Gambling Psychology Explained
Gambling has become a popular hobby that attracts millions of people on a regular basis. What motivates people to take the risk and wager money for a potentially bigger return? In this article, we’ll dive into the gambling psychology that influences bettors’ decisions behind the scenes.
Why Has Gambling Become So Popular?
Gambling has grown in popularity as a hobby for a variety of reasons. First and foremost, there’s no denying the thrill and adrenaline connected with gambling. The unpredictable nature of games of chance, such as slot machines or roulette, generates excitement and boosts adrenaline. The prospect of earning a large sum of money with a modest investment entices people to gamble, driving the urge to try their luck. Gambling is a thrilling hobby for people looking to break from their daily routine and add a little spice to their lives.
Furthermore, the ease of access to gambling has contributed significantly to its appeal. People may now gamble from the comfort of their own homes or on the road, thanks to the introduction of online casinos and mobile gambling apps. The ease of access to a diverse selection of gambling alternatives has drawn a broader audience than before.
Finally, it’s a fun social activity to enjoy with your friends. The rise of social gambling platforms has turned gambling into a social activity, allowing friends and acquaintances to compete against each other and share their experiences. This social aspect has contributed to the growing popularity of gambling as a hobby, as it provides a means of entertainment and connection with others.
Gambling Psychology and Its Background
There are several psychological factors and processes that influence individuals’ behavior and decision-making in gambling activities. It seeks to understand the cognitive, emotional, and social aspects that impact people’s engagement in gambling and their reactions to wins and losses. It aims to promote responsible gambling practices and address the negative consequences associated with excessive or problem gambling.
A big part of casino psychology is cognitive bias. People may exhibit biases such as the illusion of control (believing they have more control over the outcome than they do), the gambler’s fallacy (believing that past outcomes influence future ones), or confirmation bias (seeking information that confirms preexisting gambling beliefs). In gambling situations, these biases can lead to illogical thinking and decision-making.
It’s important to note that gambling psychology differentiates recreational gamblers from problem ones. Around 90% of gamblers are recreational ones that don’t exhibit addictive behavior. However, a certain percentage of bettors fall into the category of problem or pathological gamblers. We’ll discuss this topic more in the gambling addiction section.
Research Studies on Gambling Psychology
Developments in neuroimaging technology have allowed for more detailed research into the psychology of gambling addiction. The most significant research in gambling psychology was done in the first two decades of the 21st century by Dr. Mark Potenza. Dr. Potenza is a renowned psychiatrist and researcher known for his expertise in the field of addiction, including gambling disorder. He has contributed significantly to the understanding of the neurobiology and psychological aspects of addiction.
In 2003, Dr. Mark Potenza conducted a study utilizing neurological research to demonstrate the distinctive brain reactions of problem and pathological gamblers compared to individuals without gambling issues when exposed to gambling-related stimuli. The research team presented positive and negative images to a large sample of participants, with positive images representing events like weddings and negative images depicting scenarios involving death or divorce. Across all groups, the neurological responses to these images were consistent. However, when participants were shown images associated with gambling, notable differences emerged. While recreational gamblers exhibited no significant change in brain activity, pathological gamblers experienced a spike in brain activity that remained elevated for extended periods.
Moreover, the response to gambling is influenced by gender, as indicated by a study conducted by Dr. Mark Potenza’s team in 2013. The research involved four distinct groups: male recreational gamblers, males diagnosed with internet gambling disorder (IGD), female recreational gamblers, and females diagnosed with IGD.
Across all groups, gambling caused increased brain activity. However, in the case of recreational gamblers of both genders, brain activity returned to normal levels shortly after gambling ceased. Similarly, females with IGD displayed a return to baseline brain activity levels soon after stopping gambling. In contrast, males with IGD exhibited prolonged periods of heightened brain activity. The findings from the study suggest that the sustained increased brain activity experienced by male gamblers may contribute to their 11% higher likelihood of developing problem gambling compared to female gamblers.
How Does Gambling Addiction Take Over?
As we’ve previously suggested, and Dr. Potenza’s research has confirmed, there’s a big difference between recreational and compulsive gambling. Players exhibit certain patterns of behavior that deepen their gambling addiction tendencies. Here are some of the most common reasons behind the betting psychology of compulsive gamblers.
