GAMBLING TRENDS

A Brief History of Gambling in Minnesota

Minnesota is not an early adopter of gambling or its expansion. Minnesota cautiously ventured into legalized gambling with nonprofit bingo games in 1945 for charitable purposes only. It wasn’t until the late 1970s that Minnesotans considered gambling expansion — when the lottery was first proposed — but the state didn’t get voter approval until the late 1980s. Lottery sales began in April 1990 and Powerball was added in 1992. The Minnesota Lottery now has over 3,000 sales outlets.​​

In November 1982, voters approved an amendment to allow pari-mutuel betting, and the next year the Minnesota Racing Commission was born, with Canterbury Downs opening in 1985. Running Aces Casino opened in 2008.

The first state compacts for tribal casinos began in 1989. ​ Eleven sovereign nations own and operate the 21 casinos in Minnesota.

The latest and most significant expansion of gambling occurred when the new Vikings stadium was approved. Video pull tabs were approved in 2012 to help pay the state’s portion of the stadium. Though sales were initially sluggish, by 2019 the Gambling Control Board indicated that growth had topped $2.2 billion. Charitable gambling remains an important revenue source for various organizations to raise funds for their community. There are over 1,100 registered charitable organizations in Minnesota.

SCOTUS Overturns Sports Betting Ban

In May 2018, the Supreme Court of the United States overturned a longtime ban which prohibited all states except for Nevada from offering sports betting. Since the ban was lifted in November 2020, 22 states plus Washington, D.C., have approved sports betting. Minnesota is considering bills that would legalize sports betting, but as of December 2020 none have been passed.

Sports and Esports Gambling

Moving ahead at an even faster pace is esports. The market for esports is massive and attracts participants that are young, curious and diverse. To put it in perspective, esports viewership has doubled from 260 million in 2016 to almost 495 million esports viewers in 2020. Seventy-two percent of viewers belong to the highly coveted 10-35 age demographic that is notoriously hard to reach via traditional media channels.

Esports have been around for since the early 90’s and as games have become more sophisticated and accessible, are gainting in popularity. Unlike sports betting, betting on esports has not met the same regulatory challenges (primarily because it’s been considered under the radar). Now however, many people are gaining interest in this outlet, particularly with the onset of COVID-19. This is a no-contact sport and is open to anyone who can handle a joystick. There is real money involved, players are becoming pros, and national sport team owners are reviewing options to purchase esports teams as a means of diversifying their portfolios. As esports continue to grow in popularity and revenue, the threat of addiction to gambling in esports is real and should be addressed.

As esports are considered real sports, both in their marketing and competitors obtaining visas based on a classification of professional athletes, wagering on the outcome of events can be considered sports betting. Around the world, the rules governing such wagers differ, and not all places have implemented regulation or language into their laws to consider the growth of esports. It is illegal to bet on esports in the United States.

Online Gambling

With advanced technology, many gaming operators have established a substantial platform for all types of gambling, social casino games, esports and a huge selection of video games designed for entertainment.

Legalized online gambling is available in many states but, as of December 2020, Minnesota is not one. If someone is betting online, it is likely through an unregulated offshore operator that does not have to comply with the rules and regulations established by a particular jurisdiction. This means they are not obligated to list odds, may embed predatory features into the games, and will not necessarily release winnings when you want to cash out.

Unlike legalized gambling sites, the fast-rising number of games are also unregulated and can be attractive to young children as well as adults. Many operators provide a free option to play; however, if one wants to advance in the game, a player is offered plenty of opportunity to pay in advance or gain other attributes that will keep the player engaged in time and money.

Though many enjoy these various forms of entertainment — paying only what can afford and not doing harm to themselves or others — we know that about four percent of the population will develop behaviors that will land them on the gambling disorder continuum.

Other risks involved with online gambling is the “lack of friction.” Often played in solitude, the player has little-to-no barriers to help pace one’s participation in the game. Few interruptions may mean larger losses of time and money.

Convergence of Gambling and Gaming

Addictive behavior that results from frequent gaming can resemble the characteristics of gambling disorder. With gaming — as with gambling — the activity may begin as a fun, harmless diversion during one’s leisure time, but soon transform into an obsession with serious consequences on work and family life.

In June 2018, gaming disorder was included in the International Classification of Diseases (ICD) by the World Health Organization. Hours spent gaming can adversely affect a young person’s education, social development and career prospects. Best practices and evidenced-based approaches are emerging for the treatment of gaming, as well as the intersection with problem gambling and gambling disorders.

Problem gaming behavior continues to grow and has experienced a huge surge during the COVID-19 pandemic. Strongly correlating with mental health disorders, this is anticipated to be a major social burden in 2021, and there will be a need for clinicians prepared to address this. Please note the distinction in diagnosing someone with gaming disorder only includes games without embedded gambling elements.

