One of the very best presentations on why the legalization of commercialized sports gambling has inflicted so much harm on tens of millions of Americans, especially young adults and teens.
One of the very best presentations on why the legalization of commercialized sports gambling has inflicted so much harm on tens of millions of Americans, especially young adults and teens.
In a first-of-its-kind study from the University of California San Diego Rady School of Management, researchers have identified comprehensive insights into the positive and negative impacts of online gambling legalization on tax revenue and gambling behaviors in the U.S. They find it enhances state revenues, but increases irresponsible gambling, especially among lower-income consumers.
“Our data show that online gambling legalization leads to more irresponsible gambling spending among lower-income consumers than among higher-income gamblers,” said Kenneth C. Wilbur, professor of marketing and analytics at the Rady School and co-author of the study. “We define gambling irresponsibly as spending a high proportion of their income —for example, 10%—on gambling.”
The authors of the working paper analyzed five years of data from a total of 32 states. They compared 18 states that changed online gambling policies to 14 states that did not have gambling policy changes using a generalized synthetic control framework, a method used by economists and data scientists to evaluate government policy changes as natural experiments.
Authors applied the framework to data from four sources, including comprehensive state revenue and tax data, national gambler helpline calls, Center for Disease Control suicide records and digital payment records for a balanced panel of 717,724 online gamblers.
“Of the more than 700,000 gamblers that we studied, 96% percent appeared to lose money to online gambling,” Wilbur said. “Only 4% made money from online betting. That is by design. Online gambling platforms often ban or throttle frequent winners’ accounts. There is no right to gamble.”
Low-income gamblers are most likely to increase irresponsible gambling after state policy changes
For around 250,000 participants, researchers could analyze gambling expenditure as a percentage of income, thanks to direct deposit data. In Canada, responsible gambling guidelines advise gamblers to spend less than 1% of monthly income on gambling. However, the direct deposit dataset revealed that 43% of panel gamblers exceeded 1% of income in gambling months, with 5.3% spending more than 10% of their income on gambling and 3.2% spending more than 15% of their monthly pay.
“Our analysis shows that online gambling legalization leads to far more problematic gambling among lower-income gamblers than among higher-income gamblers,” Wilbur said. “These findings emphasize the high financial risk associated with online gambling.”
“We tried to collect as many relevant and comprehensive data sets as we could to help inform policy makers,” Wilbur said. “Given our results, a concern of legislators could be that while they see tax revenue rolling in and much of that spending is coming from the wealthier individuals i.e. ‘whales.’ But, if you look more closely, the people experiencing the most gambling problems are likely to be the smaller-scale, lower-income gamblers, i.e., ‘minnows.’ This might justify more spending on assistance for problem gamblers.”
Psychiatrist Dr. Kavita Fischer of Pennsylvania was profiled in The Wall Street Journal on Feb. 18, 2024.
Kavita Fischer couldn’t believe her luck.
She started with $750 and hit a hot streak last summer that stretched over six days. She played round after round of online casino games until her winnings hit $500,000. The windfall would make up for every bad bet and pay off all she owed.
Fischer, a 41-year-old mental-health professional and suburban homeowner with two boys, was by then in debt by six figures from online gambling losses. For nearly a year, she lost again and again, complaining to at least one gambling company that she had a problem but couldn’t stop. As a psychiatrist familiar with human impulses and addiction, Fischer knew better than most what she needed to do.
Yet she was up against an industry skilled in the art of leveraging data analytics and human behavior to keep customers betting. Gambling companies tracked the ups and downs of Fischer’s betting behavior and gave bonus credits to keep her playing. VIP customer representatives offered encouragement and gifts.
After her six-day hot streak, Fischer made several requests to start withdrawing the half-million dollars from the PointsBet gambling app. But she kept changing her mind and plowed the money back into play.
Within a day, she lost nearly all of it. “There’s nothing in your brain that says, ‘OK, stop now, you’re done. You’ve won your money back, you can put this behind you,’” Fischer said. “There was just something in my brain that made me keep going.”