Chasing Losses
Problem gamblers commonly fall into the trap of chasing losses. They believe that if they keep gambling, they have a chance to recoup their losses and regain financial stability. This behavior stems from a cognitive bias called the gambler’s fallacy, which is the false belief that previous losses increase the likelihood of future wins.
Reward Pathways and Addiction
Gambling can activate the brain’s reward pathways, releasing dopamine, a neurotransmitter associated with pleasure and reinforcement. Over time, problem gamblers may develop a tolerance, needing larger bets or more frequent gambling to achieve the same level of satisfaction. This can lead to addiction, where the brain becomes dependent on the release of dopamine triggered by gambling.
Emotional Escape
Gambling can provide an escape from negative emotions, stress, or personal problems. For some problem gamblers, the act of gambling offers temporary relief and a distraction from real-life difficulties. The excitement and thrill of gambling can provide a temporary euphoria or numbness, allowing players to forget about their problems, even if it’s for a little while.
Denial and Optimism Bias
Problem gamblers may engage in denial, downplaying the negative consequences of their gambling behavior or rationalizing their actions. They may also have an optimism bias, believing that their luck will eventually change and they will win big. These cognitive biases prevent problem gamblers from recognizing the severity of their gambling problem and can contribute to their continued engagement in gambling activities.
Final Thoughts on Gambling Psychology
Casino psychology plays a crucial role in understanding the motivations, behaviors, and consequences associated with gambling. The popularity of gambling as a hobby can be attributed to factors such as the thrill and excitement it provides, the ease of access through online platforms, and the social aspect of gambling.
Dr. Mark Potenza’s research has significantly contributed to the field, particularly in studying the distinctive brain reactions of problem gamblers. His studies have revealed differences in brain activity between recreational gamblers and those with gambling disorders, as well as the influence of gender on gambling-related brain responses. Problem gamblers often continue to gamble due to cognitive biases, chasing losses, reward pathway activation, emotional escapism, and denial. Understanding these psychological factors is crucial in developing effective prevention and treatment strategies for gambling addiction.
Gambling Psychology FAQ
What are the psychological effects of gambling?
For some individuals, excessive gambling can lead to negative psychological impacts. These can include increased stress, anxiety, depression, and feelings of guilt or shame.
What is the gambler’s mindset?
The mindset of a gambler can vary, but common characteristics include a desire for excitement and thrill, a belief in luck or superstition, and a willingness to take risks.
What are the three types of gamblers?
There are three types of gamblers: recreational, professional, and problem. While recreational and professional gamblers use gambling as a source of entertainment and profit, respectively, problem gamblers have addictive tendencies.
What triggers gambling addiction?
Gambling psychology recognizes several factors that can influence the development of gambling addiction, namely character traits, social factors, availability, and accessibility.
What is the most addictive form of gambling?
The most addictive form of gambling is internet gambling, with slot machines and video poker being the most addictive games. The psychology of slot machines dictates that instant gratification from winnings boosts desire to play more and more, leading to addiction as a result.
US law firm Schulte Roth & Zabel has sued 26 Capital Acquisition Corp for unpaid legal fees in relation to the unsuccessful merger of Okada, the largest casino in the Philippines.
Legal battle ensues after failed SPAC merger
Schulte Roth & Zabel took the matter to Delaware's Court of Chancery, seeking to prevent 26 Capital, a Special Purpose Acquisition Company (SPAC), from dissolving without settling its alleged legal obligations. The law firm had provided legal counsel to 26 Capital concerning its intended US$2.5 billion SPAC merger with Okada Manila, an affiliate of Japan's Universal Entertainment (6425.T).
Court requested to block SPAC dissolution
The legal dispute between the legal firm and its former client, 26 Capital Acquisition Corp,cited unpaid legal fees exceeding US $1.9 million. This dispute arose in the aftermath of 26 Capital's unsuccessful merger attempt with the Philippines' largest casino. This is a setback from 26 Capital. Earlier this month, a Delaware chancery judge declined to compel Okada Manila to proceed with the merger, citing disclosure shortcomings within the deal. The judge's ruling also condemned 26 Capital's behavior, stating that the company "engaged in conduct that should not be rewarded" by being allowed to force the merger's completion.