Here are a few quick facts about gamers:

  • Average age of a gamer: 33 years old
  • Sex breakdown of a gamer: Male: 54%, Female: 46%
  • Average length of time playing: 14 years
  • Ethnicity breakdown of a gamer (USA): Caucasian: 67%, Hispanic: 15%, African American: 12%, Asian: 5%, Other: 3%
  • Ethnicity breakdown of a gaming addict: Caucasian: 69%, Asian: 13%, Other: 18%
  • Countries with gaming addicts (to date): 95

With 2.5 billion active gamers worldwide, the industry is growing rapidly. An estimated three percent of gamers are at risk for gaming addiction.

Both gaming and gambling can be played obsessively, costing the fulfillment of work and familial responsibilities, often without regard for the long-term negative consequences that can arise. The connection between the two types of addictions becomes apparent when gambling elements are embedded in video games, often referred to as loot boxes.

The rise of gaming and esports has developed so rapidly it’s been difficult for regulatory agencies to respond. Like gambling, it’s important for those who choose to participate to understand the potential risks.

What’s A Loot Box?

Loot boxes are virtual treasure chests containing undisclosed items that can be used in games. They might consist of customizing characters or weapons (“skins”). These contents may affect progress through the game, or simply be designed to convey status. Loot boxes are in-game purchases using real currency. As these games are not regulated, many of the gaming operators do not provide any information as to what may be in the loot box or the chances for a player to purchase a box with the items they’re seeking. This is where the gambling element comes into play — the risking of something of value in the hopes of gaining something of greater value.

Reasons Why People Buy Loot Boxes

  • Increased performance – loot boxes can provide an advantage to players that purchase them if the items gained boost performance.
  • Personalization – loot boxes provide a sense of differentiation by allowing the players to personalize their characters.
  • Obtaining achievements – certain games only reward and unlock an achievement when a player completes a purchase.
  • Showing off to friends – players purchase loot boxes to obtain special items to show off to others (gaming capital).
  • Low perceived cost – players are willing to buy a loot box if the perceived value of the items is higher than the cost.
  • Unlocking content – certain content cannot be purchased within games and can only be obtained through loot boxes.

Occasional purchases won’t lead to a gambling problem. However, in the UK, children who played unchecked racked up thousands of dollars of purchases seeking to get a particular skin. The UK estimates there are 50,000 children exhibiting gambling addiction.

Addiction is not necessarily related to the loss of money. Time loss, loss of relationships, growing isolation, efforts to reduce anxiety and escapism can all play into developing an addiction. It’s unclear what the impact of COVID-19 will be among the population. It’s better to be aware of the signs than to ignore what may be a developing addiction.

NCPG recommends addressing concerns around loot boxes and addiction with a multi-layered approach to users, parents and communities to ensure an appropriate range of protections is put into place for youth and other vulnerable populations. These efforts should:

  • better inform consumers,
  • prevent gambling-related problems,
  • facilitate treatment-seeking,
  • support recovery, and
  • increase research to enable evidence-based solutions.

    FUTURE TRENDS

    • Signs are already indicating this generation (born between 1997 and 2015) will approach gambling in a very different way than any other generation. They have a very different concept of winning. Winning is not necessarily tied to money, but whether or not the outcome is a positive, fun, engaging experience. This changes the meaning of loss, from money to the quality of the experience. This generation has grown up with social media and multi-player games with an emphasis on interaction, showing off their skills and raising their social profile as a result.
    • Historically we have taken the view that problem gamblers develop these traits as a result of gambling. For this new generation, however, these traits will have already developed and been established long before they ever reach the age where they can gamble. They have been raised to seek value adds in whatever they do. They like to try things for free before committing. Games that provide “free” bets will be attractive. They respond to marketing reward schemes and have spent a great deal of time playing video games — all aspects of developing problem behavior.
    • This generation doesn’t have the money now, but unless we tackle this challenge, we are looking at the prospect of a new generation of players pre-programmed to be problem gamblers.

    Source: Christina Thakor-Rankin, Principal Consultant, 1710 Gaming Eventus International September 2020

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    A recent trend gaining more momentum since the onset of COVID-19 is that the American casino industry wants gambling regulators to make it easier to adopt cashless payment transactions on the casino floor. Currently, only a small number of casinos use such payment systems, which include debit or credit cards and apps like Apple Pay, Google Pay and PayPal. The reasons for this push are to offer the varied payment options customers have come to expect in their daily lives. Health reasons have also been cited as a means of reducing one’s potential exposure to COVID. Touchless payment methods, where possible, have been the preferred choice by the Centers for Disease Control (CDC).

    Among the benefits of cashless transactions cited by the American Gaming Association (AGA) are the ability for gamblers to follow and set limits on their gambling activity and to reduce the number of currency transaction reports that casinos have to file with the government regarding some customer transactions at the casino more easily.

    So far, there has not been widespread adoption of digital payment options at casinos or other gambling facilities in the U.S. Industry executives say this is due to several factors, including limits imposed by state legislators or gambling regulators.

