørgensen who is the Executive Director at the World Lotteries Association. It was very interesting talking to the commercial sector to understand both the initiatives operators are undertaking to progress the responsible gaming agenda and also to learn more about the challenges they face.

From academia I had the pleasure of talking to Professor Alex Blaszczynski from the University of Sydney, Dr Jonathan Parke from Salford University and Professor Roger Steare from Cass Business School. I found the academics were very open and balanced in their points of view, in terms of cautioning against jumping to generalisations about any links between internet gambling and problem gambling however also challenging the operators to do more where they can.

I also had very interesting conversations with the Andy McLellan, CEO of GamCare and Tex Rees who is eCOGRA’s Fair Gaming Advocate and John Carr OBE, Secretary of the UK Children's Charities' Coalition on Internet Safety. It was encouraging to see how the commercial sector is collaborating and supporting organisations such as GamCare and eCOGRA to help deliver a fair and safe gaming environment and also to help support vulnerable gamblers. I also interviewed Christel Schaldemose MEP, who has been actively involved in driving the political debate around consumer protection in the European Parliament and who authored last year’s report on the integrity of online gaming.

It was very enlightening talking to such a diverse and expert range of stakeholders and I learned a lot from the experience. As you could imagine, such a diverse range of people did at times take differing viewpoints on some issues. However whilst people had differing views on the best approaches, what was clear to me was that everyone was focused on trying to build a sustainable online gambling industry. I hope you enjoy the paper!

Loyalty isn't Foverver: How to Embrace Social Change to Build Your Brand

I want to share some great examples of how organisations have put sustainability at the heart of their businesses via innovative and at times controversial social initiatives. Using brands for social change is one of the most effective ways in which corporations can quickly move beyond 'traditional CSR' i.e. companies have in the past focused on communicating CSR to their stakeholders so that it has a positive impact on their reputation. The opposite of this is a corporation using its brand’s ability to change consumer behaviour as a way of changing social behaviour.

A good example of this approach is the brand agenda of MTV. For over two decades, MTV has placed social-issue campaigning at the heart of its brand, and has used this technique as a powerful and distinctive method of communicating and identifying with its target audience. In the process it has arguably done more than any other commercial organisation to tackle cultural taboos and change youth attitudes on issues like HIV/AIDS and human rights.

Youth is a key segment for gambling operators and harnessing young peoples’ social consciences to build an operators brand offers a range of possibilities. Zynga, the world’s leading social network game developer, is using its network of 180 million players to raise millions for good causes through players purchasing virtual goods. A key challenge for online gambling operators is that whilst there is no conclusive evidence linking the prevalence of problem gambling with the internet, the online channel is more prevalent with the youth segment, which could therefore be a factor in increasing the prevalence of problem gambling.

Unilever’s Dove Campaign for Real Beauty, which focused on women, was considered an unqualified marketing success by many in industry. Unilever took a controversial approach by blatantly debunking the dream that supermodel beauty was within a woman’s grasp, tipping focus away from aspiration towards realism. The campaign filmed Unilever executives’ own daughters discussing their self esteem challenges, which had an enormous impact on consumers. Further stages in the campaign centred on running self-esteem workshops for women and developing a 112 second YouTube film to drive awareness to the workshops. The film had been viewed 3 million times within 3 months of being released.

How sure are you that you will be in business in the future? Health and Sustainability

Over the summer I’ve been talking to a number of senior stakeholders within the online gaming industry on themes related to how to build a sustainable industry. A couple of papers related to my research will be published later this year, however people have been asking me what other companies in other industries are doing to help build customer loyalty through sustainable practices.

So as executives become increasingly worried about the impact of sustainability on the corporate bottom line, I’m taking a look at the themes of Safety, Social Change, The Environment, Fairness and Health to see what ideas from other industries can be leveraged to sustain the online gaming industry. A whitepaper will be posted on the Bet Buddy website soon but here is a view on Health and sustainability.

Many companies are now beginning to address sustainability issues beyond their four walls, particularly upstream in the supply chain. For example, Marks and Spencer launched Plan A in 2007 and are considered a leader in developing fair and sustainable business partnerships with their third world supplier.

However, Thomas Singer of SustainAbility argues that few examples exist of companies that have begun to act upon the realisation that their sustainability impact also extends downstream to their customers. Singer argues that the next frontier is likely to be about addressing this downstream impact, and companies that take this leap will find themselves well positioned for sustainability leadership. The first challenge, however, will be coming to terms with the notion that the customer may not always be right.

In the UK, a growing number of supermarkets and food manufacturers are using traffic light colours on the labels of products to help consumers make more informed choices. Companies such as Sainsbury, Asda and McCain say that the introduction of food labelling has had a very positive impact on product development and their customers, who have found food labelling both informative and reassuring. Now customers have experienced the benefits of food labelling, would they expect anything less? See what companies and people are saying at this Food Standards Agency video.

