tag:theconversation.com,2011:/nz/topics/gambling-research-10103/articlesGambling research – The Conversation2022-11-04T12:35:22Ztag:theconversation.com,2011:article/1939212022-11-04T12:35:22Z2022-11-04T12:35:22ZHow winning record $2 billion Powerball jackpot could still lead to bankruptcy<figure><img src="https://images.theconversation.com/files/493380/original/file-20221103-13-rtnw5b.jpg?ixlib=rb-1.1.0&rect=98%2C134%2C8080%2C5309&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Got the winning ticket? </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/PowerballJackpot/472c058979164ec0823b9328b236fcb6/photo?Query=powerball&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1087&currentItemNo=1">AP Photo/Julio Cortez</a></span></figcaption></figure><p>Someone in Altadena, California, was the <a href="https://www.cnn.com/2022/11/08/us/powerball-lottery-record-delayed-drawing-tuesday-trnd/index.html">lucky winner of the largest Powerball jackpot</a> in history – or perhaps the unlucky winner? </p>
<p>Officials <a href="https://www.powerball.com/article/ticket-california-wins-world-record-204-billion-powerball-jackpot">revealed that the winning ticket</a> was purchased on Nov. 8, 2022, after the <a href="http://www.powerball.com/games/home">Powerball jackpot</a> swelled to <a href="https://www.cnn.com/2022/11/08/us/powerball-lottery-record-delayed-drawing-tuesday-trnd/index.html">US$2.04 billion</a>.</p>
<p>The prize was the largest lottery the world has ever seen, <a href="https://www.today.com/money/1-6-billion-powerball-california-couple-claims-winning-ticket-6-t100966">overtaking a $1.6 billion Powerball jackpot</a> in 2016 and <a href="https://www.cnn.com/2018/10/24/us/mega-millions-drawing-wednesday/index.html">$1.54 billion Mega Millions in 2018</a>.</p>
<p>The <a href="http://powerball.com/#powerball-prizes-and-odds">odds of winning</a> the Powerball lottery are very small, <a href="https://www.cbsnews.com/news/powerball-jackpot-record-amount-19-billion-odds-of-winning/">about 1 in 292 million</a>. You are about <a href="https://www.cdc.gov/disasters/lightning/victimdata.html">300 times more likely to be hit by lightning</a>. If <a href="https://www.census.gov/quickfacts/fact/table/US/PST045217">every adult</a> in the U.S. purchased just one ticket, each with a different number, there would still be a good chance – about 11% – that no winner would emerge at a given drawing and the pot would continue to grow even larger.</p>
<p>But once a lottery winner is declared and claims the prize, a more interesting question arises: What happens to all that money and the supposedly lucky ticket holder? As <a href="http://doi.org/10.1007/s10834-012-9299-y">research by me</a> and others shows, it’s often not what you’d expect. </p>
<figure class="align-center ">
<img alt="a bolt of lightning can be seen on the horizon in the clouds above the sea" src="https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/493384/original/file-20221103-15-f050yg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">You’re 400 times more likely to be hit by a bolt of lightning than to win the Powerball.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/thunderstorm-over-sea-royalty-free-image/608978427?phrase=lightning">Jerry Kestel/EyeEm via Getty Images</a></span>
</figcaption>
</figure>
<h2>A smaller prize than it seems</h2>
<p>The first thing to bear in mind is that even when the jackpot is eye-wateringly large, the actual payout will be much less. </p>
<p>If someone comes forward with the winning ticket, they will not actually receive $2 billion in one big check. As a single winner, they can either choose a lump sum payment that amounts to about $929 million or receive $2 billion worth of annual payments that get progressively higher over <a href="http://www.megamillions.com/difference-between-cash-value-and-annuity">30 years</a>.</p>
<p>Also, the taxman gets to take a big bite. The federal government <a href="https://www.usamega.com/powerball/jackpot">will take</a> about $344 million, leaving $585 million if it’s a lump-sum payment. And then the state in which the winner resides will swallow a smaller portion if it has an income tax, as California does.</p>
<p>That jackpot is starting to look a lot smaller, though it’s still a massive chunk of change. </p>
<h2>Where windfalls go</h2>
<p>The conventional wisdom is that winning the lottery will change your life. While that’s probably always true, research suggests that it’s not always going to change in the way you might hope. </p>
<p>Economists Guido Imbens and Bruce Sacerdote and statistician Donald Rubin <a href="https://doi.org/10.1257/aer.91.4.778">showed in a 2001 paper</a> that people tend to spend unexpected windfalls. A look at lottery winners approximately 10 years after they won found they saved just 16 cents of every dollar won. </p>
<p>In my own research, I found that average people in their 20s, 30s or 40s who were <a href="http://doi.org/10.1007/s10834-012-9299-y">given an inheritance or large financial gift</a> quickly lost half the money through spending or poor investments. </p>
<p>And other studies <a href="http://doi.org/10.1162/REST_a_00114">have found</a> that winning the lottery generally didn’t help financially distressed people escape their troubles and instead only postponed the inevitable bankruptcy. <a href="https://www.cnbc.com/2018/02/06/why-the-560-million-powerball-winner-wants-to-stay-unknown.html">One found</a> that one-third of lottery winners eventually go bankrupt. </p>
<h2>It’s not easy to blow it all</h2>
<p>So how exactly could a lottery winner blow through hundreds of millions of dollars so quickly? It’s not easy. </p>
<p>Demographic research on lottery players’ characteristics shows that <a href="http://link.springer.com/article/10.1007/s10899-010-9228-7">lottery playing peaks</a> when people are in their 30s and falls as people get older. And the average female in the U.S. <a href="https://www.cdc.gov/nchs/data/vsrr/VSRR10-508.pdf">lives to age 80.5 and the average male to 75.1</a>.</p>
<p>So that means if the winner is in her 30s, she would have about 45 years or so to spend the lump after-tax sum of, let’s say, $470 million. That means she would have to spend a bit over $10 million a year, or roughly $29,000 per day, to burn through it all – even more when you factor in interest accrued while it sits in the bank.</p>
<p>In addition, really blowing it all means the winner has no assets to show for it. If she uses the money to buy luxury homes, <a href="https://www.vulture.com/2018/10/banksy-says-that-painting-was-meant-to-be-totally-shredded.html">Banksy paintings</a> and Ferraris and Aston Martins, her net worth wouldn’t actually change and she’d be able to retire with her wealth intact – assuming the investments kept their value or rose. </p>
<p>Blowing through the money, which leads to bankruptcy and low savings rates, means the winner has nothing to show for her spending besides a good time, plus goodwill from friends and relatives who went along for the ride.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two white men in suits, ties and coats stand next to each other in New York in front of a tall building. One of them is pointing and looking up" src="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=888&fit=crop&dpr=1 600w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=888&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=888&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1115&fit=crop&dpr=1 754w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1115&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/493393/original/file-20221103-26-1gh4il.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1115&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Huntington Hartford, at left, next to Robert Moses, was born rich but died in bankruptcy.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RobertMoses/9cfd01d5e7384b53ab10381973ddf653/photo?Query=Huntington%20Hartford&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=14&currentItemNo=12">AP Photo</a></span>
</figcaption>
</figure>
<h2>Riches to rags</h2>
<p>And that’s basically what a man named Huntington Hartford did. </p>
<p>Hartford, who lived from 1911 to 2008, was the heir to <a href="https://www.groceteria.com/store/national-chains/ap/ap-history/">the Great Atlantic & Pacific Tea Co.</a> fortune. This company, which started just before the Civil War, is better known as the A&P supermarket chain. A&P was the first U.S. coast-to-coast food store, and from World War I to the 1960s, it was what <a href="https://www.walmart.com/">Walmart</a> is for today’s American shoppers. </p>