SPACs vs. IPOs
In comparison to traditional Initial Public Offerings (IPOs), SPACs have gained significant attention in recent years. SPACs, or blank-check companies, raise capital through an initial public offering but don't have a specific business plan. Instead, they seek to acquire existing businesses, allowing them to go public more swiftly than the conventional IPO route. Schulte Roth & Zabel asserted its right to the substantial legal fees incurred while working on behalf of 26 Capital, stating that creditors must be compensated before investors can redeem their shares. The law firm's statement highlighted the importance of adhering to legal obligations in SPAC transactions.
26 Capital's decision to dissolve
26 Capital recently declared its intention to dissolve completely. This course of action involves liquidating its trust account and distributing assets to its stockholders. Should this dissolution proceed, Schulte Roth & Zabel contends that it would be left without any recourse to recover its unpaid legal fees.
Risks associated with SPAC transactions
The legal dispute between Schulte Roth & Zabel and 26 Capital serves as a testament to the complexities and risks associated with SPAC transactions, particularly when compared to the more conventional IPO process. While SPACs offer companies an expedited path to going public, they are not without their challenges. The lack of a predefined business plan in SPACs can lead to unforeseen obstacles, such as the disclosure issues encountered in the 26 Capital case.
In contrast, IPOs involve a more structured and regulated approach, with companies required to meet rigorous disclosure standards before going public. This scrutiny helps ensure that investors are adequately informed about the company's financial health and potential risks.
As SPACs continue to play a significant role in the world of finance, legal disputes like the one between Schulte Roth & Zabel and 26 Capital highlight the need for clear guidelines and oversight to protect the interests of all parties involved. Whether SPACs will maintain their popularity or face increased regulation remains a topic of ongoing debate within the financial industry.
Background of deal
In June 2023, the merger deal between Asian-based Tiger Resort Leisure and Entertainment Inc (operator of Okada Manila) and special purpose acquisition corporation (SPAC) 26 Capital Acquisition Corp was terminated. Initially valued at $2.6 billion, the merger aimed to take Okada Manila public on NASDAQ. Delays arose in late 2022 due to conflicts between Universal Entertainment Group and 26 Capital, led by billionaire gambling investor Jason Ader. The merger was seen as a way for Okada Manila to access funds, new customers, and lenders.
However, the dispute stemmed from founder Kazuo Okada's ousting in 2017 amid allegations of financial mismanagement. Okada's removal from Universal Corporation's leadership led to a complex legal battle. Despite charges being dismissed, legal issues persisted, affecting Okada Manila.
The situation escalated in May, with Okada's partners seizing control of the casino. A lawsuit was filed against Jason Ader and 26 Capital, alleging fraud and violations of the Investment Advisers Act. Universal Entertainment Corporation accused 26 Capital of significant breaches, including unauthorized disclosures and violations of securities laws.
The termination of the merger and ensuing legal battle revolved around alleged misconduct by Jason Ader, casting doubt on the proposed deal's viability.
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Newcastle United has announced a multi-year partnership with BetMGM, the newly launched UK iGaming and online sports betting brand from MGM Resorts International. BetMGM has become an official club partner for the new 2023/24 season and its brand will be visible across St. James' Park, the club’s stadium.
Commenting on the partnership, Newcastle United's chief commercial officer, Peter Silverstone, said: "We are delighted to be introducing BetMGM as an official club partner. We are very pleased to be taking this step together and I'd like to welcome BetMGM to our growing family of partners."
BetMGM already has a significant presence in Newcastle, with the company's UK office in the city, and it “understands the football club, its fanbase and the region,” Silverstone added.
Sam Behar, UK director at BetMGM, said: "Newcastle United's re-entry into the world's elite this season is a golden moment for the football club and its incredible fans. He added, "We are proud that the club has selected BetMGM as one of its betting partners for the upcoming season."
BetMGM has kicked off its first UK advertising campaign, featuring stand-up comedian and actor Chris Rock.
Premier League clubs have agreed to withdraw gambling sponsorship from the front of their matchday shirts by the end of the 2025-26 season. However, clubs will still be able to continue featuring gambling brands in areas such as shirt sleeves and LED advertising. The decision was made after a consultation between the league, its clubs, and the Department for Digital, Culture, Media and Sport (DCMS) as part of the government’s ongoing review of current gambling legislation.