    There may be benefits to adopting cashless systems; however, they need to be adopted along with other consumer protections.

    Cited benefits/opportunities of cashless systems:

    • Public health issue (not handling money)
    • Better means of knowing your player
    • Way of the future
    • Increased security – less cash for casinos to handle, reduces ability to launder money
    • Data, data, data — which can equate to more research
    • Potentially stronger consumer protections — ability to set limits and include responsible gambling messages relating to a player’s spending, wins and losses

    Red flags to adopting a cashless system:

    • Need to distinguish between credit and debit. They are not equal.
    • With a loaded debit card, the player has a limit. Credit limits may be much higher and easier to obtain and may enable a player to spend much more than they can afford.
    • Cashless also minimizes the player’s awareness of actual dollars spent.
    • It’s not known whether using a cashless system will contribute to more high spending, though the UK recently banned credit card use at casinos due to public backlash.

    The newly released Guidelines for Payments Processing from the National Council on Problem Gambling (NCPG) will help guide the industry’s thinking about solutions to this issue. According to the NCPG, payment limits can be an important responsible gambling tool, offering a consumer-centric approach that emphasizes player control, information and shared responsibility. NCPG’s guidelines are based on an informed consumer choice model and can help payment processors play an important role in reducing gambling addiction.

    NCPG’s guidelines call on all stakeholders to:

    • encourage people who gamble to set their own limits of time and money,
    • use personalized responsible gambling messages,
    • allow players to self-exclude from gambling platforms and venues,
    • allow players to synchronize their exclusions with venue and state exclusion lists,
    • research signs of problem behavior,
    • utilize the payments data they collect to monitor performance, and
    • develop models to help predict and prevent excessive usage.

    The full NCPG GUIDELINES FOR PAYMENT PROCESSING can be found here.

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    Gaming Disorder

    Not all video games include gambling elements. Most are primarily skill-based where players improve by playing more. Though these skill-based games are not a form of gambling, concerns have been raised by the growing numbers of players who are exhibiting gaming disorder. Gaming disorder shares some similar characteristics to problem gambling, but it also has its distinctions. These differences are enough that the World Health Organization, in 2018, recognized it as a separate addiction and only includes games without built-in gambling elements.

    Gaming disorder is characterized by a pattern of persistent or recurrent gaming behavior (“digital gaming” or “video-gaming”), which may be online or offline, manifested by:  

    • impaired control over gaming (e.g., onset, frequency, intensity, duration, termination, context),
    • increasing priority given to gaming to the extent that gaming takes precedence over other life interests and daily activities, and 
    • continuation or escalation of gaming despite the occurrence of negative consequences. The behavior pattern is of sufficient severity to result in significant impairment in personal, family, social, educational, occupational or other important areas of functioning. 

    The pattern of gaming behavior may be continuous or episodic and recurrent. The gaming behavior and other features are normally evident over a period of at least 12 months in order for a diagnosis to be assigned, although the required duration may be shortened if all diagnostic requirements are met and symptoms are severe. Gaming addiction is characterized by:

    • preoccupation with online games,
    • withdrawal symptoms when online gaming is taken away, such as irritability, anxiety, or sadness, but there are no physical signs of pharmacological withdrawal,
    • tolerance—the need to spend increasing amounts of time engaged in online games,
    • unsuccessful attempts to control the participation in online games,
    • loss of interests in previous hobbies and entertainment as a result of, and with the ex­ception of, online games,
    • continued excessive use of online games despite knowledge of psychosocial problems,
    • has deceived family members, therapists or others regarding the amount of online gaming,
    • use of online games to escape or relieve a negative mood (e.g., feelings of helpless­ness, guilt, anxiety), and
    • has jeopardized or lost a significant relationship, job, or educational or career oppor­tunity because of participation in online games.

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    Healthy play – what is it and how could you possibly equate gambling with healthy play? There’s a paradigm shift emerging from thought leaders who focus on responsible gambling. For years, it was the player’s sole responsibility to protect themselves from harmful play.

    However, the winds are shifting and there’s a growing acknowledgement in the gambling industry that operators and regulators can and should do more in reducing the harm a vulnerable player may experience. Both brick and mortar establishments and online sites are showing signs of taking a more serious approach to implementing robust responsible gambling programs because they know it will only help their businesses. These newer programs are taking into consideration:

    • A shift to harm reduction and supporting safer gambling through:
      • informed play, and
      • robust responsible gambling tools.
    • The need to prioritize harms to affected others by:
      • identifying risk behavior.
    • The value of prioritizing financial harms including:
      • changes in credit and cash policies.
    • The need to reinforce ideal consumer behaviors,
    • Ensuring staff is well trained.

    By transitioning to more inclusive language and practices, it may help to diminish the stigma and encourage those to seek the help they need to get healthy.

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