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Win limits as a strategy for “responsible gaming”
Stephen W. Litvin, Douglas M. Walker, and Russell Sobel15th International Conference on Gambling and Risk-Taking
Caesars Palace, Las Vegas, May 30, 2013
2
Disordered gambling
• Gambling to an extent that it causes disruption in personal or professional life– Affects 1% of general population
• DSM-5 (2013) has 9 criteria, choose 4 (Petry et al., 2013)– Relies on other to provide money to relieve
desperate financial situation caused by gambling
Litvin, Walker, and Sobel, "Win limits..."
Litvin, Walker, and Sobel, "Win limits..." 3
Gambling research
• Focuses on…– Diagnosis– Causes and effects– Prevalence estimates– Treatment strategies
Litvin, Walker, and Sobel, "Win limits..." 4
“Responsible gaming”
• Strategies to help prevent and/or alleviate gambling disorders– Akin to limits for low-risk alcohol consumption (Currie et al.
2008)• Optimal limits for “low risk participation” in gambling (Currie et al.
2006): – gambling no more than 2 or 3 times per month– spending no more than CAN$501-1000 per year on gambling– spending no more than 1% of gross family income on gambling
• No single, accepted definition of “responsible gaming”– “…any level of gambling that does not contribute to harm”
(Currie et al. 2008)
Litvin, Walker, and Sobel, "Win limits..." 5
“Responsible gaming”, cont.
• Key aspects of responsible gaming include…– Setting a loss limit– Limiting the amount of gambling
• Time per session• Frequency
• Focus on limiting losses and limiting time gambling– Financial losses cause problems– Negative expected value limiting time is
important
Litvin, Walker, and Sobel, "Win limits..." 6
Promotion of “responsible gaming”
• Gambling research• Corporate social responsibility (casino
industry)• State government laws and regulations
Litvin, Walker, and Sobel, "Win limits..." 7
Gambling research
• Motivation for “responsible gaming”– Disordered gamblers responsible for a significant
proportion of industry revenues (Orford et al., 2013)– Financial problems characterize disordered gamblers– Public health focus on harm minimization (Korn &
Shaffer, 1999)• Responsible gaming in the literature– Often mentioned as a component of prevention &
treatment– Tests of effectiveness?
Litvin, Walker, and Sobel, "Win limits..." 8
Corporate social responsibility• Casino industry openly acknowledges problem gambling
– May be a reaction to cigarette case• CEOs’ claim that “nicotine is not addictive”• 1998 settlement to pay states $206 billion
• Financial support of research– NCRG (National Center for Responsible Gaming)– Some critics of research (e.g., Schüll 2012, pp. 260-271)
• Casinos have brochures on responsible gaming placed in prominent locations on casino floor– “Set a budget and stick to it.”– “Set a time limit and stick to it.”
• The industry seems to be very upfront and responsible about informing customers– But does this also help their bottom lines? (Yes)
Litvin, Walker, and Sobel, "Win limits..." 9
AGA (2003)• Four key characteristics of
responsible gaming– Responsible gamers understand that
gambling by its nature entails risk and that the odds of winning are with the house
– Responsible gaming is done socially, with family, friends or colleagues
– Responsible gaming is done for limited amounts of time, both in frequency and duration
– Responsible gaming always has predetermined acceptable limits for losses
Litvin, Walker, and Sobel, "Win limits..." 10
State government
• Debates over casinos often focus on social costs and problem gambling– Politicians require industry to address problems
and pay taxes to address them• Regulations include…– Requiring brochures/information in casinos– Direct funding for treatment/help lines
• AGA summarizes state regulations (2008)
Litvin, Walker, and Sobel, "Win limits..." 11
Source: American Gaming Association, “Responsible gaming statutes and regulations.” (2008)
Litvin, Walker, and Sobel, "Win limits..." 12
Casino gambling statistics
• Players’ EV for casino games is -5%– Table games• Roulette: single/double 0• Craps: odds (2x, 10x, etc.)
– Slot machines• Payout % often regulated• Averages 95%
Litvin, Walker, and Sobel, "Win limits..." 13
Probability density function
Source: Hannum & Cabot (2005, p. 22)
Litvin, Walker, and Sobel, "Win limits..." 14
A typical casino visit
• Loss limits are a key component of “responsible gaming”
• Consider a “responsible gambler”– Player starts with $500 chips and loss limit– Player leaves once they lose the budgeted $500– Responsible gambler leaves all budgeted money at
the casino– A “win limit” may have them leave earlier, with
the casino’s money
Litvin, Walker, and Sobel, "Win limits..." 15
Win limits in the literature
• Never mentioned in academic literature• Common in “how to beat the casino” books
– Schneider, The Everything Casino Gambling Book: Feel Confident, Have Fun, and Win Big! (2004, pp. 214-15)
“Setting limits on your winnings is just as important as setting limits on your losses, and for the same reason. Many a player has found himself up a huge amount at the table or slot machine, only to go home empty-handed because he continued to play well past the point where he should have quit. Remember, the longer you play any game at the casino, the more the odds swing in the casino’s favor.”
Litvin, Walker, and Sobel, "Win limits..." 16
Simulation of loss & win limits
• Slot machine– $1 per play, single line– Random number generator, 0.000-1.000– Expected value of -0.05
• Spin results and payoffs:Random Number Net
PayoffMinimum Maximum
0.00000 0.75000 $ (1)
0.75001 0.90000 $0
0.90001 0.97000 $1
0.97001 0.99897 $20
0.99898 0.99997 $45
0.99998 1.00000 $160
Overall expected value: $ (0.05)
Litvin, Walker, and Sobel, "Win limits..." 17
Simulation, cont.