Join us in Malta between the 13 - 17 November for SiGMA Europe 2023
SiGMA Europe’s Malta Week festival brings together a diverse and international group of industry leaders for a convergence of expo, conference, and networking. The event will be held at the Mediterranean Maritime Hub (MMH), a larger, more dynamic venue that promises a raw, industrial, and unconventional space unlike anything ever used before.
In the words of SiGMA Group founder Eman Pulis, “We’re redesigning your entire experience, from the minute you land in Malta until the very last moment. I look forward to welcoming you with open arms to this iGaming festival.”
Find all the details here.
Curaçao’s Minister of Finance, Javier Silvania, today delivered his welcome message during the first day of SiGMA Curaçao, an event hosted by the Ministry of Finance in association with SiGMA.
Here you may find the Minister’s message in its entirety.
Good afternoon, firstly I’d like to thank you all very much for gathering here today at the Curaçao’s very first gaming industry event. I am aware that this room is a mosaic of opinions, interests, and backgrounds, both local and international. From existing B2C operators to entrepreneurs, service companies, lawyers, games and platform developers and even those who have reservations about this legislation.
Our primary objective during this event is to dissect the practical implications of the proposed gambling process. This is not just a matter of regulatory updates or financial benefits. This is about shaping the future of Curaçao as a jurisdiction in a way that is transparent, accountable, and prosperous.
To those who have apprehensions about this legislation – I hear you. Changes are always met with skepticism, especially when they impact long-established practices. However, for all the operators out there our intent is not to disrupt, but to elevate.
I understand the varied business types represented here today. Each one of you plays a pivotal role in shaping the contours of our entertainment landscape. While our visions may differ, our end goal remains the same – ensuring that Curaçao thrives.
Before I delve into the rationale behind the new legislation and the changes in our gambling landscape, I want to take a moment to congratulate Daniel Leandro Giraldo Soto on winning the trophy at the WPT Curaçao Invitational tournament last night.
Moreover I want to thank the World Poker Tour by putting on such a prestigious event as an explicit and unwavering show of support for the major undertaking of revitalizing the jurisdiction of Curaçao.
Now I would like to move on to the three fundamental reasons as to why the new legislation and processes are not only for the good of Curaçao as a gambling jurisdiction, but also for Curaçao as a country.
These are:
- Economic Benefits
- Social Benefits
- Reputational Benefits
Curaçao is the largest jurisdiction in terms of operator numbers, yet the public purse and the people of this island do not get even a fraction of what they deserve, given the staggering amount of revenue that flows through the island.
I think the best way to demonstrate this is to give you a visual example.
In 2022, the Malta Gaming Authority reported licensing revenues of EUR 82 million. That is 82 million just from fees to the authority. During the same time period of one year the Curaçao government and Gaming Control board were entitled to the approximate amount of EUR 250,000
These figures are correct. 82 million versus 250,000.
This contrast in numbers offers a sobering insight into the different trajectories and priorities of these two jurisdictions. It's crucial for Curaçao to evaluate its long-term strategy. Does it want to continue being the go-to for cheap and easy licenses or does it want to step up its game, increase its revenue, and simultaneously potentially provide better protection and benefits for both its operators and its citizens?
An alternative approach to consider is the broader contribution to the economy at large. In a well-managed gambling jurisdiction the direct revenues to the regulator are only the tip of the iceberg. The overall impact is monumental and demonstrates the real potential value to the economy.
The key driver of any gambling regulation is the gaming operations themselves, however the generation of economy in the sub-sectors can change not just the revenue to the gaming authority but indeed the overall economy on the island.
Firstly there are the mandatory services such as corporate, banking, internet services to support the gaming operations themselves.
Along with that there are additional financial incomings – this includes property leasing for more local and expat employees, international bandwidth connections to other jurisdictions and markets, software development, training and education, not to mention of course the obvious one which is of course increased local employment.
And that is not all, evidence has repeatedly shown in other jurisdictions – very similar to ours – that the ripple effect runs even deeper – including retail and hospitality, financial, foreign spending and local hardware/equipment vendors.
