Predatory Business Practices

Lottery Advertising: The Pathology of Hope

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Respected gambling researcher Robert Goodman has called lottery advertising “the pathology of hope” and state lotteries, because of their exemption from truth-in-advertising laws, fully exploit this pathology.

Most industries and companies are subject to truth-in-advertising laws enforced by the Federal Trade Commission. According to these laws, advertising must be truthful and non-deceptive, advertisers must have evidence to back up their claims, and advertisements cannot be unfair. Since 1974, the U.S. Congress has exempted state-run lotteries from these laws. Because of this, governments and lotteries have wide latitude in how they can promote their product, exaggerate chances of winning, and encourage more of our fellow citizens to lose their money instead of saving or investing. All federal laws relative to the lottery can be found in Title 18 of the U.S. Code, Sections 1301 to 1307. The final section, 1307, outlines the lottery’s exemption from truth-in-advertising laws.

These predatory and deceptive practices can be found in the media plans of the lotteries. Ohio’s Super Lotto media plan, for example, stated that lottery promotions should be timed to coincide with the receipt of government benefits, payroll and Social Security payments.

Lottery – U.S. Code

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A Nation in Debt: How We Killed Thrift, Enthroned Loan Sharks and Undermined American Prosperity

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This essay written by Barbara Dafoe Whitehead appeared in the July/August 2008 issue of The American Interest. It is excerpted and adapted from For a New Thrift: Confronting the Debt Culture, a report released in May 2008 by the Commission on Thrift. Whitehead exposes how anti-thrift institutions like state lotteries, casinos, payday lenders and credit card companies hinder the average American’s ability to save their earnings and get ahead financially. These institutions have been the main contributors to the growing amount of consumer debt accumulated in recent decades. Whitehead calls on the public to reform these institutions and to advocate for a culture based on saving and wealth-building.

Whitehead – A Nation in Debt

LesA Nation in Debt: How We Killed Thrift, Enthroned Loan Sharks and Undermined American Prosperity
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Exploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?

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Predatory gambling in Australia has matured faster than that in America, providing valuable lessons on addiction. Mark Dickerson, a noted academic from the University of Western Sydney, shared his work at McGill University in Montreal, Canada. Essentially, Dickerson proves conclusively that the only truly “responsible” gamblers are professional gamblers. Gambling is designed, marketed and packaged to carry customers beyond the point of reason and control. Dickerson believes there are methods the gambling operators could employ to ameliorate these dangers. But operators are unlikely to voluntarily jeopardize revenues from its victims. The study provides remarkable insight into how predatory gambling works and what it does to its customers. The second report below was also written by Professor Dickerson and it deals with similar issues as the study above. In the second report he notes the difficulty of identifying problem gamblers and suggests ways the operators could reduce harm.

Limits of Responsible Gambling

Reframing Responsible Gambling

LesExploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?
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Meet Your New Neighbor: How Slot Machines are Secretly Designed to Seduce and Destroy You, and How the Government Is In On It

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MUST-READ. Here’s what may be the best investigative news story about electronic gambling machines and the partnership between the predatory gambling trade and our government written to date. The reporter was Isaiah Thompson of the Philadelphia City Paper and it appeared in January 2009.

Meet Your New Neighbor

LesMeet Your New Neighbor: How Slot Machines are Secretly Designed to Seduce and Destroy You, and How the Government Is In On It
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Why It’s Time to Disrupt the “Business as Usual” Approach to the Government Policy of Predatory Gambling

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This MUST-READ report by Charles Livingstone and Richard Woolley provides what may be the best analysis about how almost 100% of the responsibility for problem gambling is placed on the backs of the afflicted citizens. Predatory gambling operators and the government accept virtually no responsibility.  The report also shows why it is time to disrupt this “business as usual” approach promoted by those who profit from government-sanctioned predatory gambling.

Risky Business: A Few Provocations on the Regulation of Gambling Machines

CkirbyWhy It’s Time to Disrupt the “Business as Usual” Approach to the Government Policy of Predatory Gambling
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Sports gambling apps target users as young as 13 years old

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This MarketWatch article outlines the move by app developers to tap into the large and growing U.S. sports gambling market by developing ‘freemium’ models for users as young as 13 years old. These models include no purchase required apps where users must view advertising to enter pools and free virtual currency based apps.

2016 Sports gambling apps target users as young as 13

LesSports gambling apps target users as young as 13 years old
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Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling

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In this paper, Harrigan and Dixon examine how the same slot machine games with different payback percentages may affect the player’s behavior. Interestingly, slot machines with higher payback percentages (offering a perceived air of fairness for the player: 98% vs. a lower payback of 85%), were more likely to impose the most risk for ensuing gambling problems. In their findings, they argue for the regulations of lower payback percentages (85%), as the higher ones appear to be far more addictive.

Government Sanctioned ‘‘Tight’’ and ‘‘Loose’’ Slot Machines- How Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling

LesHaving Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling
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The Lottery is a tax, an inefficient, regressive, and exploitive tax

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Max Galka of Metrocosm compiled data from the New Your State Lottery which illustrates the deceptive methods used by the state governments to advertise, distribute revenues, reveal expenses and inflate ticket costs.

2015 The lottery is a tax, an inefficient, regressive, and exploitative tax

LesThe Lottery is a tax, an inefficient, regressive, and exploitive tax
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Oregon Cutting Vital Programs, But Still Spending Nearly $9 Million on Lottery Advertising

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The Oregonian reports that the state of Oregon is “cutting programs that serve poor families, threatening to close highway rest stops and laying off teachers.” But this has not stopped the Oregon Lottery from spending $8.9 million on messaging during the 2011 fiscal year in its effort to encourage more Oregonians to gamble.

Whatever Oregon’s Trying to Communicate, It’s Costing You Millions

LesOregon Cutting Vital Programs, But Still Spending Nearly $9 Million on Lottery Advertising
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Lessons From Casino Management

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The general manager of Henderson, Nevada’s Stetson Saloon and Casino has some advice for player club members: casinos don’t really care how much you win or lose. What matters to them is how long you play the games and how much you are willing to play. They care less about sending free slot play to frequent players (why waste it on people who are coming anyway?) and concentrate more on sending promotions to less frequent players. The manager of this casino also freely admits that, “the longer you play, the more money you are likely to lose.”

Casino Perks Come 3 Ways: Game, Time, Bets

CkirbyLessons From Casino Management
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