<p>Hartford inherited <a href="https://www.telegraph.co.uk/news/obituaries/1996555/Huntington-Hartford.html">approximately $90 million</a> when he was 12. <a href="http://businessmacroeconomics.com/">Adjusting for inflation</a> means he was given <a href="https://www.bls.gov/data/inflation_calculator.htm">about $1.6 billion</a> as a child, after taxes. Yet Huntington <a href="https://www.nytimes.com/2008/05/20/arts/design/20hartford.html">declared bankruptcy</a> in New York in 1992, approximately 70 years after being handed one of the largest fortunes in the world.</p>
<p>Hartford had the reverse Midas touch. He lost millions buying real estate, creating an art museum and sponsoring theaters and shows. He combined poor business skills with an exceptionally lavish lifestyle. After declaring bankruptcy, he lived as a recluse with a daughter in the Bahamas until he died. </p>
<h2>May the odds be ever in your favor</h2>
<p>Hartford’s life story, coupled with academic research, shows that coming into a windfall of cash doesn’t always have a happy ending. Squandering that money is easier than it seems. </p>
<p>If you like to pay the lottery, I wish you good luck. If you win, I wish you even more luck.</p>
<p>Nevertheless, one key lesson, whether you play or not, is that when you get a windfall or win the lottery, plan ahead and resist the all-too-human temptation to spend all the money.</p>
<p><em>This article was updated on Nov. 10, 2022, to reference the winner.</em></p><img src="https://counter.theconversation.com/content/193921/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Squandering all that money is easier than it seems.Jay L. Zagorsky, Clinical associate professor, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1653872021-08-04T23:35:16Z2021-08-04T23:35:16Z4 gambling reform ideas from overseas to save Australia from gambling loss and harm<figure><img src="https://images.theconversation.com/files/414093/original/file-20210802-18-leu1kp.jpg?ixlib=rb-1.1.0&rect=0%2C9%2C6006%2C3980&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>It’s now well recognised gambling can cause <a href="https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30289-9/fulltext">significant</a> <a href="https://www.researchgate.net/publication/341046047_Gambling_and_gambling-related_harm_Recent_World_Health_Organisation_initiatives">harm</a>. However, many countries have done much more to reduce gambling-related harm than we have in Australia. </p>
<p>Here’s four examples of how other countries have responded to the challenge of growing gambling-related harm, drawn from my <a href="https://www.churchilltrust.com.au/fellow/angela-rintoul-vic-2018/">research</a> on the topic.</p>
<h2>Setting loss limits for everyone</h2>
<p><a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8278013/">Norway</a> replaced harmful high-intensity slot machines — similar to poker machines seen in many clubs, pubs and casinos in Australia — with machines that require users to register their <a href="https://link.springer.com/article/10.1007/s10899-009-9127-y">gambling</a>. </p>
<p>For example, every <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/add.13172">Norwegian</a> using one of these machines has to create a registered account, with maximum limits set on how much you can lose per day and per month, and the capacity to set a lower limit than the universal maximum.</p>
<p>These kind of <a href="https://www.researchgate.net/publication/319480788_Pre-commitment_systems_for_electronic_gambling_machines_Preventing_harm_and_improving_consumer_protection">pre-commitment systems</a> help prevent harm, and help people keep track of their losses.</p>
<p>Finland also has <a href="https://www.churchilltrust.com.au/fellow/angela-rintoul-vic-2018/">universal loss limits</a> (meaning limits on how much can be bet per day or per month) to prevent “catastrophic” losses for online gambling. </p>
<p>There’s no reason Australia couldn’t follow suit, if it wanted to.</p>
<p>Victoria already offers a <a href="https://www.researchgate.net/publication/319480788_Pre-commitment_systems_for_electronic_gambling_machines_Preventing_harm_and_improving_consumer_protection">voluntary pre-commitment scheme</a>, which allows people to opt-in if they want to set a loss limit. It’s been <a href="https://apo.org.au/sites/default/files/resource-files/2020-02/apo-nid277096.pdf">shown</a> to be ineffective, partly because it is optional. A universal scheme that applied to all would work much better to reduce gambling-related harm.</p>
<h2>Reducing the stakes</h2>
<p>In 2019, the British government responded to reports of a surge in harms related to slot machines known as “<a href="https://www.plutobooks.com/9780745340395/vicious-games/">fixed odds betting terminals</a>” (FOBTs). This is a kind of electronic roulette game that sits in betting stores in the UK. </p>
<p>Despite the gambling industry, as one <a href="http://researchbriefings.files.parliament.uk/documents/SN06946/SN06946.pdf">report</a> put it, “disputing a causal link between FOBTs and problem gambling”, harm-reduction <a href="https://tribunemag.co.uk/2019/01/fixed-odds-betting-terminals-fobts?fbclid=IwAR34lnRbyLtjrVAeNRgMiGMMZNCyobBMk-XANcLYLABVXvxr08oAMMldf6U">campaigners</a> <a href="https://www.theguardian.com/uk-news/2018/nov/17/killing-machines-tracey-crouch-on-why-she-resigned-as-minister-over-fobts">publicised</a> <a href="https://www.bbc.com/news/uk-england-south-yorkshire-48804945">stories</a> of people bereaved by gambling-related suicide. </p>
<p>In response to subsequent public concern, the government <a href="https://www.theguardian.com/uk-news/2018/nov/14/government-u-turn-expected-on-fobt-maximum-stake">reduced stakes</a> on FOBTs from £100 to £2. </p>
<p>In other words, the maximum amount you could lose per spin shrank from £100 to £2. </p>
<p>By contrast, in Australia in 2010, the Productivity Commission <a href="https://www.pc.gov.au/inquiries/completed/gambling-2010/report">recommended</a> a reduction in the maximum stake on poker machines in clubs and hotels from $10 to $1. </p>
<p>A decade later, this has yet to be tried, although most Australian states (other than NSW and the ACT) have reduced the maximum loss per spin to <a href="https://www.vcglr.vic.gov.au/sites/default/files/Australian_New_Zealand_Gaming_Machine_National_Standard_2016.PDF">$5</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman contemplates credit card debt." src="https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/414279/original/file-20210803-25-n3e5vm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Other countries have shown reforms that reduce gambling-related harm are possible.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Reducing reliance on gambling revenues</h2>
<p>The gambling industry often <a href="https://theconversation.com/new-research-shows-pokie-operators-are-not-nearly-as-charitable-as-they-claim-124085">argues</a> harms from gambling are offset by its <a href="https://www.tandfonline.com/doi/full/10.1080/14459795.2016.1263353?casa_token=lxxYVjtVpn4AAAAA%3ACgLYv9J37ag8AFybPO_QzaJHz3XzpePdtqo9Y3Bb9VPIfLp-kM9xGZ4vGrUKH2cNIlruqZhKzBY_1eI">donations to good causes</a>.</p>
<p>Many Nordic countries also divert gambling revenue to <a href="https://www.tandfonline.com/doi/abs/10.1080/16066359.2019.1663834?scroll=top&needAccess=true&journalCode=iart20">good causes</a> such as not-for-profit organisations providing child protection services or <a href="https://www.aspeninstitute.org/blog-posts/norway-won-winter-olympics/">Olympic</a> teams.</p>
<p>In <a href="https://yle.fi/uutiset/osasto/news/finlands_gambling_problem_a_robin_hood_system_in_reverse/10329304">Finland</a>, over 69% of gambling revenue goes to good causes (though even this is coming under <a href="https://journals.sagepub.com/doi/full/10.1177/1455072520968024">scrutiny</a>).</p>
<p>In Australia, donations to good causes are around <a href="https://www.tandfonline.com/doi/full/10.1080/16066359.2019.1663834">2% of revenues</a>. The community benefits from gambling are tiny. </p>
<p>Australian state and territory governments rely on gambling taxes for around 6% of their <a href="https://www.abs.gov.au/statistics/economy/government/taxation-revenue-australia/latest-release#data-download">state tax revenue</a>.</p>
<p>This may pose a challenge to reform; any significant reduction in harm will <a href="https://global.oup.com/academic/product/setting-limits-9780198817321?cc=jp&lang=en&">reduce revenues</a>. </p>
<p>Finland is achieving <a href="https://iclg.com/practice-areas/gambling-laws-and-regulations/finland">reform</a> by introducing it <a href="https://journals.sagepub.com/doi/full/10.1177/1455072520968024">incrementally</a>, allowing the reduction in revenue to be managed over time.</p>