Online gaming has been a game changer for the economies of small states such as Malta, Philippines, Gibraltar, Isle of Man, Alderney and Curaçao. In the case of Malta, online gaming has transformed the Island’s economy since it was introduced in 2014 as it depend primarily on tourism to a diverse economy that includes hospitality, property, financial services and IT services. In 2019 online gaming generating a total of €1.65bn into the Maltese economy, that is, more than 12% of the total year’s GDP. Figures have dipped since Covid had an impact; however the economic impact is undeniable.
Comparatively although the Isle of Man does not publish figures at the same depth as Malta, there are records of e-Gaming accounting over 20% of GDP – a value of approximately GBP 1 billion.
SocialWhen it comes to the social benefits let us discuss the impact on work and employment. The intent of our efforts to revitalize the legislative landscape is to develop Curaçao as a centre of excellence in the gambling industry. This pushes envelope for employment opportunities and in fact there a many individuals and businesses out there who have no idea of the opportunities that are coming their way.
Now, envision a scenario where our local educational institutions, including our prestigious university incorporate industry specific training. Students could be offered tailored courses, internships, and training programs, paving the way for a future career that boasts of specialized skills that don’t now exist on the island. Such symbiotic relationships not only benefit the students and the establishments but also raise the profile of our education system.
Next, let's talk about the development of business areas. The establishment of such entertainment hubs often leads to the rejuvenation and development of the surrounding areas. Take, for instance, DMO and Otrabanda. As these zones thrive, they attract other businesses, from restaurants to retail shops, creating a ripple effect of economic growth, development, and urban revitalization.
Moreover, with the growth of these hubs, there's an inherent need for skill development. This doesn't mean just training those who wish to join the gambling sector, but it offers an opportunity for the broader population to upskill. Whether it's courses in customer service, cybersecurity, or finance, the range of skills that the population can acquire, and master is boundless.
Therefore as we consider the future of gambling legislation in our country, we have the chance to boost employment, enhance our education system, rejuvenate business districts, and upskill our citizens, ensuring that our community doesn't just grow, but thrives.
ReputationalRight now Curaçao is not highly regarded as a gambling jurisdiction. This is a well-known issue, and has been discussed at length. And quite simply the new legislative landscape will change that. So I would like to move on to something more important that is at play here.
Gambling is classified as a high risk industry. And the FATF the worlds financial action task force pays specific attention to it when evaluating countries positions on the White Grey or Black listing scale.
Recently Gibraltar was placed on the Grey List with FATF saying at the time that Gibraltar’s status as a major gambling hub was a significant factor in its decision. In particular the FATF criticized the government’s failure in “applying sufficient fines for anti-money laundering failings”.
AML is a key criteria of financial evaluations, one of which Curaçao will be subject to next year. And let me be very clear about it, the likelihood of us being placed on the grey list because our lack of AML legislation within the gambling sphere is real, and it is worrying.
The implications of being grey listed are far-reaching and touch upon various sectors of our nation. Let me walk you through some of the profound consequences we might face:
Firstly there will be a general negative perception that AML failings will not be the only ones that relate to commonly identified international standards - in short, the no smoke without fire view of us.
Governments may decide to restrict trade with us or connected entities or prohibit trade altogether.
Firms and banks will need to undertake heightened due diligence which will also negatively impact business and cross border trading which may increase prices, bargaining power and the cost of securing and servicing debt.
International aid if needed would see fewer potential sponsors.
Government revenues from local businesses would be negatively impacted.
International bond and loan markets would be regarded negatively meaning governments and private sector would have severe challenges in raising capital.
None of this is good. And all of it is avoidable. We absolutely and categorically need to take the steps necessary to prevent grey-listing and the LOK provides the safety net that we desperately need.
In conclusion I would like to say that “change is the only constant”, and in the face of change, we have two choices – resist or adapt. I believe in the resilience and adaptability of the Curaçao spirit. Together we can create a future where Curaçao can shine as a beacon of responsible gaming in the Caribbean.
As Australia continues its attempts to regulate the acute issues leading to problem gambling within its borders, further responsible gaming failures continue to come to light.
Now undoubtedly a major policy issue, problem gambling and gambling addiction in turn is having a heavy impact on the Oceanic commonwealth.
Nearly 80 percent of Australians partake in gambling activities with the most at-risk demographic being males between the ages of 18 and 35.