The more than $15-billion-a-year online gambling industry grew out of a 2018 Supreme Court decision that cleared the way for states to allow and regulate sports betting. Now, 30 states and the District of Columbia have approved online sports wagering 24 hours a day.
Online casino gambling, which became Fischer’s habit, is legal in six states and has been an industry gold mine.
In November 2022, Fischer downloaded the app from DraftKings, one of the top two online-betting companies in the U.S. along with FanDuel. She was looking for relief from the stress of a recent divorce and the isolation of working from home in the pandemic. She found Slingo, a bingo-style matching game as simple to play as a slot machine.
Soon after Fischer started playing, a customer representative sent an email introducing himself. At DraftKings and other online betting companies, they are identified as VIP hosts.
“I look forward to working with you and building a great relationship!” Jamyl Cogdell wrote on Dec. 9, 2022. Over four months, Fischer said they exchanged dozens of emails and text messages. Cogdell didn’t respond to requests for comment, and DraftKings declined to comment on his behalf.
DraftKings and other gambling companies doled out tens of thousands of dollars in credits that kept Fischer playing long after she wanted to quit.
Casinos have always wooed their high-rollers with special treatment, but online-betting has intensified industry tactics. Companies closely track betting habits 24 hours a day, collecting such data as how much time each customer spends on an app, how much money they gamble, what kind of bets they place and how much they lose.
With a real-time view of a customer’s gambling activity, VIP hosts keep in close touch. They can track when customers last used the app and offer credits and other incentives to persuade their most-valued gamblers—by definition, the biggest losers—to return. Payment options give gamblers immediate access to funds that some can’t cover.
Gamblers are assigned VIP hosts based on how much they are wagering. The personal attention pays off. At PointsBet—acquired in 2023 by Fanatics, a sports-merchandise company—VIP sports bettors representing 0.5% of the customer base generated more than 70% of the company’s revenue in 2019 and 2020, according to internal company documents reviewed by The Wall Street Journal.
Fischer at times bet tens of thousands of dollars a spin. As her losses grew, Fischer texted her sister in Florida, saying she had a gambling problem. Fischer’s sister said she told her to seek help.
Meantime, the VIP offers kept coming.
“How was your weekend? I just added the following offer to get your Tuesday started off right: Earn $30 casino credits for every $1,000 wagered on Slots,” Cogdell wrote to Fischer on Jan. 17, 2023, “up to $1,000 over 72 Hours.”
Looking back, Fischer said she became a psychiatrist to understand the mysteries of the human brain. Over the course of about 11 months, she became a mystery to herself. “You know you’re wasting your life or time or money,” she said. “You just can’t get out.”
Online gambling companies say that most people play for entertainment, and that they can minimize harm to customers.
“DraftKings is committed to the highest standards of consumer protections and responsible gaming,” said Jennifer Aguiar, the company’s chief compliance officer. The company declined to comment about Fischer.
This account is based on interviews, emails and financial records.
Fischer, a co-valedictorian of her high school in Florida, finished her residency in psychiatry in 2012 at the University of Pittsburgh. She appreciated the art and science of her profession, getting to know patients as a way to understand their illnesses.
She lives in a two-story house with walls of windows overlooking the rolling hills of her Pittsburgh suburb. Her two young sons play soccer. Over the years, she sometimes visited a nearby casino to see a 1980s cover band, budgeting $100 to pay for food, drinks and craps games on her night out.
During the pandemic, playing casino games on her phone started out as a way to unwind after the boys went to sleep. Soon, she was gambling late into the night. As she lost, she spent more time and money trying to reverse her fortunes. “I’ll do it this time,” she recalled thinking. Instead, her losses grew.
She hoped to dig her way out and the free credits gave her a reason to keep trying. DraftKings sent her a 14-person tent that she sold for $500. The company invited her to a Steelers football game to watch from a suite with food and drinks.
On Jan. 9, 2023, Fischer emailed her DraftKings host to say she was “doing terribly” at Slingo and should try a different game “or quit gambling completely.”
“In the meantime, is there any way you can send me some VIP love?” she asked.