<h2>A national regulator</h2>
<p>Australia’s fragmented system, where gambling is regulated at state and territory levels, is another challenge.</p>
<p>National strategies to prioritise action and coordinate efforts can help align responses. A <a href="https://www.dss.gov.au/communities-and-vulnerable-people-programs-services-gambling/national-consumer-protection-framework-for-online-wagering">national regulator</a> could assist in implementing and strengthening existing responses. </p>
<p>The standardised system of regulation in the countries I researched was a feature that could be adopted in Australia, which has a relatively small population.</p>
<h2>An opportunity for reform</h2>
<p>The recent <a href="https://www.smh.com.au/business/companies/what-we-learned-about-crown-from-the-nsw-inquiry-20210222-p574sr.html">Bergin inquiry</a> into whether Crown was fit to hold a license in a new casino in Barangaroo and ongoing royal commissions in <a href="https://theconversation.com/illegal-improper-unacceptable-revelations-about-crowns-casino-culture-just-get-worse-164084">Victoria</a> and <a href="https://www.abc.net.au/news/2021-07-26/regulator-may-seek-to-cancel-crown-perth-casino-licence/100323118">Western Australia</a> continue to expose flaws in the provision of gambling with Australia’s <a href="https://theconversation.com/responsible-gambling-a-bright-shining-lie-crown-resorts-and-others-can-no-longer-hide-behind-162089">largest casino operator</a>. </p>
<p>These overseas examples show there are many effective ways to reduce gambling harm in casinos, clubs, pubs and suburban communities. </p>
<p>We are fortunate at least in Australia that online gambling has been limited to wagering and lotteries; in many countries slot machines and casino table games are <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8278013/">available</a> online 24/7. </p>
<p>Australia has an opportunity now to reduce harm by considering approaches implemented elsewhere.</p>
<p><em>If this article has raised issues for you, or if you’re concerned about someone
you know, call Lifeline on 13 11 14 or the Gambling Helpline on 1800 858 858.</em></p><img src="https://counter.theconversation.com/content/165387/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Angela does not accept funding from the gambling industry. She has been employed on grants funded by the Australian Research Council and the Victorian Responsible Gambling Foundation. She has contributed to studies funded by Australian Institute of Family Studies, Australia’s National Research Organisation for Women’s Safety, and the Australian Commonwealth Department of Social Services. Angela has received travel funding from the Turkish Green Crescent Society, Monash University and the Winston Churchill Memorial Trust.</span></em></p>Many countries have done much more to reduce gambling-related harm than we have in Australia.Angela Rintoul, Senior Research Fellow, Federation University AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/840652017-09-15T02:50:26Z2017-09-15T02:50:26ZSnap that prize up: croc research on gambling habits gets an Ig Nobel<figure><img src="https://images.theconversation.com/files/186112/original/file-20170914-8975-1iltwl8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The one-metre long relatives of this snappy croc at the Koorana Crocodile Farm, near Rockhampton, helped test the betting risks of potential gamblers.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/gorey/3446805828/">Flickr/Michael Gorey</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Our research examining the effects of holding a live crocodile on slot-machine gambling has won one of this year’s infamous <a href="http://www.improbable.com/">Ig Nobel prizes</a>.</p>
<p>The award was one of several presented at a ceremony at Harvard University in the US on Thursday night, which honours research topics that “<a href="http://www.improbable.com/about/">first make people laugh, then make people think</a>”. They’re often regarded as a parody of the Nobel Prizes.</p>
<p>The judges said to all those who didn’t win an award, “better luck next year” and repeated the same to the recipients.</p>
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Read more:
<a href="https://theconversation.com/three-charts-on-australias-addiction-to-poker-machines-78353">Three charts on: Australia's addiction to poker machines</a>
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<p>Our original research paper, <a href="https://link.springer.com/article/10.1007%2Fs10899-009-9174-4">Never Smile at a Crocodile: Betting on Electronic Gaming Machines is Intensified by Reptile-Induced Arousal</a> published in the Journal of Gambling Studies in 2010, did get <a href="http://www.abc.net.au/science/articles/2010/01/29/2802811.htm">some coverage</a> at the time.</p>
<p>Now that our work has been awarded the 2017 Ig Nobel prize for Economics, does it mean the influence of emotions on people’s gambling may get more attention in the literature? </p>
<p>Frankly, probably not. People will laugh a little, and carry on with their lives.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=675&fit=crop&dpr=1 600w, https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=675&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=675&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=848&fit=crop&dpr=1 754w, https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=848&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/186114/original/file-20170914-9038-2baqnd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=848&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Researcher Nancy Greer and Prof Matthew Rockloff were suitably dressed for the Ig Nobel occasion.</span>
<span class="attribution"><span class="source">CQUniversity</span>, <span class="license">Author provided</span></span>
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<h2>The croc research</h2>
<p>But the research addressed a surprisingly serious topic of how gambling is affected by the excitement generated by pokies or slot machines. </p>
<p>One of the important entertainment elements of gambling is its ability to generate excitement. This excitement is particularly important for people with pre-existing gambling problems, who often suffer from low moods.</p>
<p>The research was devised to subtly manipulate excitement just prior to gambling.</p>
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<a href="https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/186120/original/file-20170915-8998-15pji09.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The researchers used smaller crocs like this one as part of the study.</span>
<span class="attribution"><span class="source">Shutterstock/Digital Video Bank</span></span>
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</figure>
<p>Our supposition was that some of the excitement from holding the crocodile would be misattributed to the gambling experience, allowing us to study how that feeling of excitement might influence gambling decisions.</p>
<p>So we attended 100 crocodile tours at the <a href="https://www.koorana.com.au/">Koorana Crocodile Farm</a> in Coowonga, Central Queensland, Australia. For about half of the tours, we approached people at random to play a simulated pokie game before entering the farm and having any contact with crocodiles. </p>
<p>For the other half of participants, they were approached immediately after holding a live one-metre crocodile. Photos holding the crocodile are a feature of the end of the tour, and most tourists take a turn holding this ancient - and potentially deadly - animal.</p>
<p>We measured all aspects of people’s real-money gambling on our simulated pokie game. We also took standard measures of people’s physiological state and mood, and surveyed them for any pre-existing gambling problems.</p>
<h2>The findings</h2>
<p>Most of our subjects, the tourists at the croc farm, had fun holding the croc. The juvenile crocodile had its mouth taped shut, but still had sharp teeth protruding from its mouth. </p>
<p>It also had sharp claws, and tourists were advised to handle it carefully. In our debriefing of the participants, nobody indicated an awareness that the crocodile had any influence on their gambling decisions.</p>
<p>But our results showed that people with pre-existing problems bet larger amounts after they held a one-metre crocodile, as long as they did not rate themselves as having a negative mood. </p>
<p>In contrast, gamblers with pre-existing problems who were in a negative mood bet substantially less. This demonstrated that emotions are an important determinant of gambling choices.</p>