What’s more worrying, however, is that almost half of all Australians who participate in gambling activities are at risk of experiencing some kind of gambling-related harm.
Efforts to curb problem gamblingIn lieu of this, Australia is undergoing a heavy regulatory restructuring in order to address these increasingly out-of-control issues.
Subsequent to a parliamentary inquiry specifically aimed at curbing harms from online gaming, 31 recommendations have been made to encourage responsible gaming and mitigate gambling harm.
These have most notably included a self-exclusion register known as BetStop and a ban on credit cards for gambling purposes, previously only applicable at land-based venues, extended to all online gambling among any other forms.
These efforts are yet to be properly reviewed due to how early in their inauguration they are. Aside from this, however, several issues remain unattended to as of yet.
Fines for underage gamblingSubsequent to the implementation of the newest measures from the parliamentary inquiry, Gambling operator Tabcorp was accused of failing to prevent a 16-year-old from gambling at several of their venues in nearly 31 instances.
Aside from Tabcorp’s clear negligence in adequately monitoring their venues for underage gambling or establishing effective age verification methods, this displays just how deep gambling penetrates into the culture of the nation.
This is perhaps an issue as significantly perpetrated by advertisers as it by operators themselves.
CEO of New South Wales operator Wicked Games, Darryl Manning, gave an exclusive statement to SiGMA group when he explained that this sort of oversight would not occur in the currently outlawed online casinos of Australia.
He suggests that player protections are far more robust online than they are in land-based operations:
“If the pundits wanted to get real about problem gambling, why not allow online slots. After all, the tools that are currently being developed to protect the online player are far more robust, and far more capable of identifying a player’s means or curtailing certain behaviour, than those applied to land-based Gaming.”
Considering these improved protections, problem gambling could be curbed by offering a more diverse marketplace with a new influx of far safer products in the online space.
Gambling advertisingWhen focusing on gambling advertising, the various states comprising Australia are in agreement and are keen to enact a ban or at least a restriction on gambling advertising.
South Australia
In South Australia there is already a gambling ban in place for television that includes a blackout between 4 pm and 7.30 pm on Monday and Friday with a similar blackout in effect for radio between 6 am and 8.30 am on the same days.
This is still not believed by many to be a strong enough band with South Australia submitting in favour of a total prohibition on gambling advertising on television, streaming services and social media.
Shane Rattenbury, the Australian Capital Territory’s attorney general, has also stated that he wishes to see his jurisdiction follow suit.
Queensland
In Queensland, the government has made several statements noting that gambling promotion is “obtrusively delivered through television broadcasts” touting its own support for a ban on gambling inducement.
Although gambling advertising is already restricted in the territory, PG programmes between the family-friendly hours of 7 pm and 8.30 pm are unfortunately “saturated with gambling advertising”.
A national issue?This issue has been a point of contention for quite some time now. The states previously mentioned among some others are in favour of a national approach issued throughout the commonwealth.
However, some other states, most notably New South Wales, have submitted in support of the current system as the regulatory bodies there believe this is a matter for states and territories separately.
These states have stated that this preference stems from the competitive tension this creates, allowing states to adopt the most optimal policies based on the variety of data provided by their peers.
Operator stanceAlthough most operators in Australia would disagree with gambling advertising being subject to a complete prohibition, there is some agreement in that effective restrictions should be implemented with scrutiny placed on the ethical values of advertisers.
Manning also weighed in on this particular issue, expressing how he believes that the onus should be on advertisers to dissuade any players at risk.
In his statement, he suggested:
Join us in Malta between the 13 – 17 November for SiGMA Europe 2023“One way would be to allot a portion of the advertising budget to this audience. Maybe the last third of a video ad or the bottom third of a pictorial could be dedicated to seriously addressing the issue. Not just a 5-second Speed talker.”
SiGMA Europe’s Malta Week festival brings together a diverse and international group of industry leaders for a convergence of expo, conference, and networking. The event will be held at the Mediterranean Maritime Hub (MMH), a larger, more dynamic venue that promises a raw, industrial, and unconventional space unlike anything ever used before.
In the words of SiGMA Group founder Eman Pulis, “We’re redesigning your entire experience, from the minute you land in Malta until the very last moment. I look forward to welcoming you with open arms to this iGaming festival.”
Find all the details here.