Ep 223: 'The Problem with Problem Gambling', with Jonathan Michaels
As you may know, March is Problem Gambling Awareness Month in the United States. It's a time where the topic gets a lot of attention and we hear news about grants, new programs, and more research, yet it's still a topic where the industry faces quite a bit of criticism from mainstream media. On today's episode of Igaming Daily, we're gonna discuss what the industry is doing right and what it can do better when it comes to problem gambling. Igaming Daily is presented by Optimove, the number one CRM marketing solution for the igaming market. 56% of the EGR Power 50 personalized player experiences with Optimove.
Speaker 1:And just a reminder, special offer still stands. Optimove is offering new clients a free 1st month when they buy Optimove. For more information and to claim that offer, go to optomove.comforward/sbc. I'm Jessica Welwyn, editor of SBC Americas, and I've got a special guest with me, for this episode, Jonathan Michaels of Jonathan Michaels Strategies. Jonathan, for those who don't know you, you've kind of been in the gaming space all over the place.
Speaker 1:So just a quick little bit, what's your your background and your focus for the industry?
Speaker 2:Sure. Well, thank you for having me, Jess, and thank you to SBC for for hosting this on the iGaming daily podcast. So Jonathan Michaels, I'm a, I guess, a grizzled gaming industry vet now. I've I've been in the industry for about 10 years. I started my own consulting group, about a year ago.
Speaker 2:What I like to say is the intersection of innovation and regulation, which there's plenty of opportunity, within this industry to to help advance those. I spent I started my career with the American Gaming Association. Spent about 7 years there doing a variety of things, built up their membership, did a lot around sports betting payments. And then, for the past, you know, two and a half or three years before starting my own firm, I was with a group called Sightline Payments who's a Fintech specializing in the gaming industry. So I try to keep a pretty broad lens about what's going on.
Speaker 2:And, you know, at Michael Strategies, we're a boutique consulting firm. Work with variety of clients on, you know, generally regulatory, government affairs, public affairs, and a lot of that intersects with, responsible and problem gambling. So we'll spend a lot of time on those issues as well.
Speaker 1:Yeah. If you wanna go check out Jonathan's LinkedIn page, he has a post about problem gambling that kind of helped all of this kind of come together in terms of just thinking about it in in a different way, I would say, in a more proactive way than the industry tends to. So I think kind of a good place for us to start is I hate to jump in and be so critical off the top, but, you know, I don't know if you agree with this statement, but the things we were doing and the things we see with with PGAM are kind of reactive. Right? We're doing everything kind of after the fact.
Speaker 1:How much of that is because, like, we still just have a lot of research to do versus, like, well, it's just the way we've always done it?
Speaker 2:I am a big believer in the inertia. An object at rest stays at rest unless acted upon by an outside force. So I think what you see in this business is a lot of the way we treat responsible and problem gambling comes from the land based casino industry, where, you know, if you're sitting at a slot machine and you're playing, you know, there's no real way to say, okay. Does that person like, they have a problem outside of, well, they look like they're really intense on something. It it's it's not very scientific is what I'm trying to say.
Speaker 2:So when you introduce this online, you know, gambling option, there are some really good responsible gaming tools, I believe. Now whether that's deposit limits, whether that's time limits, whether that's just looking at your balance and what you've spent. But what we've seen, and and the Massachusetts Gaming Commission really laid this bear, was people aren't really using those tools. So if you have tools and nobody's using them, how do you get people to think about this differently? Now it's problem gambling awareness month.
Speaker 2:Their problem gambling and responsible gambling are 2 very distinct things. They get conflated far too much. The overwhelming majority of players stick in that responsible gaming bucket. We'll call it 95% of them. For about 5% or so, some might say as high as 10, they will either struggle with gambling addiction or they have the the potential to struggle with their game.
Speaker 2:So as an industry, what are the things we can do for that segment of the population to really help them? And and a lot of this is not, like, pointing and saying you're a problem gambler. Like, self exclusion tools, things like that that are very much, like, in your face. How do you get people to just take a step back? Think about what they're doing, stay within these guardrails, and, you know, how do we as an industry be proactive about saying, what are the things that make sense for us to do this as opposed to waiting for regulators to go way too far with something.
Speaker 2:That's going to be, almost too much.