The host added a $500 bonus to her account. “Hope you can get hot!” he said. Later that month, he asked Fischer to check in once a week to see if she was eligible for promotions and credits.
To fund her gambling, Fischer spent savings and retirement funds and took out personal loans. She used credit cards that treat gambling transactions as cash advances, charging interest rates as high as 33%.
Fischer discovered Pavilion Payments, which works with betting companies to provide a service called VIP Preferred. The program gives bettors access to money without waiting for bank transfers to clear. When Pavilion, a Las Vegas-based company, tried to collect what Fischer owed, she often came up short, triggering collection notices. Pavilion said it promotes responsible gambling.
Several times, Fischer imposed limits on her betting through tools provided on the apps, including DraftKings. She would cap her spending or temporarily block herself from placing bets. When those restrictions expired, she started spending again.
As her debts grew, Fischer tried in January to sign up for a state-run program that allows gamblers to ban themselves from all betting apps legal in Pennsylvania—for a year, five years or a lifetime. Fischer said she got an error message and gave up.
“I’m hurting this week—would you please be able to do one more bonus so I can try to turn my luck around tomorrow?” Fischer said in a March 8, 2023, email to her VIP host.
The host credited her account with $500. “Hoping this will get you on the right track!” he wrote.
Later in March, Fischer’s boyfriend took her for a getaway in Cancún, Mexico, but she couldn’t stop thinking about her swelling financial problems. She was $1,200 short on her mortgage and wrote her DraftKings host asking if they offered loans to VIP customers.
The host said no. He asked if Fischer was gambling within her means. “We take responsible gaming very seriously here,” he wrote, and included a link to DraftKings tools that would allow her to limit bets or impose a temporary ban.
After returning home, Fischer told her DraftKings host she was gambling within her budget. “Okay perfect,” he said and gave her a $250 credit “to get you back in action.”
In April, DraftKings said she was no longer eligible for a VIP host but didn’t give a reason. Frustrated, Fischer demanded her account be closed. In the first four months of 2023, she lost about $141,000 to the company. During that time, DraftKings gave her more than $36,000 in gambling credits. Overall, she lost more than $190,000 to DraftKings in 2022 and 2023.
Fischer wrote to DraftKings in May, saying she was addicted to gambling and needed help. “I do believe I could have been protected better,” she said. “My VIP host could see the time I spent gambling as well as the amounts.” She asked to be reimbursed for a portion of her losses.
A member of DraftKings’ Player Protection Team said in an email that she couldn’t get a refund for her losses.
“We are sorry to hear about your experience with our platform and the financial issues you now are facing,” a representative of DraftKings’ Player Protection wrote. The email included phone numbers for gambling hotlines and links to gambling addiction websites.
“I would have stopped a long time ago,” Fischer said. “Those VIP bonuses would get me back in.”
Psychologists say that for gamblers, placing a bet triggers the brain to release dopamine, a chemical that creates a sense of pleasure and anticipation. The feelings surge while awaiting the next spin of the slot machine or the next football play. Gamblers seek the feeling repeatedly, regardless of winning or losing. Some can’t stop.
The online betting industry in the U.K. has been under scrutiny over concerns about gambling addiction and the marketing practices of betting companies. Regulators cited bonuses and VIP programs as tools companies employ to keep customers gambling and losing.
In 2020, U.K. regulators imposed restrictions on VIP programs, which target big spenders. The rules required the companies to check on whether gamblers could afford the amounts they were betting and rein in credit giveaways. Regulators have since reported a 90% reduction in the number of customers in VIP programs.
PointsBet as recently as 2022 categorized its sports-betting customers based on their wagering patterns, according to internal company documents viewed by the Journal. One type of valued customer was known as a “Dave,” which the company has described as a man, aged 30 to 45, making at least $150,000 a year. Daves bet about 100 days out of the year with an average wager of $500.
The company also labeled customers making an average bet of less than $20 as a “Chad,” marking them as less desirable gamblers. PointsBet had stopped using the terminology by the time it was acquired by Fanatics, a Fanatics spokesman said.