– Player details• Each run includes 900 players• Each player can do 5,000 spins, if no limits set
– Simulation Rules[1] No win limit or loss limit[2] Time limit of 1 hour (at 6 seconds per play = 600 plays)[3] $100 loss limit; no win limit[4] $100 loss limit; $100 win limit[5] $100 loss limit; $100 win limit “down”[6] $100 loss limit; $200 win limit[7] No loss limit; $100 win limit
Litvin, Walker, and Sobel, "Win limits..." 18
Simulation results summary (900 players)
Simulation
# Winners
Average$ Result
Maximum$ Result
Minimum $ Result
Average # Plays
Maximum # Plays
Minimum # Plays
1 No win or loss limits (5,000 spins; 8.33 hrs. of play)
159 $ (251) $ 419 $ (843) 5,000 5,000 5,000
2 Time limit of 1 hr. (assume 6 sec./spin)
315 $ (30) $ 233 $ (220) 600 600 600
3 $100 loss limit; no win limit
66 $ (76) $ 382 $ (100) 1,429 5,000 147
4 $100 loss limit; $100 win limit
275 $ (35) $ 162 $ (100) 677 2,595 78
5 $100 loss limit; $100 win “down”
286 $ (35) $ 666 $ (100) 730 5,000 41
6 $100 loss limit; $200 win limit
135 $ (53) $ 254 $ (100) 1,084 4,478 156
7 No loss limit; $100 win limit
435 $ (153) $ 186 $ (858) 3,135 5,000 81
Litvin, Walker, and Sobel, "Win limits..." 19
Comparison
- $100 loss limit vs- $100 loss limit; $100 win limit
- losses cut in half, so is the fun- number of winners increases dramatically
with win limits- cuts maximium in half (unless it’s win “down”)
Litvin, Walker, and Sobel, "Win limits..." 20
-$1200 or less
-1199 to -1
100
-1099 to -1
000
-999 to -9
00
-899 to -8
00
-799 to -7
00
-699 to -6
00
-599 to -5
00
-499 to -4
00
-399 to -3
00
-299 to -2
00
-199 to -1
00
-99 to 0
1 to 100
101 to 200
201 to 300
301 to 400
401 to 500
501 to 600
601 to 700
701 to 800
801 to 900
901 to 1000
$1001 or more
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
5000 spins $100 loss $100 loss, $100 win $100 loss, $200 win1 hr time no loss; $100 win $100 loss,$100 win down
Probability Density Functions
Litvin, Walker, and Sobel, "Win limits..." 21
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
5000 spins $100 loss
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%
5000 spins $100 loss, $100 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
5000 spins $100 loss,$100 win down
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%
5000 spins no loss; $100 win
Litvin, Walker, and Sobel, "Win limits..." 22
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%
$100 loss, $100 win $100 loss,$100 win down
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
$100 loss $100 loss, $100 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
5000 spins $100 loss, $200 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%
5000 spins 1 hr time
Litvin, Walker, and Sobel, "Win limits..." 23
-$1200 or less
-1199 to -1
100
-1099 to -1
000
-999 to -9
00
-899 to -8
00
-799 to -7
00
-699 to -6
00
-599 to -5
00
-499 to -4
00
-399 to -3
00
-299 to -2
00
-199 to -1
00
-99 to 0
1 to 100
101 to 200
201 to 300
301 to 400
401 to 500
501 to 600
601 to 700
701 to 800
801 to 900
901 to 1000
$1001 or more
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins $100 loss $100 loss, $100 win $100 loss, $200 win1 hr time no loss; $100 win $100 loss,$100 win down
Cumulative Density Functions
Litvin, Walker, and Sobel, "Win limits..." 24
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins $100 loss
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins $100 loss, $100 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins $100 loss,$100 win down
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins no loss; $100 win
Litvin, Walker, and Sobel, "Win limits..." 25
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
$100 loss, $100 win $100 loss,$100 win down
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
$100 loss $100 loss, $100 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins $100 loss, $200 win
-$1200 or less
-1099 to -1
000
-899 to -8
00
-699 to -6
00
-499 to -4
00
-299 to -2
00
-99 to 0
101 to 200
301 to 400
501 to 600
701 to 800
901 to 1000
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
5000 spins 1 hr time
Litvin, Walker, and Sobel, "Win limits..." 26
Win limits and “responsible gaming”
• Should this be a component? • Suppose when a person reaches his win limit, he leaves the casino for an
hour or two…– Thaler & Johnson (1990) discuss people behaving differently when betting with
“house money”• Event count is more important than magnitude• Two wins of $50 each is “better” than one win of $100
– Leaving could change perception from “casino’s money” to his– The decision to stop gambling when ahead might be “good practice” for making
other difficult decisions – like not gambling so much.• Utility function weighting of…
– more gambling sessions– greater chance of winning– less time playing
• The End.
Litvin, Walker, and Sobel, "Win limits..." 27
Contact informationDoug WalkerDept. of Economics & FinanceCollege of Charleston66 George St.Charleston, SC 29424
[email protected](843) 953-8192
Springer © 2013, 312 pagesISBN 978-1-4614-7122-6
www.springer.comUse Token for 20% off, before June 20
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