So could a similar approach be used within online gambling? Some say yes. Players are often presented with too much information to be able to make rationale and informed choices & are susceptible to taking the wrong decisions. Therefore, providing players with feedback on their play, such as if their bet frequency has increased significantly, could help promote more sustainable gambling practices.

Consumer decision making is further explored in Sunstien and Thaler’s book ‘Nudge: Improving Decisions About Health, Wealth, and Happiness’. The authors say that everyone’s "Inner Homer Simpson" drives us to make flawed decisions, which I explored in a previous blog.

Saving the world through changing your casino

So we can now bet and lose our cash with a weight lifted from our moral conscience through Green Bet. The way it works is that if you set-up an account and gamble through a Green Bet affiliate, the operator puts aside 45% of its winnings (or your losses) towards a project to develop a Green Tower solar project in North Africa. So, do punters have a green conscious, to such an extent that they are prepared to switch and set-up online accounts with Green Bet affiliates? Well, William Hill online have signed-up, so maybe. The idea is novel and I have no objections to it, however success depends upon enough operators to be willing to sign-up to the programme. Operators are incredibly protective of their brands so my guess is the majority will sit back and wait and see what happens. Also, wouldn’t it be better and more appealing if the players themselves had a say in which charities their losses supported? And whilst I have nothing against solar projects in Africa, what about helping the betting operators to focus on the sustainability initiatives that really matter to the industry and their customers?

Share data and help people live better lives

I came across patientslikeme today. The company’s goal is to “enable people to share information that can improve the lives of patients diagnosed with life-changing diseases”. People are encouraged to share real world, outcome-based data to help advance knowledge and understanding of a range of diseases. The firm also looks to establish data-sharing partnerships with doctors, pharmaceutical and medical device companies, research organizations, and non-profits. The idea is that partnering and pooling together patient data (that patients freely volunteer) can help identify new medical information and trends that can be applied to better treat patients. It’s not clinical science as we know it but it sounds like a good idea to me. Perhaps other data-rich industries can do something similar? For example, some online gambling operators are beginning to tap into the power of data to help gain greater insight into gambling behaviours such as bwin and Harvard’s transparency project. This is somthing we are also doing at Bet Buddy, and although such approaches are still new in online gambling, it will be hard to stop the momentum in the future once people realise the power of sharing data. Watch this space...

Power to the people

Here’s a new service called pownum that allows customers to rate pretty much any organisation. Pownum say that “Whether its sheer frustration or absolute delight, wouldn't it be good to let such organisations know how you feel? Whether we want to express our feelings on organisations' attitudes towards customer service, the environment, their employees or society in general, the harsh truth is we are powerless to be heard.” The idea being that collectively, people can make a much bigger impact and make corporations listen and act.

I did a quick comparison of some of the betting operators to see how punters are rating them: Betfair (6/10), PaddyPower (7.5/10) and 888.com (7/10). I must stress that this is a very new service and the number of people rating these organisations is currently very low, but other organisations are beginning to get quite a few ratings from customers telling them how they feel about them e.g. Waitrose must be delighted that customers are rating it 8.5 (compared with 6.53 for Sainsburys and 4.7 for Tesco).

Social media is still very much in its infancy so the impact of it on companies and society will take time to evolve. But perhaps one day punters will be using services like pownum to tell the world which are the best and worst betting operators and why, which will bring a new transparency to how we choose who we bet with.

How effective is Self-Exclusion? The story of Joyce May Ross

I’ve been speaking to a number of stakeholders within the industry in the past few weeks about player protection. What I’m hearing is that one of the reasons why the levels of problem gambling has remained consistently low is due to operators offering players the appropriate tools to help them to manage their play, such as self-exclusions and limits. Many stated that these features have proved very effective.

This weekend I read about Joyce May Ross, who is suing B.C. Lottery Corp for $331,000 for failing to stop her gambling after she asked them to through the corporation’s self-exclusion programme. So whose fault was it that she lost so much money? Do lotteries need to do more to help gamblers such as Joyce? And are they the best placed to monitor gamblers?

For the online industry, one of the challenges to implementing effective player protection in the area of self-exclusion is how does one prevent a self-excluded player signing-up to a different operator? Adopting a pan-European approach would make sense, such as developing a common database where operators share relevant data, but implementing such an initiative could prove very challenging.

So back to Joyce May Ross. The question is will more lawsuits follow? You can read the article here.

Taming the ‘Inner Homer Simpson’ in you

As a student of and avid reader in the field of behavioral economics I wanted to mention Sunstien and Thaler’s ‘Nudge: Improving Decisions About Health, Wealth, and Happiness’ (here’s a good review of the book. The book’s an excellent read, and although there are some assertions I may not entirely agree with, it is highly relevant to what we are doing at Bet Buddy. The authors say that everyone’s "Inner Homer Simpson" drives us to make flawed decisions, such as eating too many cashews long after you stopped wanting one to paying insane fees on your credit cards. Why do we make these decisions? We live by rules of thumb, are influenced by irrational cognitive biases, and we live in a world of too many choices, with insufficient time and information to make the best one and little feedback about the stupid choices we've made in the past. So, the etching of black houseflies into the wells of the urinals at Schiphol Airport, under the theory that "if a man sees a fly, he aims at it”, reduced spillage by 80 percent, so was a good thing. And when the ATM beeps to remind you when you've walked away without your bank card is also a good thing. And giving players a gentle nudge or reminder if their play habits change is a good thing too.