<p>The research used a paradigm consistent with experimental realism, in which the goal was to simulate the psychological processes involved in real-world gambling rather than to simulate the mundane realism of the casino environment.</p>
<p>Experimental research often sacrifices some features of realism to improve control. Later correlational research supports our result by showing that people generally bet more in large, and presumably more exciting, casino environments than in smaller local venues.</p>
<h2>Ig Nobel recognition of the research</h2>
<p>Great science and great humour are often based on a surprise or unexpected results. It is important for people to understand that not all research has to be stuffy to be valuable. </p>
<p>Public recognition for our research through the Ig Nobels may allow people to “laugh”, but also to “think”. People need to be more aware of how their emotional states can influence their gambling decisions so that they can make better gambling choices.</p>
<p>The crocodile study was actually completed ten years ago, and we have made great progress since in understanding gambling choices. Our <a href="https://theconversation.com/responsible-gambling-why-occasional-use-is-generally-safe-25493">more recent research</a> looks at gambling harms and benefits, with the purpose of trying to identify what amount of gambling is “too much”.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/from-huh-to-who-the-universal-utterances-that-keep-us-talking-47775">From 'Huh?' to 'Who?': the universal utterances that keep us talking</a>
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<p>Many people participate in gambling with measurable recreational benefits. The key to engaging successfully with gambling products, including slots, is to maximise the benefit and minimise the harms.</p>
<p>One of our new research platforms to examine this and other questions is a customised Luck Lolly Slots slot machine game available from <a href="https://itunes.apple.com/us/app/lucky-lolly-slots/id1055174667">iOS</a> and <a href="https://play.google.com/store/apps/details?id=au.com.headjam.cqu.lucky_lolly_slots&hl=en">Android</a> app stores. It’s been developed by CQUniversity for a research project investigating pokie-style mobile apps and is available for free (with no in-app purchases and no ads). </p>
<p>As for the Ig Nobel prize, it includes a cash award of <a href="http://www.improbable.com/2016/04/27/april-30-as-final-day-for-retiring-the-zimbabwe-100-trillion-dollar-bills/">10 trillion Zimbabwe dollars</a>. This will soon be spent by the research team on necessary supplies: two cups of coffee at Dunkin’ Donuts (medium, no milk).</p><img src="https://counter.theconversation.com/content/84065/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Rockloff has received research grants from Gambling Research Australia, the Queensland Treasury Department, the Federal Department of Social Services, the Victorian Treasury Department, the Victorian Responsible Gambling Foundation, the Tasmanian Department of Treasury and Finance, the First Nations Foundation, the New Zealand Ministry of Health, and the Alberta Gambling Research Institute.</span></em></p><p class="fine-print"><em><span>Nancy Greer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Research that studied the pokie risks gamblers were prepared to take after they held a live crocodile has been awarded one of this year’s Ig Nobel prizes.Matthew Rockloff, Head, Population Research Laboratory, CQUniversity AustraliaNancy Greer, Researcher and PhD Candidate, CQUniversity AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/776632017-05-17T15:09:00Z2017-05-17T15:09:00ZGambling’s ‘crack cocaine’ is devastating lives and not doing much for the economy either<figure><img src="https://images.theconversation.com/files/169785/original/file-20170517-6030-1ozw6dc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/luck-word-on-slot-machine-vector-560811694">Shutterstock</a></span></figcaption></figure><p>Since 2008, UK gamblers have squandered £11.4 billion playing games such as poker and roulette on <a href="http://www.itv.com/news/2016-12-13/what-are-fixed-odds-betting-terminals/">fixed-odds betting terminals</a> (FOBTs). These sophisticated gaming machines, often referred to as the “crack cocaine” of gambling, are to be found in high street bookies and casinos across Britain, allowing people to bet up to £100 every 20 seconds.</p>
<p>Not only is this helping to create a huge swell in problem gambling, it is also affecting the economy, because this spend has little ripple effect, flowing directly into relatively few pockets without generating a significant number of jobs.</p>
<p>Hounslow in south-west London huddles directly beneath the planes taking off and landing at Heathrow airport. A comparatively poor area of the capital, 20% of the local population earns less than the living wage. Hounslow’s high street contains 11 bookmakers, each with four FOBTs, and each of those has a maximum gambling stake of £100. In 2015, on this one street, <a href="http://www.mirror.co.uk/news/uk-news/street-28million-lost-year-crack-7325541">£2.8m was lost to FOBTs</a>, according to the <a href="http://fairergambling.org/">Campaign for Responsible Gambling</a>.</p>
<p>Anyone walking through their local town centre will see the number of betting shops has mushroomed, often with “cash converter” type shops nearby, where people can exchange goods for money. As of March 2015, there were 34,884 FOBT gaming machines around the UK providing bookmakers with a gross gambling yield (the percentage of a bet kept by the operator) of <a href="http://researchbriefings.files.parliament.uk/documents/SN06946/SN06946.pdf">£1.7 billion</a> in 2016.</p>
<h2>Problem gambling</h2>
<p><a href="http://live-gamblecom.cloud.contensis.com/PDF/survey-data/Gambling-participation-in-2016-behaviour-awareness-and-attitudes.pdf">Research</a> shows that the number of people in the UK with a gambling problem is rising. Around 500,000 Britons are experiencing difficulties – categorised as either “problem” or “at risk” gamblers – with numbers increasing every year.</p>
<p>And for each gambler there can be up to five close family members <a href="http://usir.salford.ac.uk/2335/1/Gambling_and_Debt_Final_Report_PDF.pdf">also affected</a> through issues such as unmanageable debt, homelessness, hunger, domestic violence or having a parent or spouse in prison. Damage is not limited to families either; a significant proportion of problem gamblers commit crime such as theft and fraud to fund their habits, with some <a href="http://www.telegraph.co.uk/news/2017/01/31/ex-manager-olympian-greg-rutherford-admits-defrauding-athlete/">high-profile cases</a> hitting the headlines each year.</p>
<p>In the UK, <a href="https://www.publications.parliament.uk/pa/cm201012/cmselect/cmcumeds/writev/gambling/m39.htm">research</a> shows that poorer people are more likely to develop a problem gambling habit. Data collected by the Campaign for Responsible Gambling reveals that betting shops with FOBT machines have expanded most in <a href="http://fairergambling.org/wp-content/uploads/2016/02/The-Economic-Impact-of-Fixed-Odds-Betting-Terminals-20151.pdf">poorer areas</a>, suggesting that action needs to be taken to limit the opportunities for people to experience heavy losses in the midst of their communities.</p>
<p>Although only 3-4% of adults use these machines, FOBT players account for <a href="http://fairergambling.org/wp-content/uploads/2016/02/The-Economic-Impact-of-Fixed-Odds-Betting-Terminals-20151.pdf">66% of all gambling losses</a>. In 2015, the government rejected an attempt led by Newham Council to reduce the maximum stake from £100 to <a href="https://www.popall.co.uk/news-publications/news/government-rejects-2-cap-for-fobt-stake-limits">£2 per play</a>.</p>
<p>The wider economic impact of gambling is poorly understood because at present the only data considered are gross gambling yield, jobs and profits in the industry – plus government revenue from betting duty and taxation.</p>
<p>Taken together, these present an encouraging picture with the industry claiming betting shops contribute £3.2 billion to UK GDP, with between 55,000 people directly employed in betting shops, 100,000 jobs supported in the wider economy and around <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/24892">£1 billion paid in taxes each year</a>.</p>
<p>But this is not the full picture. Contrasting <a href="http://fairergambling.org/wp-content/uploads/2016/02/The-Economic-Impact-of-Fixed-Odds-Betting-Terminals-20151.pdf">research</a> by the Campaign for Fairer Gambling shows money spent on FOBTs does not support much in terms of jobs compared with spending in other sectors of the economy – while £1 billion of general consumer spending supports 21,000 jobs, £1 billion of spending on FOBTs only supports the equivalent of 4,500 jobs. </p>
