New Technology Is Making Gambling Even More Addictive

To most people, Jacqueline Balaam wouldn't fit the stereotype of the typical gambling addict. The 41-year-old is married with two children; she previously held a well-paying job as a finance officer at one of the most prestigious universities in the world and volunteered in her spare time as the treasurer of her local social club.

But unbeknown to friends and family, Balaam was in the thrall of a powerful addiction. Over eight years, she wagered a total of almost $9 million, mostly on online gaming site Jackpotjoy. Last month, she was jailed for fraud, having stolen more than $400,000 from her employers to fund her addiction.

For Natasha Schull, an anthropologist at MIT who studies gamblers and the games which captivate them, Balaam is an example of someone who became trapped in what she calls "the machine zone," the immersive void where time, money, and ultimately reality become subsidiary to the compulsive draw of the game experience.

The money at stake is often the initial motivation for people addicted to bingo or slot machine games, especially if they win a few times, but it quickly becomes relatively unimportant. Just like narcotics addicts, they're playing to access a state of mind rather than a monetary reward. While Jacqueline occasionally won five figure sums, she never banked the money. Instead, she fed it right back into the game.

"When gambling addicts really get into the zone, money is the last thing they're thinking about," Schull explains. "They're really playing for the value of the zone. Money's just a currency to get there." Zone psychology, and the types of games that prove most immersive for gamers, are the key focus for Schull and researchers looking to help addicts reconstruct their lives. It's also long been an area of interest for the companies scooping up the profits.

The gambling world has traditionally made its cash by finding ways to attract people into casinos in the hope of getting them to place large wagers on the roulette tables or immerse themselves in the slot machine and video games. Bookmakers make far more money through the fixed odds betting terminal machines in their shops offering bingo and roulette, than they do from sports betting.

One of the reasons why these games hook people so easily is their high event frequency. "People often mistakenly demonize slot machines, but the addictive thing is the structural characteristics of the game rather than the machines themselves," says Mark Griffiths, a psychologist and director of the International Gaming Research Unit at Nottingham Trent University. "It's about being able to engage in gambling repeatedly. I could create you the safest slot machine in the world where you can only press the button twice a week. In the US, Canada, and India they have a game called Keno, a fast action lottery draw and it's addictive because it takes place every two or three minutes."

Going by the number crunchers, this is a boom time for gambling. According to market researcher IBISWorld, the entire global gambling and casino industry is worth $285 billion and will continue growing by 5.3 percent each year until 2020. The figures are mind-boggling. But they also mask rapidly changing customer demographics which have many in the business shifting uneasily.

"These huge numbers are mainly being driven by Asia," Schull explains. "New casinos are being opened in Singapore, the Philippines, resorts, and hotels across that part of the world. Japan is considering legalizing casino development. But if you look at the rest of the world, the industry is trying to deal with the fear that it's losing its customer base. It's aging out. Over the past decade, the age of the average gambler in a betting shop or casino has risen to well over 50."

The gambling world has been seeking to reverse the trend by investing heavily in new technologies to appeal to a younger generation. These exploit the sensory cues which lure people into the machine zone by increasing the visual, auditory, and tactile stimulation.

"They realize that getting addicted to these games is not about money, it's about falling out of space and out of time," Schull says. "You almost forget you have a body. They use surround sound, touch screens, and devices called haptic actuators, which create these little buzzing or pulsing haptic effects behind the screen or in your chair. And the shocks, vibrations, or zaps from the chair are choreographed to synch up with whatever game effects are happening, so it acts as a confirmation of whatever's going on in the game and brings you further into the zone."

But getting people who are under 45 into a casino in the first place remains a challenge. One of the tricks some casinos have considered is augmented reality. "Augmented reality is the combination of real and virtual on a screen in real time," says Mike Cohen of Total Immersion, a company which develops augmented reality based products. "Casinos look to use it as a shiny, new gimmick which can drive traffic into the casino with things like interactive photo opportunities or smartphone apps which interact with a casino slot machine and trigger when you walk through the door."

The problem is, like all gimmicks, the lifespan is relatively short. "There's a big 'wow' factor to the technology," Cohen says. "You think it's the coolest damn thing you've ever seen and you get really excited, you do it three, four times. And then it's done. It's mind-blowing the first time, and then you're like 'What else?' There's a finite limit to it."

Ultimately, the gambling world knows it has to reinvent itself to survive in the long-term. Some sectors have embraced the new era of mobile and internet media more successfully than others. Bookmakers like bet365 and Ladbrokes have hit on a way of pulling in younger gamblers by live streaming global sporting events. If customers come back regularly, they hope they can eventually be enticed into the website's online casino, where the serious cash is made.