To regulate (or not)

I was having a chat with Roger Steare the other day about whether regulation in some industries is more necessary than others (Roger is a Professor of Organisational Ethics and a fellow at ResPublica). We agreed in the principle that over-regulating, regardless of industry, doesn’t lead to sustainable practices (take a look at the banking industry). Self-regulating generally leads to more durable settlements, however agreeing on the principles can be challenging. Take a look at the Retail Lending Initiative, a great idea to help promote better practices within the Credit Card industry that failed to get adopted due to challenges in getting stakeholders to agree a common way forward (click here to read more). So what about self-regulation in the gaming industry? I think this does make sense in many respects. There’s a risk that developing acres of legislation will actually encourage the undesirable outcomes that the legislation is intended to stop. And the operators who are already creating sustainable profits in a responsible way will be unfortunately leveled by a system that sets rules that promotes the wrong behaviours (see Tim Cowen’s blog). However, for self-regulation to work, the dialogue must embrace all industry’s stakeholders…

Focusing on safety rather than social values

I read a thought-provoking letter in today’s FT suggesting that if BP had focused as much on safety as they have on describing their social conscience and non-business values then perhaps the tragedy may not have happened. The gaming industry is doing a lot to build progressive CSR policies and practices. But I do wonder whether the ‘greenwash effect’ is putting the industry under too much pressure to report progress against a whole range of CSR indicators and targets which, although important, take emphasis away from the more relevant externalities associated with the industry? Here’s the link to the letter.

The joys and perils of a near miss

There is a very interesting article in the Economist on the thrill of almost winning. We can analyse a player’s game play and make accurate assumptions about whether they are showing signs of problem gambling. But analysing their near misses takes this approach to the next level...

A good name is beyond price

The FT’s and BITC’s 2010 Responsible Business Report shows progress being made by businesses to deliver a positive impact in communities whilst growing profits (although little surprise to see BP was not in the frame this year...). Whilst it was encouraging to see Camelot and BSkyB on the list, the challenge for the gaming industry is to increase its profile and visibility to ensure more companies make the cut for 2011. Simo is about to kick-start some leading edge research into CSR in the gaming industry this year with City University’s Cass Business School. Watch this space...

Doing Well By Doing Good

I came across Sexton the other day, a firm that works with companies to help them find the most marketable ways to advertise their socially conscious initiatives. A cynical person would say that this is another flavour of greenwashing. To me, helping companies to find ways to better connect with customers and communities, and then using this to differentiate their brand, sounds like a pretty good idea.

Transparency and player loyalty. A missed opportunity?

The dynamically changing gambling industry is posing gaming operators with both challenges and opportunities to creating competitive advantage. Technology is driving increasing demands from customers as gaming operators become more sophisticated and accessible. Player management is becoming increasingly important in terms of generating revenue and preserving player loyalty. The players' experience must become easier, more mobile and uphold responsible gaming standards. Responsible gaming is increasingly coming to the forefront of the industry and regulators will require operators to meet higher standards in the future.

But aren't operators already doing enough? At Bet Buddy we believe they need to take transparency and player loyalty to the next level. Why? Because the relationship between society and corporations is changing. Customer service, the environment and corporate ethics are at the forefront of the publics' mind. Customer service charters, corporate social responsibility reports and environmental policies will not be enough in the future. Trust in business is a brand differentiator. The Edelman Trust Barometer 2010 reported that "a company I trust is the top driver of corporate reputation in the UK". And McKinsey research states that "company CFOs largely agree that environmental and social programmes will create value over the long term for corporates".

At Bet Buddy we believe gambling operators need to place greater emphasis on being profitable whilst also protecting players. Responsible gaming is increasingly relevant to operators' players, authorities and society. It is a critical element of operators' strategies and could become a missed opportunity...

A happy player is an informed player

The other day I was talking to a former senior executive at one of the major online gaming operators and he told me that one of the challenges in promoting responsible gaming is that some players do not want to know how much they are spending, as the truth could give them an unpleasant surprise. He asked “would you want to know how much money you spent on beer last year?” This got me thinking. I calculated that I spent around £1000 last year on beer. Did this horrify me? Did this make me want to cut back on how much beer I drink? No it didn’t. Actually, it made me realise that I do like to drink in moderation as I quite enjoy it. In fact, it made me think that I wouldn’t mind knowing whether my drinking habits and spend remain in my own levels of moderation. For the vast majority of gamblers online gaming is fun. And at Bet Buddy, we believe that a happy player is an informed player. Keep it fun!