<h2>The real cost to communities</h2>
<p>The problem with weighing up these competing claims is that no independent evaluation of costs and benefits has been developed and conducted in the UK. A more accurate calculation would need to include the social costs of gambling to affected families and communities, such as rehousing families who have lost their home to gambling debt, and the costs to the criminal justice system resulting from crime arising from problem gambling.</p>
<p>To develop an effective measure of the real costs of gambling, independent research will be needed. In the UK, the gambling industry funds research, education and treatment of problem gambling under the principle of the “<a href="https://books.google.co.uk/books?id=1nFowsqApQAC&pg=RA1-PA175&lpg=RA1-PA175&dq=polluter+pays+principle+gambling&source=bl&ots=X49v7kzEVA&sig=-WS3ypP92e6kTdVPj8UN7SW_3Ho&hl=en&sa=X&ved=0ahUKEwi8_7DPifLTAhUlLcAKHYBdAesQ6AEILzAA#v=onepage&q=polluter%20pays%20principle%20gambling&f=false">polluter pays</a>”, and most of the £7m raised annually from the industry is spent on treatment.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/169789/original/file-20170517-9937-1apx59h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Fixed-odds betting terminals, on which punters can blow £100 every 20 seconds, are leading to a rise in problem gambling.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/online-gambling-579663841">Shutterstock</a></span>
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</figure>
<p>As a <a href="https://research.gold.ac.uk/17217/1/Fair%20game%20Producing%20and%20publishing%20gambling%20research.pdf">project</a> led by Goldsmiths University found, the UK funding programme for gambling research prioritises “banal” research questions that will not offend the gambling industry, with funded research often conducted by private companies or academics that have <a href="https://www.theguardian.com/society/2016/jan/06/documents-reveal-gambling-charity-chair-conflict-of-interest">close ties</a> to the industry.</p>
<p>Similarly, Tim Farron MP has raised concerns about the close relationship the industry has with <a href="https://www.begambleaware.org/">GambleAware</a> (previously known as the Responsible Gambling Trust) which manages the funds provided by the industry to pay for research about problem gambling, education to prevent problem gambling, and treatment for problem gamblers.</p>
<p>The Charity Commission was also asked to <a href="http://www.independent.co.uk/news/uk/home-news/britains-leading-gambling-charity-at-centre-of-conflict-of-interest-claims-a6885271.html">investigate allegations</a> that large research contracts were being awarded to companies with close links to senior staff at the Responsible Gambling Trust and that senior posts within it were filled without a competitive process. At the time, the Responsible Gambling Trust responded: “The Responsible Gambling Trust has robust procedures in place and we are a fully independent charity committed to minimising gambling-related harm.”</p>
<p>It also added later: “The Charity Commission dismissed as ‘unsubstantiated’ complaints about the Responsible Gambling Trust made by two lobbying groups – the Campaign for Fairer Gambling and Rethink Gambling. Correspondence from the Charity Commission, published on our website, confirms that potential ‘conflict of interest within the charity is well managed and recorded’.”</p>
<p>The whole notion of problem gambling separates and “individualises” consumers, suggesting they make a free choice to spend their leisure time and money as they wish. But, as the data on spending indicates, this is not an individual problem; it is a social problem causing real harm to individuals, to families, to communities and to the economy.</p>
<p>Unfortunately, the extent of that harm is not understood by society or policy makers because very little research is being carried out, and what research is being undertaken is focusing on the wrong topics. As the Charity Commission investigation proves, there is a potential conflict of interest between the people allocating research funds and the industry providing the money for the research.</p>
<p>A radical review of the impact of gambling, its social costs and benefits and the funding and governance structures that underpin research, education and treatment is urgently needed. But since the government’s review of FOBTs was shelved when the snap election was called, it’s not worth betting that this will happen any time soon.</p><img src="https://counter.theconversation.com/content/77663/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carolyn Downs has received funding from European Union, National Debtline and Gamcare. She is a member of Labour Party.
</span></em></p>For some people, fixed-odds betting terminals are ferociously addictive, producing big profits for bookies and a rise in problem gambling. What’s the solution?Carolyn Downs, Lecturer in Leadership and Management, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/579612016-04-21T10:07:43Z2016-04-21T10:07:43ZCould gambling be the secret to saving when rates are so low?<figure><img src="https://images.theconversation.com/files/119535/original/image-20160420-25615-3o5x0r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Put it all on green?</span> <span class="attribution"><span class="source">Roulette table via www.shutterstock.com</span></span></figcaption></figure><p>Many interest rates in the U.S. are <a href="http://www.nytimes.com/2015/12/15/upshot/why-very-low-interest-rates-may-stick-around.html">close to zero</a> and <a href="http://www.wsj.com/articles/bank-of-japan-introduces-negative-interest-rates-1454040311">even negative</a> in some parts of the world, like Japan. </p>
<p>Not unexpectedly, U.S. <a href="https://research.stlouisfed.org/fred2/series/PSAVERT">savings rates</a> are also quite low as individuals ask themselves: “Why save a lot of money at a bank if I get no return?”</p>
<p>This situation has many <a href="http://money.usnews.com/money/personal-finance/articles/2015/07/15/why-our-savings-rate-is-falling-and-what-to-do-about-it">commentators</a> <a href="http://www.thefiscaltimes.com/2015/04/26/Americans-Low-Savings-Rate-Bad-Sign-Good-Economy">wringing</a> their <a href="http://www.economist.com/blogs/freeexchange/2013/04/saving">hands</a> because low <a href="http://www.jstor.org/stable/2729595">savings rates</a> are a problem for many reasons. </p>
<p>Individuals who don’t save face spending their golden years of retirement in poverty, instead of plenty. In addition, people with no savings face financial problems and potential ruin when unexpected large expenses occur and cannot help out their children with large bills like college or a down payment on a first home.</p>
<p>In the absence of a rapid increase in interest rates, which <a href="http://www.wsj.com/articles/fed-leaves-interest-rates-unchanged-lowers-outlook-for-further-increases-1458151656">appears unlikely</a>, is there anything we can do to change this problem and get people to save more? </p>
<p>As odd as it may sound, gambling could be part of the answer. </p>
<h2>A simple solution: prize-linked accounts</h2>
<p>One innovative idea for boosting low savings rates is through prize-linked savings accounts, also known as lottery-linked deposits. </p>
<p>The idea of prize-linked accounts is simple. Instead of receiving the full amount of interest on their savings, most people are given less money than they would otherwise and the remainder is distributed as prizes awarded randomly to some savers chosen by a lottery.</p>
<p>Pretend the average person receives US$2 each month in interest on a standard savings account. A bank offering a prize-linked account might instead give the account holder $1 of interest plus a small chance – slightly better than <a href="http://www.lse.ac.uk/IPA/images/Documents/PublicSphere/2015/Issue%203%20Singles/8-%20Prize-linked%20Savings.pdf">scratch tickets</a> – to win $10,000. The bank would gather the $10,000 prize money by pooling the extra dollars of interest held back from many savings accounts.</p>
<p>These lottery savings accounts are an innovative idea because <a href="http://www.wsj.com/articles/charles-r-schwab-raise-interest-rates-make-grandma-smile-1416441900">interest rates today are very low</a> and offer little or no incentive for people to save money. Low savings rates cause people to abandon traditional savings accounts and lead some people to seek higher rates of return in <a href="https://theconversation.com/explainer-whats-the-turmoil-in-the-chinese-stock-market-all-about-44457">very risky investments</a>.</p>