Speaker 1:Yeah. And, I mean, we've seen, certain states put forth some stuff that is, you know, like credit card bans. Massachusetts, and you've deposited segregating those funds so you can't use them in Massachusetts. But, you know, these measures where how do you identify the balance of too much versus not enough?
Speaker 2:Well, I think that's where the proactive piece comes in. And we keep saying, well, there's not enough research. There's not enough research. And there are a couple of things we generally know. And I I believe in on the markers of harm side.
Speaker 2:You could generally point to what are riskier behaviors. So when I was at Sightline, they conducted a study with you at LV. Kauska Herringent did an awesome job on it, where they were looking at payments data to identify potential markers of harm. And, you know, they went through I think it was something like 92 or 93% of players exhibited no signs of concern. And then of the 7%, there were some that were VIP players, some that just had irregular habits.
Speaker 2:There was, like, 1 cohort, which was about 1.2% of the the survey. Those people had, on average, 30 deposits a week. 40% of their deposits were declined. You know, you look at that cohort and you're, like, that's probably a problematic cohort. So how do you build solutions to help that cohort, whether it's those people need to set a limit.
Speaker 2:You know, we we have a bunch of these identification tools. There's no standardization there. And then further, there's no intervention standards. What actually works? And I don't think we need to do academic research that takes 3 years and looks in the past to do that.
Speaker 2:I think a lot of that we could do in real time. So how do you try things and see what gets players? We'll we'll use that 2a half percent number that Massachusetts found out. How do you get that up? Let's say 10% of players utilizing these 20%, getting them to think differently where you help ensure that people stay in that responsible game.
Speaker 1:You know, what's interesting to me is you're right that we found that asking players to limit themselves is not really clicking and connecting, and it's not something that they wanna do. Then you look at a place like the UK, which is now looking at affordability checks for people. And I have to say, like, my eyebrow goes up at that, and I'm like, I don't think Americans would respond well to such a thing. I'm not sure that the average American sports bettor would appreciate the intervention. You know, you they kinda turn into, like, Cartman from South Park.
Speaker 1:Like, whatever, whatever. I do what I want. Like, do you think there is just a cultural difference in North America that complicates this problem more?
Speaker 2:I think there's a newness piece. Certainly, there's cultural differences where, you know, we have federalism and, you know, states rights and things like that, and and we'll we'll call it the culture of freedom. But, you know, to me, if you look at your banking apps, there's a bunch of tools in there. You know, but if you go to how do you set a deposit limit or a spend limit on Gambling. I've been in this industry 10 years.
Speaker 2:I've been in payments. I couldn't tell you how to settle it for myself, nevertheless, somebody else. Because, you know, sometimes so, you know, before we got on this podcast, you know, Jess and I were talking about March bats, both huge college basketball fans. I will accelerate my spend pretty dramatically this month because there's so many games and so many things to do. Does that mean I have a problem?
Speaker 2:Does that mean I have to set a limit? No. I might just spend a little more because I really enjoy the product, And, you know, baseballs are on the core. I don't really bet on baseball. So the fluctuations in play might be different.
Speaker 2:So could it trigger an affordability thing? I don't know. Maybe. I would hope not with my $10 single game wagers, but you never know how the those systems work. But I think it's how do you provide people with information to make smart decisions about their plan.
Speaker 2:And it's not, you know, you need to go through this and tell us your income. It's, hey. Do you know you you and, you know, some groups do this proactively. Like, you know, my parents live in New Jersey. So I'll play online casino games when I'm there.
Speaker 2:And, you know, occasionally, a thing will pop up. Hey. Do you know you've been on for 20 minutes? You've spent x dollars. And I would say, okay.
Speaker 2:And you might be able to say that, you know what? That's probably a little more than I should have spent. But is there a way by which you could say, like, I should spend x or y? It's really difficult. But if you said, you know, people who have a similar play pattern set a limit of $250 a month as a loss limit.
Speaker 2:Do you wanna do that? That might make sense. Tell me what other people are doing, not necessarily like what you mandate me.
Speaker 1:And you mentioned, you know, there's a big difference between responsible gambling and problem gambling. I guess to just could dive into that a little bit more. I know I have had moments in casinos where I've spent more than I intended to, and in hindsight, I'm like, that was dumb. So, you know, I think it's such an all or nothing proposition sometimes with the way that we talk about it that, like, you can have moments like that where maybe you were not necessarily problematic. Is the better word irresponsible?