The mass of data they're able to amass also enables them to profile customers and block the ones who win too regularly. "The industry is at an ugly time in its lifecycle where there's a grab for as many mug punters [people who gamble more than they can afford] as they can get," says Steve Bailey, a Melbourne-based professional gambler. "If you bet $50 [or more] and don't have a history of losing much, the bookmakers aren't interested. It seems they're only after problem gamblers, the ones who will bet on anything and chase losses. These are publicly traded companies and this is the best way they see to make larger and larger profits."

At the present, industry estimates suggest that just 20 percent of total gambling revenue is made online. But that could be about to change, and quickly. At the moment, many countries—including Turkey, China, and the Netherlands—still ban online gambling, while in the United States and Germany the situation is more complicated, with federal bans but permissions granted in an increasing number of states. With millions playing illegally and governments realizing the potential tax windfall at stake, legislation is rapidly being introduced. The Netherlands is expected to introduce a regulated online gambling system later this year. Juniper Research estimates that the global gambling industry's revenues from mobile online games will reach more than$100 billion by 2017.

Facebook has been quick to capitalize, enabling betting game developers like Jacketpotjoy to use its platform in a similar fashion to its many social games and acquiring the start-up Oculus VR for $2 billion to pave the way for virtual reality gaming. Apple has also made alterations to its iPhone software. The race is now on to develop betting games which contain the same elements that have made Candy Crush, Bejewelled and others, hugely popular. Schull does not see it being a difficult transition.

"When you compare slot machines and social games, the user experience is already very similar," she says. "It's so fast and there are no social cues, it's just you and the machine. You get caught in this feedback loop of stimulus and response which is incredibly absorbing."

Fearing they're about to lose out, the giants of the casino industry have been reaching out to the social gaming world to try and form partnerships. "About ten years ago there was staunch opposition to any online gambling from the casino industry, but now they're trying to control it as much as they can," Schull says. "You've got the likes of WMS and IGT looking to merge with gaming developers like Double Down, but they aren't easy alliances."

The tension comes from contrasting business philosophies. The casino industry struggles to get its head around the 'freemium' model, which has generated explosive revenues for the developer Zynga through games like Farmville and Mafia Wars. The basic game is free but once hooked, many users are prepared to pay for upgrades and increased game time. The model works due to Zynga's ability to design games that will appeal to vast numbers of customers.

The developers are interested in learning from the captivating qualities of slot machines but remain unconvinced they should buckle to pressure from the casino companies who would like them to find a way to monetize their users more quickly.

As a result, some of the biggest names have already turned their backs on the vast revenue streams potentially at stake. After initially announcing the impending release of its first betting games in the UK in 2013, Zynga has gone cold turkey on the idea. "We're no longer entering the online gambling space," says spokesperson Kelly Pakula. "Instead we're continuing to focus on free-to-play mobile games like Words with Friends."

But others are more than happy to step into the void, with Seattle-based Big Fish Studios enjoying success with its iPhone app Big Fish Casino. This year Toronto developer RiftSino VR plans to launch the first 360 degree virtual reality casino game via Facebook's Oculus platform, billed as providing a "gratifying Vegas experience from the comfort of your home."

Griffiths believes there are several reasons why online gambling has the potential to generate so much revenue. "The value of money is psychologically lower online," he says. "This is because the games convert your real money into virtual representations as quickly as possible, so you're doing everything on credit. And although Facebook betting games allow you to process your cards and cash out your winnings, few people do that. They just keep the credit for next time. This is exactly how real-life casinos work. They convert your money to blue chips and even though you know those chip are $1 each, it would be a very different experience if you saw $1 notes disappearing down the hole."

The other key aspect is the anonymity of the online world. People become psychologically disinhibited in the absence of face-to-face interaction and while most reputable gambling companies will have built-in warning mechanisms to protect those who play excessively, the 24/7 access means it's all too easy to simply move to another game.

It isn't hard to picture a boardroom of techies and malevolent casino owners, hell-bent on identifying the best ways to addict people, but this isn't quite the reality. Qualities which make a game even faster and more immersive tend to be stumbled upon rather than pre-designed, with the overall aim to get a critical mass of people playing and spending money. But the nature of the game designs mean they tend to be hyper-addictive. Schull feels this is a fundamental problem.

"It's all about monetizing the hits and working out how to keep people pressing certain buttons over and over again without thinking about what else is happening in life. That's your ideal customer. But that's also the mode of an addict, so is it really ethical?"

While most companies work by the 80:20 rule where 80 percent of their profits are generated by 20 percent of their customers, many suspect the ratio is more like 90:10 in the gambling world. And much of that 10 percent is likely to be made up of problem gamblers like Balaam.

While some people tend to have a personality or psyche which makes them more susceptible to addictive behavior, Griffiths believes that understanding the nature of the games and how they work can have a protective role. But it's still extremely easy to get sucked in.

"These games tap into very human modes of absorption," Schull says. "Look at the success of games like Angry Birds. Although these aren't gambling-based games, they show how under the right circumstances and with the right interface, almost anyone can get drawn into playing for too long and not feeling fully in control."

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