<p>Prize-linked accounts have the advantage of ensuring savers never lose their initial funds, unlike other forms of gambling where losers can go home empty-handed. </p>
<p>One example of how prize-linked accounts work is the <a href="http://www.savetowin.org/product-info/how-save-to-win-works">save-to-win</a> program, promoted by a <a href="http://www.d2dfund.org/overview">nonprofit with a mission</a> to boost financial security among the poor. Savers deposit their money in a special 12-month account. Every $25 deposited gets the saver one more lottery ticket. Each month some prizes are awarded, and in some locations there is also an annual grand prize of $10,000 for those people who kept money in the bank for all 12 months. </p>
<p>These rules encourage people to open accounts, leave money untouched and build savings. <a href="http://www.d2dfund.org/files/publications/STW_National%20Overview_2014.pdf">Evaluations</a> of these accounts since they began in 2009 suggest they are effective at boosting savings especially among the poor. </p>
<h2>History of prize-linked accounts</h2>
<p>Prize-linked savings accounts are not a new invention. The <a href="http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=344389&fulltextType=RA&fileId=S0968565005000119">first lottery savings account</a> was created in England in 1693 to help fund the Nine Years’ War against France. </p>
<p>It was a great success and raised a million British pounds for the government, which was about one-sixth of all public spending that year. Savers bought tickets for £10 each. Each ticket had a chance to win a grand prize of £1,000 per year for 16 years.</p>
<p>Tickets that won nothing in the lottery, however, paid interest of £1 per year for 16 years, providing the English Crown with a medium-term loan whose proceeds were used to fight a war. This was a huge success for savers because each £10 ticket returned a total of £16, plus a chance of winning a jackpot.</p>
<h2>Controversy</h2>
<p>Controversy has surrounded prize-linked accounts ever since their introduction in 1693. Initially, criticism was leveled against the accounts because they encouraged people to gamble, which many people viewed as immoral.</p>
<p>More recently, governments have been against the accounts because they divert funds from state-sanctioned lotteries. South Africa’s <a href="http://www.bloomberg.com/news/articles/2014-09-23/the-casino-coming-to-your-corner-bank">First National Bank created</a> a very successful account in which winners received a maximum payout of about $150,000. This program <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2441286">boosted savings</a> by the poor and unbanked in South Africa. However, that country’s Supreme Court ruled the accounts were illegal after the <a href="http://allafrica.com/stories/200803311066.html">state lottery commission complained</a> that its own sales were reduced as a result.</p>
<p>While many other countries have <a href="http://www.nber.org/papers/w16433.pdf">created prize-linked</a> savings accounts, the idea is relatively new in the U.S. The first prize-linked savings accounts were created in <a href="http://www.nytimes.com/2014/08/31/business/using-gambling-to-entice-low-income-families-to-save.html">Michigan in 2009</a>. </p>
<p>The successful introduction of these accounts in other states like Nebraska resulted in President Barack Obama signing into law in December 2014 the <a href="https://www.congress.gov/bill/113th-congress/senate-bill/1597">“American Savings Promotion Act,”</a> which enabled credit unions and banks to offer these accounts across the country. President Obama and Congress needed to revise the laws, because prior to the bill it was illegal for banks to engage in risky activities such as sponsoring a lottery.</p>
<p>States, however, also have to change their laws for this program to become widespread. One of the most recent states is <a href="http://www.d2dfund.org/news/2015/06/oregon_passes_prize_linked_savings_legislation">Oregon</a>, which passed legislation in June 2015 enabling banks to offer the accounts this year.</p>
<p>Very interesting but preliminary research is being done by University of Colorado Finance Professor <a href="http://conference.nber.org/confer/2015/SI2015/HF/Cookson.pdf">Tony Cookson</a>, who examined people in Nebraska and found that the introduction of lottery-linked savings leads consumers to reduce casino gambling. This means that these lottery-style accounts can not only boost savings rates but also encourage people to gamble less in casinos. While this is a win for consumers, it is problematic for states that are dependent on casino and lottery revenue to balance their books.</p>
<h2>A ‘special’ boost</h2>
<p>Prize-linked savings accounts are not the complete solution to low savings problems in the U.S. and elsewhere. Nevertheless, these accounts can help.</p>
<p>Encouraging people <a href="http://u.osu.edu/zagorsky.1/2015/02/02/emergencysavings/">to save</a> and build an <a href="http://u.osu.edu/zagorsky.1/2015/02/09/why3months/">emergency cushion</a> for a rainy day is important. Prize-linked savings accounts are one way to do this.</p>
<p>My bank recently sent me a mailing trumpeting the fact that because I am a long-term “valued” customer, my savings account got a special interest rate boost to encourage me to save more. Even with the “special” boost, I earned a grand total of $1.27 in interest for the month. This tiny sum gives me no incentive to spend less and save more.</p>
<p>However, a prize-linked savings account that did away with all of my paltry <a href="http://businessmacroeconomics.com/">interest</a> but gave me a small chance at earning enough money to actually buy something of value would definitely encourage me, and likely many others, to save more.</p><img src="https://counter.theconversation.com/content/57961/count.gif" alt="The Conversation" width="1" height="1" />
Lottery-linked accounts helped England wage its Nine Years’ War in the 17th century. Could it help the rest of us save more money today?Jay L. Zagorsky, Economist and Research Scientist, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/323462014-10-28T09:37:46Z2014-10-28T09:37:46ZWill gambling be good for the people of Massachusetts? The evidence suggests not<figure><img src="https://images.theconversation.com/files/60428/original/d82sfzg3-1412088851.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An artist's rendering of Wynn's proposed $1.6 billion casino on the Mystic River, Everett.</span> </figcaption></figure><p>The [upcoming vote](http://ballotpedia.org/Massachusetts_Casino_Repeal_Initiative,<em>Question_3</em>(2014) on whether to scrap plans to allow casino resorts in Massachusetts fits into a broader pattern of individuals and pressure groups resisting the expansion of commercial gambling in both the US and abroad. </p>
<p>The reaction comes after three decades of states around the world legislating to introduce more sophisticated and pervasive forms of gambling, in a move that marries <a href="http://onlinelibrary.wiley.com/doi/10.1111/1468-4446.12050/abstract">the revenue needs of governments</a> with the industry’s desire for profits. </p>
<p>This <a href="http://www.ncbi.nlm.nih.gov/pubmed/21188851">mutually beneficial relationship</a> between states and gambling has created a <a href="http://theconversation.com/who-wins-from-big-gambling-in-australia-22930">powerful multi-national industry</a> equivalent in scale to Big Tobacco, which researchers recently dubbed “Big Gambling.”</p>
<p>Proponents of gambling, and particularly large casinos, argue that increased taxes, as well as job and wealth creation, contribute to the revitalization of local economies and pay for a range of important public services. </p>
<p>Such a case has been made for the planned resort casino in Boston, with supporters emphasizing the <a href="http://ggbnews.com/issue/vol-12-no-36-september-22-20142015/article/wynning-bid-in-boston">boost to tourism and the creation of local jobs</a> and a transport infrastructure that the billion dollar venture would bring.</p>
<p>However, critics point out that gambling only redistributes existing money, but does not generate much new wealth. In fact, it can have a detrimental effect on the surrounding economy as <a href="http://www.gla.ac.uk/media/media_34552_en.pdf">leisure spending is diverted</a> away from local businesses. Every dollar spent in a casino is a dollar that might have been spent in local restaurants, cinemas or shops. </p>