Psychologists who study gambling addiction say companies collect enough data to identify sports-bettors and online-casino customers with a problem.
The biggest sign is known as chasing losses—attempting to recoup losses by gambling more. One trackable indicator is when bettors make frequent deposits into their gambling accounts, according to a U.K. study.
On some days, for instance, Fischer made a dozen or more deposits into a single app, according to her bank statements: $100. $300. $500.
As states debated legalizing online gambling, companies promised to intervene with problem gamblers, but there are few regulations to ensure compliance.
New Jersey regulators last year started requiring betting companies to use player data to identify at-risk customers. Among the trackable signs are gamblers who increase the amount of time they spend betting each week, and those who wager until they have less than a dollar in their accounts, according to the New Jersey Division of Gaming Enforcement. Other indications include bettors who repeatedly bar themselves from betting apps.
About 94,000 customers had received varying degrees of intervention from online companies, including video tutorials and conversations about responsible gambling, as of October last year, according to the New Jersey attorney general’s office.
Last July, after Fischer won and lost $500,000 with PointsBet, a customer representative offered in an email to help Fischer set spending limits on the app. The representative asked to arrange a time for a phone call to check on her.
“At PointsBet, we want to ensure that our players are having the best experience possible, and we strongly believe that the best way to do that is to gamble responsibly,” the email said.
In August, Fischer again applied to be banned from gambling apps through the Pennsylvania Gaming Control Board. In an automated email on Aug. 3, the agency said her request wasn’t accepted because of discrepancies in her information.
A week later, she tried again and added a personal plea. “I have attempted to self-exclude now for the 4th time/ please let me know if you need anything else from me. Pennsylvania online gambling has wrecked my life,” she said in an email.
The state board confirmed her lifetime ban from online betting platforms three days later. Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board, said the agency responds when people have trouble signing up for the ban.
In one year, Fischer gambled away more than $400,000 of her own money. “Can you blame someone who has alcohol addiction?” Fischer said. “I don’t.”
She took out a $243,000 home-equity loan to pay off credit cards and personal loans at a lower interest rate. It will cost her $2,400 a month for 15 years, she said. That is on top of her monthly mortgage payment of $3,600 a month.
To settle another $120,000 in credit-card debt, Fischer has payment plans that cost $2,500 a month. She has picked up shifts with a local healthcare provider for extra income.
In August, Fischer attended her first 12-step meeting for gamblers at a local church. She felt afraid and alone, thinking there might be only a few people there. Instead, there was a group of 25. One group member told her not to feel lonely anymore. She cried.
“I was, like, ‘I can’t believe there are so many people here,’” she said.
Fischer is planning a presentation in March to psychiatrists across Pennsylvania about screening for gambling problems. She said she wanted to tell her story, despite the professional and personal risk, to help lift the stigma of gambling addiction.
“It can happen to anyone,” she said.
On the use of artificial intelligence in the gambling industry: “The gambling industry’s sly new way to suck money from desperate Americans.” Read it here.
Amid a backdrop of states like Texas aggressively selling $100 lottery scratch tickets in communities where citizens earn a minimum wage of $7.25 an hour, and policy makers of both political parties talk continuously about ways to improve opportunity and attain financial security for more Americans and their families, we urge you to watch this important national webinar on what many believe is one of the country’s most-neglected yet consequential problems: state lotteries.
The event is for reporters, opinion leaders, public officials, and members of our national network interested in learning how state governments’ experiment with lotteries has failed and how this failure affects you, your community, and the nation, regardless whether you ever buy a single lottery ticket.
The forum is titled “How States’ Experiment with Lotteries Has Failed and Why It Affects You.” It features prominent national lottery expert Dr. Jonathan Cohen, author of the important new book “For a Dollar and a Dream: State Lotteries in Modern America,” and Sean Mussenden, data editor for the Howard Center for Investigative Journalism at the University of Maryland and a key figure behind the publication of the 2022 groundbreaking national series on state lotteries, “Mega Billions: The Great Lottery Wealth Transfer.” Brief background about each speaker is below.