Speaker 2:Yeah. Oh, I mean, listen. I I went to the Under Armour store on Tuesday after a lunch meeting, and I was probably a bit irresponsible there. Like, there there are so many things where you could
Speaker 1:say He's wearing Under Armour right now, by the way. So Your
Speaker 2:CEO is a Maryland alum. I have to, you know, support him, and I I do have some stock at the company as well for full disclosure. But it's it's one of those areas where, like, you know, you can make mistakes. And just because you you spend more than you should have, whether it's at a dinner or whether it's at when you're shopping. Occasionally, I'm gambling.
Speaker 2:It doesn't necessarily mean you have a problem. But what you said there, Jess, that was really important was you realize in hindsight, yeah, I probably shouldn't have done. It. The challenge with addiction is people don't see that and don't think that way. They just go right to it.
Speaker 2:So you mentioned the credit card bans earlier. I have a bit of a problem with credit card bans. Yes. All the research indicates that people that use credit cards, deposit into accounts, have a higher likelihood of developing challenges with their game. But we should use that as a data point to find ways to help them.
Speaker 2:Because if we say that's riskier, well, let Nuts make sure that anybody who tries to use a credit card to deposit sets a limit. How do you help keep people in those lanes? Because, ultimately, what I can do is take my credit cards. I have several of them, and people do this in casinos all day every day. They'll go to the cage.
Speaker 2:They'll do a credit card cash advance, which is generally higher than their ATM limit. They'll pay that huge fee that's associated with that, and they'll go about their gambling business. And you could do the same thing online. I could go to a bank, pop my credit card in, do a credit card cash advance, deposit that in my account, and it looks like it's a debit transaction. And when you talk to some of the folks that that have had challenge with this, you know, I I've I've talked to, you know, folks like Dan Trelaro and Dan Spencer at at Epic.
Speaker 2:And they they both struggled with gambling addiction, and they said that's what they would do. They would find ways to hide it. So how do you take the information that you have and give people the best tools as possible to do it? I think that's something that's that's an opportunity. And now, ultimately, I think more states are going to to move towards adding credit cards.
Speaker 2:Yeah. You see Maryland and their online gaming bill. There's there's a provision about banning that. Pennsylvania's introduced legislation. We'll see where this goes, but, you know, I I think, ultimately, if somebody has an addiction, they're gonna find ways to get money in the system.
Speaker 1:Yeah. I mean, we've seen on the land based side as you've mentioned. You can't use a credit card there. People have plenty of other ways to get funds and actually probably hurt themselves more financially than they would if they just had a credit card. I I'm curious.
Speaker 1:As a poker person, I've always had conversations with poker players that it's very hard for them to take some of the traditional problem gambling identifiers and apply it to poker because if you're a professional or if you take it very seriously, there is actually importance in putting in a certain amount of volume. And that, like, if you lose a big hand because, you know, the cards didn't go your way even though you were statistical favored, you're not supposed to just pick up and be done. You have to keep playing to recognize, you know, the value of your skill over time. You mentioned at the beginning of this that land based problem gambling solutions is kind of where all of this is still rooted in. What have we seen about sports betting in terms of how problem gambling manifests itself, and how different is it from slots or table games?
Speaker 2:It's a great question. Yes. And as a former poker player myself, I could I could recall many times I went on tilt. One of my favorite stories to tell is I was in Vegas and lost a bad hand. And I was out of money at this point and walked from Planet Hollywood to the M and M World because there was a Bank of America ATM on the 5th floor, because I did get want the fees?
Speaker 2:Yeah. I avoided the the ATM fees by walking a mile. I was
Speaker 1:gonna say that's not a short
Speaker 2:walk. No. It wasn't. But, you know and poker is a little different because certainly, you know, you go until you know, the statistical probabilities in the long run if you're a skilled player will work themselves out. But there are some times where you just feel like, I need to get up.
Speaker 2:I need to take 5 minutes. Yeah. And plenty of people do that. Others can't do that as much. But think of that feeling of your on tilt and how you feel then.
Speaker 2:Let's translate that to sports betting. And I'm trying to think of an example of of a game in in the past couple days that was, a strange ending. Let's LaSalle and, Saint Bonaventure yesterday. Atlantic 10 tournament. Why am I watching Atlantic 10 tournament?