<p>Casinos tend only to deliver economic benefits when they attract <a href="http://www.commonwealthmagazine.org/Voices/Back-Story/2014/Summer/010-Running-the-casino-numbers.aspx#.VEZ7pvnF-8Q">international high-rollers</a> rather than locals. High-rollers spend – and lose – large sums of money that benefit the region. Locals, by contrast, simply deplete the more limited resources of residents, to the cost of the local economy as a whole. Australian research, for example, has found that only around <a href="http://www.auscasinos.com/assets/files/pdf/TheAustralianCasinoIndustry-EconomicContribution-0203.pdf">5% of Australian casino customers are international tourists</a>, contributing some 18% of revenue, while locals make up the majority of players – as well as <a href="http://theconversation.com/what-are-the-odds-new-casinos-lead-to-social-harm-19161">the majority of revenue</a>.</p>
<h2>Problem gambling</h2>
<p>Alongside these (contested) economic benefits, researchers have shown that the growth of commercial gambling also brings a range of negative impacts for individuals, their families and communities. </p>
<p>Problem and pathological gambling has been recognised as a mental health issue since the 1980s, and was <a href="http://www.dsm5.org/Pages/Default.aspx">recently re-categorised</a> by the American Psychiatric Association as an addiction. Surveys from around the world estimate that between 0.6 and 4% of people experience problems with gambling, with the <a href="http://www.gla.ac.uk/media/media_34552_en.pdf">highest figures concentrated</a> among the economically disadvantaged, ethnic minorities and the young. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=351&fit=crop&dpr=1 600w, https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=351&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=351&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=441&fit=crop&dpr=1 754w, https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=441&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/60435/original/jwtcny92-1412089637.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=441&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The proposed Wynn casino is likely to make more money from locals than high-rollers.</span>
</figcaption>
</figure>
<p>Although these numbers may appear relatively small, such players account for a large proportion of gambling losses, with some studies suggesting that between <a href="http://ann.sagepub.com/content/556/1/153">a third and a half of casino profits</a> come from this group. </p>
<p>Those suffering from gambling problems experience debt, bankruptcy, the loss of their jobs, homes and relationships, as well as <a href="http://www.pc.gov.au/projects/inquiry/gambling-2009">depression and suicide</a>. </p>
<p><a href="http://eprints.gla.ac.uk/62216/">My own research</a> has shown that the problems associated with gambling extend well beyond the individual, and ripple out to affect their wider families, workplaces and communities. </p>
<p>The loss of money and time involved in excess gambling impacts gamblers’ social relationships in a range of ways. Relationships and marriages can be undermined or destroyed through lack of trust and loss of shared funds. Workplaces suffer from employee absenteeism, lost productivity and fraud, while the children of people with gambling problems do less well at school, and are more likely to truant and develop gambling problems themselves as they get older.</p>
<p>Research carried out in the US has found that proximity to casinos increases the levels of these problems in the local population, with those living within ten miles of a casino having approximately <a href="http://s3.documentcloud.org/documents/266349/neighborhood-and-gambling.pdf">double the rates of gambling problems</a> than those who live further afield. </p>
<p>Certain games are more strongly associated with these kinds of negative social impacts than others; in particular electronic gaming machines which have a high “event frequency” which makes it possible to bet – and lose – very quickly.</p>
<h2>A tax on the poor</h2>
<p>Western-style casinos, such as the one proposed in Massachusetts, are dominated by these machines, which account for some <a href="http://theconversation.com/what-are-the-odds-new-casinos-lead-to-social-harm-19161">40% of casino profits</a>, as well as a contributing to <a href="http://www.gla.ac.uk/media/media_34551_en.pdf">high levels of problem gambling</a>.</p>
<p>As the <a href="http://govinfo.library.unt.edu/ngisc/index.html.">National Gambling Impact Study Commission</a> found, the expansion of gambling when a new casino comes into town is seen by some residents as undermining the quality of life, damaging local businesses and bringing about increased levels of crime, traffic and anti-social behaviour. </p>
<p>Research from <a href="http://www.researchgate.net/publication/230779781_Modelling_vulnerability_to_gambling_related_harm_how_disadvantage_predicts_gambling_losses">Australia</a>, <a href="http://eprints.gla.ac.uk/73285/7/73285.pdf">Great Britain</a> and <a href="http://s3.documentcloud.org/documents/266349/neighborhood-and-gambling.pdf">America</a> has also consistently shown that it is low income and ethnic minority groups and communities who are most affected by the global spread of gambling.</p>
<p>Such a distribution reveals that the revenue raised through gambling is a <a href="http://books.google.co.uk/books/about/Selling_hope.html?id=VtuxAAAAIAAJ&redir_esc=y">highly regressive</a>, and damaging, form of taxation.</p>
<p>It is against this backdrop that groups and communities have begun to mobilize to counter the spread of gambling. Massachusetts’ “Repeal the Casino Deal” group has its counterpart in Britain’s “Campaign for Fairer Gambling”, and Australian politician Nick Xenophon’s single ticket “no pokies” policy. (“Pokies” is the Australian term for slot machines.)</p>
<p>As awareness of negative social impacts grows, local resistance is increasingly demanding that legislatures re-think the consequences of the global expansion of gambling. </p>
<p><em>This article is part of a series on gambling in America. You can read the rest of the series <a href="https://theconversation.com/us/topics/gambling-in-america">here</a>.</em></p><img src="https://counter.theconversation.com/content/32346/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gerda Reith has received funding for her research from a range of organisations including the Economic and Social Research Council, the Scottish Government and the Responsibility in Gambling Trust. All her research is independent, and the views expressed in this article are her own. She is affiliated with The Responsible Gambling Strategy Board - the independent body that advises the Gambling Commission </span></em></p>The [upcoming vote](http://ballotpedia.org/Massachusetts_Casino_Repeal_Initiative,Question_3(2014) on whether to scrap plans to allow casino resorts in Massachusetts fits into a broader pattern of individuals…Gerda Reith, Professor of Social Science, University of GlasgowLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/259862014-04-29T04:28:23Z2014-04-29T04:28:23ZHe who pays the piper calls the tune: gambling with research<figure><img src="https://images.theconversation.com/files/47093/original/m334js8z-1398646648.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">According to a new report, academic research into gambling is heavily biased, and controlled by industry and government.</span> <span class="attribution"><span class="source">AAP/Paul Jeffers</span></span></figcaption></figure><p>Earlier this month, a team of British anthropologists from Goldsmiths College of the University of London <a href="http://www.gold.ac.uk/gamblingineurope/report/">published a report</a> about the mundane, if very lucrative, world of <a href="https://theconversation.com/who-wins-from-big-gambling-in-australia-22930">Big Gambling</a> and the cadre of gambling researchers who help legitimise it.</p>
<p>The report was based on a three-year research program. It involved interviews with more than 100 stakeholders in the gambling industry-state-research nexus globally, including from Australia.</p>
<p>The report’s key finding was that academic research into gambling is heavily biased. It is controlled by industry and government in two main ways.</p>
<p>Firstly, funding bodies control research priorities and are not at arm’s length from governments and industry. Decisions relating to what research questions get asked and what counts as evidence are made with reference to bureaucratic politics and industry agendas, rather than the public good or academic merit.</p>