After you watch the webinar, we strongly urge you to share the video with your email list and your social media networks, inviting people to learn for themselves how serious and urgent the problem of state lotteries has become and how it affects all of us, including those who rarely, if ever, gamble on the lottery.
We also strongly encourage you to share the video with every local, state, and federal official in your region, along with members of the local and state media.
The video is posted to our YouTube channel and it can be watched here.
About the Speakers:
Dr. Jonathan D. Cohen is a program officer at the American Academy of Arts & Sciences. He is the co-editor of All In: The Spread of Gambling in Twentieth-Century United States and Long Walk Home: Reflections on Bruce Springsteen. He received his PhD in history from the University of Virginia. His new book “For a Dollar and a Dream: State Lotteries in Modern America” was published by Oxford University Press and can be purchased here.
Sean Mussenden is data editor for the Howard Center for Investigative Journalism, an investigative reporting unit at the University of Maryland Philip Merrill College of Journalism that partners early-career journalists and veteran journalists at news organizations like the Associated Press, PBS NewsHour and National Public Radio to produce deeply reported investigative stories. He was a key figure in the Howard Center’s recently published, “Mega Billions: The great lottery wealth transfer,” an in-depth look at lotteries in nearly every state.
As casino gambling operators lobby to build more casino locations in large cities like Chicago and Manhattan as well as rural communities across the US, we organized a national webinar panel on what you need to know about the real economic consequences that local casinos leave behind in their wake.
This webinar is for reporters, opinion leaders, public officials, and members of our national network to learn how local casinos affect regional economies, lower the standard of living for all citizens, including those who don’t gamble, and the urgency for Congress to act.
The webinar is titled “The Truth About the Economic Impact of Casinos.” The panel features Dr. Jonathan Krutz, emeritus professor of the College of Business and Economics at Boise State University, and Dr. Earl Grinols, and Distinguished Professor of Economics Emeritus at Baylor University. Brief background about each speaker is below.
Below is the link to watch the important event “The Truth About the Economic Impact of Casinos” that featured Dr. Jonathan Krutz, emeritus professor of the College of Business and Economics at Boise State University, and Dr. Earl Grinols, and Distinguished Professor of Economics Emeritus at Baylor University. Brief background about each speaker is below.
We strongly urge you to share the video on your email list and and your social media networks, inviting people to learn for themselves how serious the problem of predatory gambling has become. We also strongly encourage you to share the video with every local, state, and federal official in your region, along with members of the local and state media.
In addition to appearing above, the video is posted to our YouTube channel and can be watched here: https://www.youtube.com/watch?v=gYf_zLZmV6Q
About the Speakers:
Dr. Jonathan Krutz holds an MBA from the University of Iowa and a PhD in Public Policy and Administration from Boise State University, where he is an emeritus professor of the College of Business and Economics. He has studied gambling policy issues and provided expert testimony for policy makers for more than 25 years. Because of his concerns about the lack of accurate, fact-based information about the impacts of commercialized gambling, Dr. Krutz has volunteered as a member of the Stop Predatory Gambling Board of Directors since 2007. His most recent research is titled “Do Casinos Create Economic Development? A 15-Year National Analysis of Local Retail Sales and Employment Growth” and you can read it here.
Dr. Earl L Grinols, Distinguished Professor of Economics Emeritus at Baylor University, holds an economics PhD from MIT and two undergraduate summa cum laude degrees in mathematics and economics. He has studied the impacts, both benefits and costs, of gambling since the early 1990s. His book, Gambling in America: Costs and Benefits through Cambridge University Press is available at Amazon.com. His most recent book, How We Flourish: The Surprising Path to a Just Prosperity is also available at Amazon.com.
One of the nation’s top law schools issued a series of articles exposing the truth behind gambling operators, including a spotlight on the issue of commercialized sports gambling.