Speaker 2:One of my good friends from college, is a radio announcer for one of the schools in the a 10. So I follow a 10 basketball more than I should. Well, LaSalle missed a dunk to tie the game at the horn. So if you had a LaSalle money line ticket and you had a good number on it because they were either either mind point, you know, underdogs, you might get mad. You might say, you know, I'm gonna try to loss chase, essentially.
Speaker 2:I'm gonna try to bet in all these other games to make back that money that I should have won on this if if, you know, this kid made the dunk. And I think a lot of what you see in sports betting is that. Now you also it's interesting looking back on my AGA days. You know, sports betting as a low margin business, those days are pretty much over because of the same game parlor. People love parlors.
Speaker 2:And you could treat it as a lottery ticket, and many people do, where I'm gonna put a $5 10 team parlor together where I'm gonna try to win $10,000, and you're probably never gonna hit that. You might hit it once. But, you know, but if you if you're betting $5 and then all of a sudden you're betting 50 and then all you're setting you're betting a 100 because you're chasing that, that to me would be indicative of of problematic behavior. So there are some of these solutions out there, Mindway AI. There was a company I worked with called EyeProtect.
Speaker 2:Connectify has, something like this, ID pair. It you know, there are solutions out there that will look at the different betting patterns, and certainly a lot of it is financially based. Because if you were depositing $50 and all of a sudden you're depositing $500 and it's, you know, the middle of May, okay, but why might they be doing that? Okay. Maybe they like betting on horses or maybe it's indicative that there's some behavior going on that is problematic.
Speaker 2:So I I think of it in the you have a bad beat and you you lose a bet that you thought you should have won. That's just one thing. Yeah. But there are all different ways now that that you can utilize technology to say, somebody's really high risk, and you look at all the most markers of or somebody might have a moderate risk. And if somebody, you know, goes from depositing 50 to depositing $200, maybe you send them a a responsible gaming video and show them how to set limits and things like that.
Speaker 2:But the issue that exists is there as I mentioned earlier, there's no standard on what markers of harm and identification are. There's no standard on what actually works to help ensure players, you know, wage your responsibility.
Speaker 1:Yeah. I was I think it was Declan Raines at TransUnion. I've had this discussion too that just in general when it comes to finances, people are not as aware like, they always overestimate how much money they have at their disposal. So that's the other piece of this that is kind of tricky too, where if you're asking customers themselves to do these kinds of restrictions, they may not even realize what's happening. And it's only because somebody is accumulating all of this data that they could potentially say, hey.
Speaker 1:I don't know if you know this, but, like, you've lost 4 times what you've normally lost in a month.
Speaker 2:Cool. So even yesterday to to go that, I spoke with a company that's doing using voice AI. That they could do a prompt to be like, hey, Jess. How did you feel after you lost that bet yesterday? And in real time, they could they could analyze if they're like, yeah, you know, whatever that happens or I'm really bad.
Speaker 2:I'm gonna chase that. I'm gonna win 10 bets today. So, like, those types of solutions I could see being successful at at just getting people to take that step back and ensure they're wagering within their means.
Speaker 1:I'd like to revisit you mentioned we've seen such a wide range of numbers on exactly how many people this impacts. You know, I know it doesn't sound big, but when you say, like, anywhere from 1% to 5% of the population, that's actually a pretty big delta. And then I've seen, you know, it's legislative season and you get people coming up and giving you the most alarmist statistics they can find that family foundation groups say that, like, 60% of all revenue from online gambling comes from problem gamblers. Why is it so difficult to pinpoint a number and get some amount of consistency there?
Speaker 2:Well, a lot of times, people can cherry pick things. And you see this in the legislative sessions as well. You know? In Maryland, there have been 4 different studies done, 242 against the online casino legislation. You're all looking at the same information and you're drawing 4 completely different conclusions from.
Speaker 2:And, you know, how do you define problematic play? How do you define VIP play? Sometimes those 2 get put together. So New Jersey has been a leader on, we'll call it, the intervention part, and responsible gaming broadly. You know, they were one of the the the 2 states that have, implemented a regulation requiring the use of technology.
Speaker 2:And this is what my LinkedIn article was about. Use of technology to identify problematic play. Well, they're gonna go a step further, and they're gonna try a couple different interventions. Flags of player account behavior that you you, as an operator, need to do something with. And largely, they're VIP type players.