<p>Secondly, the gambling industry withholds data and access, which impairs the ability of researchers to build an evidence base. Data generated by gambling activity is controlled by industry or government regulators. And they rarely make it available, except to those whom industry or government trust. </p>
<p>This allows the gambling lobby and governments to point to the carefully manufactured “lack of evidence” when crucial and effective reforms are proposed.</p>
<h2>Australia’s gambling research infrastructure</h2>
<p>You might think things are different in Australia. Unfortunately, you would be mistaken.</p>
<p>A small and modestly funded national centre for gambling research was established at the <a href="https://www.aifs.gov.au/agrc/index.php">Australian Institute for Family Studies</a> in response to the Productivity Commission’s <a href="http://www.pc.gov.au/projects/inquiry/gambling/docs/report">1999</a> and <a href="http://www.pc.gov.au/projects/inquiry/gambling-2009/report">2010</a> concerns about a national lack of independent research capacity. Despite this, state and territory government agencies commission the vast majority of gambling research in Australia.</p>
<p>But Australian governments are hardly arm’s length, disinterested funders of impartial research. Most state governments are heavily dependent on gambling taxes. An average of <a href="http://www.pc.gov.au/__data/assets/pdf_file/0009/95688/05-chapter2.pdf#page=11">around 10% of own-state revenue</a> comes from various gambling taxes. Both NSW and Victoria derive <a href="http://www.pc.gov.au/__data/assets/pdf_file/0009/95688/05-chapter2.pdf#page=10">well over A$1.5 billion a year</a> from gambling taxes. </p>
<p>The whole Australian political economy is inextricably [bound up with commercial gambling](<a href="http://epubs.scu.edu.au/tourism_pubs/934/">http://epubs.scu.edu.au/tourism_pubs/934/</a>, especially poker machines.</p>
<p>Research is affected in a number of ways. First, commissioned research is generally funded by a levy on poker-machine losses. The authors have received such funding themselves. This means the research budget is directly dependent on the number of gamblers, especially the problem gamblers who are responsible for <a href="http://www.pc.gov.au/__data/assets/pdf_file/0010/95707/24-appendixb.pdf">40% of total spend</a> on poker machines. Why reduce problem gambling when it is paying your salary?</p>
<p>Also, research priorities are often set by advisory committees, consisting largely of bureaucrats, the gambling industry, “community” representatives and handpicked academics. <a href="http://www.gamblingresearch.org.au/home/research/research+program/">Gambling Research Australia</a> (GRA) manages and implements Australia’s national gambling research agenda, overseen by a consortium of state and territory government gambling regulatory agencies. </p>
<p>Independent, critical research that focuses on systemic issues or otherwise embarrasses is rarely suggested in the first place, even if it is in the public good.</p>
<p>Finally, the gambling industry itself commissions a modest body of gambling research. It should come as no surprise to learn that such research is rarely critical of the industry. Experience from <a href="http://jama.jamanetwork.com/article.aspx?articleid=187551">tobacco research</a>, for example, shows that industry-funded research tends to produce results favourable to big business, even after methodology and research questions are controlled for.</p>
<h2>Why do researchers comply?</h2>
<p>The reconfiguration of Australian universities over the last three decades has played a critical role in producing compliant gambling researchers. </p>
<p>Universities have moved from a model where academics were hired in permanent positions and were free to pursue their own research interests to one where salaries are increasingly supported by external project-specific funding. As a consequence, more researchers and research centres are tied to short-term contracts and “soft” consultancy money from governments and industry.</p>
<p>This means that researchers who wish to stay funded and retain their jobs are forced into <a href="http://www.gold.ac.uk/media/Fair%20Game%20Web%20Final.pdf#page=50">cosy relations</a> with research funders and industry, unmediated by independent structures that can provide independence to research.</p>
<p>Gambling researchers stay funded by producing research that is “safe”, uncritical and reliably delivered. This amounts to consulting-style work where the more important questions of the public good are, at best, sidelined.</p>
<p>But the reality is that gambling researchers have little access to research funding aside from the state governments and industry. There is no independent pool of funds to conduct research at arm’s length from governmental agenda-setting, despite the <a href="http://www.oesr.qld.gov.au/products/publications/aus-gambling-stats/aus-gambling-stats-29th-edn-aus-gambling-stats-29th-edn-product-tables.pdf#page=242">$20 billion</a> Australians lose gambling every year.</p>
<p>As it stands, the academy merely constitutes one part of the industry-state-research triad that produces and legitimises commercial gambling in Australia.</p>
<h2>Where to in the future?</h2>
<p>Although the field of gambling studies is fraught, there are remedies available to address the lack of independence that characterises a great deal of its research output.</p>
<p>Although funding bodies such as the Australian Research Council (ARC) and the National Health and Medical Research Council are far from perfect institutions, they do offer a model for a more independent and academically rigorous approach to gambling research. An independent gambling research funding body could run as a separate program of the ARC, using the ARC’s peer-review mechanism of assessing funding applications on the basis of academic merit.</p>
<p>Disclosure models and declarations of interest should also be adopted from the alcohol and tobacco research fields. In one example, that of VicHealth, funds are <a href="http://www.vichealth.vic.gov.au/%7E/media/FundingOpportunities/ARC/2013/ARC_LinkageGrants_Guidelines_2013_R2.ashx">not provided</a> to researchers who have previously been funded by the tobacco industry.</p>
<p>While research into treatment and harm-minimisation measures is important, it is far more effective and socially responsible to tackle the causes of this trouble. This means asking uncomfortable questions and hearing even more uncomfortable answers. That is something that neither governments nor the gambling industry seem inclined to want.</p><img src="https://counter.theconversation.com/content/25986/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Livingstone receives funding from the Australian Research Council relating to a project examining industry influence in dangerous consumption industries, including the gambling industry. He has previously received funding from the South Australian Independent Gambling Authority and the Victorian Gambling Research Panel. He is affiliated with the National Association for Gambling Studies (Australia) and the Public Health Association of Australia.</span></em></p><p class="fine-print"><em><span>Francis Markham holds an Australian Postgraduate Award from the Commonwealth government. He has previously been employed on projects jointly funded by the Australian Research Council (LP0990584) and the Community Benefit Fund of the Northern Territory. Like the research commissioning bodies discussed in the piece, the Community Benefit Fund is financed by a levy on electronic gaming machines in hotels in the NT.</span></em></p><p class="fine-print"><em><span>Martin Young was the lead investigator on ARC Linkages Project LP0990584: Gambling-Related Harm in Northern Australia, a project co-funded by the Australian Research Council and the Northern Territory Community Benefit Fund (which is raised via a tax on pokie-gambling in pubs). In addition to his position at Southern Cross University, he is an Honorary Fellow at the Menzies School of Health Research, Darwin, and a Visiting Fellow, Fenner School of Environment and Society, The Australian National University.</span></em></p>Earlier this month, a team of British anthropologists from Goldsmiths College of the University of London published a report about the mundane, if very lucrative, world of Big Gambling and the cadre of…Charles Livingstone, Senior Lecturer, Global Health and Society, Monash UniversityFrancis Markham, PhD Candidate, The Fenner School of Environment and Society, Australian National UniversityMartin Young, Senior Lecturer, Centre for Gambling Education and Research, Southern Cross UniversityLicensed as Creative Commons – attribution, no derivatives.