This issue of the University of Illinois Law Review has nine must-read articles by highly-respected scholars and attorneys. The full list is here. They include:
– “Casinos- An Addiction Industry in the Mold of Tobacco and Opioid Drugs” authored by Northeastern Law Professor Richard Daynard, considered by many as the key legal architect behind the tobacco litigation movement, and his colleagues at the Public Health Advocacy Institute at Northeastern University School of Law;
– “Bans on Sports Gambling and Lotteries Would Pump-Prime the U.S. Economic System in the New Age of Covid” authored by Dr. John Kindt, Professor Emeritus of Business and Legal Policy at the University of Illinois and one of the nation’s most distinguished scholars on the economic consequences of commercialized gambling.
– “Black Youths Lost, White Fortunes Found: Sports Betting and the Commodification and Criminalization of Black Collegiate Athletes” authored by Frank Vandalla and Tallulah Lanier of Emory University School of Law;
Please read the entire series of articles to expand your own knowledge about the truth behind gambling operators. The series is one of the few examples of independent scholarship being done on commercialized gambling because nearly all the research is presently funded by gambling operators. Please share these articles with opinion leaders in your region and across your and social media networks. Thank you.
As gambling companies further intensify their ongoing barrage of sports gambling ads targeted at the American people, we recently hosted a national panel on what you need to know about the massive wave of sports gambling advertising and promotions spreading across the U.S.
Above is the video to watch our important national event “America’s New Storm of Gambling Advertising: A Threat to Public Health” from earlier this year. It featured Mark A. Gottlieb, executive director of the Public Health Advocacy Institute at Northeastern University School of Law, and Harry Levant, Director of Education for Stop Predatory Gambling.
Mark and Harry powerfully revealed the truth about what is really happening in our communities and across our country. After you watch it, we strongly urge you to share the video on your email list and and your social media networks, inviting people to learn for themselves how serious the problem of predatory gambling has become.
We also strongly encourage you to share the video with every local, state, and federal official in your region, along with members of the local and state media.
The full video is posted to our YouTube channel and can be watched here: https://youtu.be/12FtoYCE9jU
We also put the panel into four smaller parts if you can’t watch the whole thing all at once.
PART I: https://www.youtube.com/watch?v=uEVyikeJfJs
PART II: https://youtu.be/UgyIcxIw-u0
PART III: https://youtu.be/wP1YUTpfdM0
PART IV: https://youtu.be/YQf9-xMMF7k
About the Speakers:
Mark A. Gottlieb is the executive director of the Public Health Advocacy Institute at Northeastern University School of Law, where he is also a lecturer and clinical instructor. Mark has focused his research and advocacy on tobacco litigation as a public health strategy for most of his career. His article, “Casinos: An Addiction Industry in the Mold of Tobacco and Opioid Drugs” (co-authored with Daynard and Friedman) was recently published in the University of Illinois Law Review. You can read his article here.
Harry Levant is the Director of Education for Stop Predatory Gambling and a public health advocate from Philadelphia. A gambling addict in recovery who made his last bet on April 27, 2014, Levant is dedicating his professional work to helping people and families to overcome struggles with gambling addiction and other substance disorders. In his role as an advocate, Levant will graduate from La Salle University with a Masters in Professional Counseling in May 2022. He is a member of numerous professional organizations including Chi Sigma Iota National Honor Society for Counselors, the American Counseling Association, the Pennsylvania Counseling Association, and Lawyers Concerned for Lawyers of Pennsylvania. He also earned a law degree from Temple University Law School.
Moderator: Les Bernal is National Director for Stop Predatory Gambling. Stop Predatory Gambling believes people are worth more than money. A 501c3 non-profit based in Washington, DC, its members work to reveal the truth behind commercialized gambling operators to prevent more victims.
It is only because of the selfless financial generosity of our members that we are able to fund important events like this national webinar. If you support our mission to reveal the truth behind commercialized gambling operators to prevent more victims, please become a member of our national network by making a gift of any size you can afford today.
Thank you.
Stop Predatory Gambling’s Les Bernal delivered the speech “The High Price of Greed: How a Local Casino Will Affect Shippensburg Kids and Their Families” in Shippensburg, Pennsylvania in May 2021. The message of the speech applies to all regions dealing with the problem of local casinos across the United States. Please watch and share the video below.