Speaker 2:So if somebody is deposited, like, $20,000 or something. Now as you saw, I think, earlier this week, the Jaguars employee that got sentenced to 6 and a half years in prison, operators should be regularly doing those kinds of checks anyway, to make sure that that, you know, they know source of funds. They're required to do that as a casino would be for for, you know, potential fraud AML, things like that. But it's how do you take those those numbers and say, okay. What what is right?
Speaker 2:And, you know, I'm a big believer in research. I think Art Pajkowski has done a tremendous job, at the International Center For Responsible Gambling on on the research front. And, you know, the industry needs more of that to understand, okay, like, what is actually the truth? But, ultimately, people are gonna cherry pick whatever statistics they want, that suits their language.
Speaker 1:You mentioned VIP, so I'm gonna end this with you on one of the tougher questions. Ontario is probably the first market we've seen where there have been more than one fine associated with how VIP customers have been treated and kind of fining the operator for not intervening in some of this. Do you think there is gonna be a VIP incident at some point that kind of blows open this conversation in North America?
Speaker 2:Well, I mean, Katherine Sayer wrote a great piece on The Wall Street Journal a couple weeks ago. It was and Katherine is a tremendous reporter. I have a lot of respect for her. And you look at it, and some of these stories, like, if you read some of the stuff in The Guardian, they are they're clickbaity, we'll call it.
Speaker 1:Yeah.
Speaker 2:They're, you know, bombastic, things like that. It's the Wall Street Journal. It's it's matter of fact, and, you know, it lays out the challenges that a psychiatrist had with going into too much debt. And, you know, it's how do you marry your your VIP and your marketing teams with your responsible gaming team. And at some level, you you have to take that out of their hands, And that's why these identification tools, I think, are so important and potentially valuable because they could say to both teams, hey.
Speaker 2:This this doesn't look right. You need to do something. And, at the end of the day, if you're a VIP host, you want your players to play. That's what you are paid to do. You're not incentivized to say, okay.
Speaker 2:We need to toss them over to the responsible gaming side of the house. So, you know, I I think you see some things. DraftKings announced something this morning around essentially, like, a player scorecard player health scorecard, which is great. You know, FanDuel has done a lot around their play well initiatives. Are they perfect?
Speaker 2:No. But but, ultimately, I think what you need to see, particularly from those industry leaders and some of the others, is how are you being proactive on these critical issues before a regulator gets up in your business? And, you know, to me, the identification layer is a really good spot for the industry to be to show that they are a leader up. Because ultimately, you see, you know, you work for SBC. They're a UK based company.
Speaker 2:You see what happens when operators are not proactive. UK, Australia, Spain, Italy, name your country. There's a host of bad policies that can come out of not doing that. So, you know, as we we wrap this for probably be able to awareness month, you know, how do you make sure you are implementing those solutions that, let's say, 5 or 5 plus percent of your player base to make sure that you do whatever you can to keep them in a a healthy and sustainable play pattern.
Speaker 1:Yeah. I mean, I think it gets said a lot. Nope. No company wants somebody to go bankrupt playing on their site. It's bad optics.
Speaker 1:Nobody wishes that on anybody. But you're right. It's there's room still to be proactive to make sure that that doesn't happen versus just be sad when it does. Alright. This has been a great conversation.
Speaker 1:We are unfortunately out of time. So, Jonathan, I will leave you for to go get your your basketball fix. I know the Terps are not exactly front runners here. Do you have any, you know, pick on who is gonna take down the tournament this year?
Speaker 2:I think it's gonna be Yukon, Houston in the national championship game. Sorry to your Kentucky Wildcats. I think they will make a run if they have a good bracket, but I don't trust Purdue. They've they've shown in the past that that, like, you know, who's gonna be at Saint Peter's this year and get some? You know, as a big 10 big 10, guy, I would love to see them make a big run.
Speaker 2:But, yeah, Yukon and Houston, I think, are the class of college basketball this year.
Speaker 1:I will agree with you. Purdue has always seemed suspect to me this year. And I agree. I don't love Kentucky's chances because maybe we work our way up to a 3, but, even that might be be tough. So, alright, we're gonna go watch some basketball.
Speaker 1:You guys, be sure to check back in next week and every day for more episodes of Igaming Daily, and check out all the latest news on SBC Americas.
Creators and Guests
