A new study entitled “Nudge versus sludge in gambling warning labels” (conducted by researchers from the University of Warwick and CQUniversity in Australia) has concluded that:

• the manner in which UK online gambling operators present information about the risk of play in accordance with the Gambling Commission’s Remote Gambling and Software Technical Standards (RTS) is ‘ineffective and too difficult to find’ and
• gambling regulators (including the Commission) “should make concrete requirements around the wording and presentation of gambling warning labels to ensure that gamblers are well-informed”. 

The abstract for the study reads as follows:

Firms can help consumers by structuring choices in a way that helps them make better decisions – via nudges. However, firms may instead prefer to profit by making it harder for consumers to make good decisions – via sludge. We explore evidence for these contrasting strategies with respect to warning label regulations in the world’s largest regulated online gambling market (the UK). Gambling operators provided the required information in an inefficient risk communication format, and this information was made difficult to find in small font on densely-packed help screens. Gambling regulators should make concrete requirements around the wording and presentation of gambling warning labels to ensure that gamblers are well-informed.

Commenting on the study, the Medical Xpress website reports that the “study of 26 different operators’ games consistently showed that warning labels containing information about the riskiness of games were presented on separate screens, dispersed randomly in large volumes of text, written in smaller fonts, and often used impenetrable acronyms”, adding that “information was also presented in a format previously shown to be misunderstood by 50% of gamblers, and no games used a demonstrably better alternative format that is explicitly allowed by the Gambling Commission”.

The Medical Xpress website goes on to state:

The researchers surveyed how gambling operators choose to inform their customers about the risk of playing on games of online roulette. The analysis included 363 roulette games available on websites from 26 major gambling operators.

Information on risk could only be found only by opening at least one other screen, requiring an average of 1.3 mouse clicks from the main roulette table. This information was further embedded on screens full of text (average of 2,078 words).

While this information was not positioned consistently on the screen, it was found to be consistently displayed in the smallest font size on the screen (99.5%) and in the least prominent font boldness (99.7%). Finally, in almost 1 out of 5 instances (18.8%) the information was provided via an acronym (“RTP is 97.2973”), without further explanation of what this means.

Dr. Lukasz Walasek of the University of Warwick Department of Psychology, who was involved in the project, said: “It is hard to imagine that this information could be less ‘easily available’ than we observed. Even though our objective was to document the regulator’s mandated risk information, we found it rather hard to find these details.”

The findings further revealed that 357 games (98.3%) used the less optimal of two formats permitted by the Gambling Commission: the return-to-player format. This format places prominence on a gambler’s average winnings (e.g. “this game has an average percentage payout of 90%”) and is misunderstood by 50% of online gamblers. None of the online roulette games used the alternative house-edge format (e.g. “this game keeps 10% of all money bet on average”), which is known to be better understood.

Previous research has shown that only 45.6% of UK online gamblers can identify the correct interpretation of return-to-player information out of four potential alternatives (“For every £100 bet on this game about £90 is paid out in prizes”). By comparison, 66.5% of online gamblers provided the same correct interpretation of house-edge information. The UK’s regulator, The Gambling Commission, gives gambling operators the freedom to choose between the return-to-player and house-edge formats.

Dr. Philip Newall of CQUniversity’s Experimental Gambling Research Laboratory, who was also involved in the project, said, “Stronger regulations on the prominent provision of understandable risk information are needed to better inform online gamblers as a part of the Government’s upcoming review of online gambling.”

To place the above findings into a proper context, whilst licence condition 2.3.1 within the Commission’s Licence Conditions and Codes of Practice requires licensees to comply with the RTS and with requirements set by the Commission relating to the timing and procedures for testing, the Commission itself describes the RTS as being “drafted in a format that sets out the key principles, without being overly prescriptive as to how these must be met”.

Expanding upon that description of the RTS, the Commission goes to state:

The general makeup and format of each requirement is structured as follows:

• the aim – describing what the Commission is seeking to achieve
• the requirement – which sets out specific requirements to meet the aim, and
• implementation guidance – providing guidance as to how the requirement should be complied with, without exhaustively describing all possible solutions. Licensees may adopt alternative approaches to those set out in the guidance provided they can meet the requirement in full and can demonstrate that an alternative approach is reasonable and similarly effective in the particular circumstances.

The above study is referring to RTS aim 3, namely “to enable customers to make informed decisions about whether to gamble based on their chances of winning, the way the game, lottery or event works, the prizes or payouts on offer and the current state of multi-state games or events”.

In relation to the “chances of winning” aspect to RTS aim 3, RTS requirement 3C states as follows:

For each virtual event, game (including bingo), or lottery, information that may reasonably be expected to enable the customer to make an informed decision about his or her chances of winning must be easily available before the customer commits to gamble. Information must include:

1. a description of the way the game works and the way in which winners are determined and prizes allocated
2. house edge (or margin)
3. the return to player (RTP) percentage or
4. the probability (likelihood) of winning events occurring.

RTS implementation guidance 3C does indeed provide a degree of leeway in terms of guidance on how the above requirement 3C should be complied with, as long as it is “easily accessible”. It states:

1. The following items provide further guidance on acceptable types of information about the likelihood of winning:
   1. for types of peer-to-peer games where the likelihood of winning may depend on skill and/or the actions of other participants, a description of the way the game works and how winners are determined will be sufficient
   2. for bingo, and some types of lottery or other games where it is not possible to determine the likelihood of winning because it depends on the eventual number of participants, a description of the way in which prizes are allocated will be sufficient
   3. the average theoretical return to player percentage. Where an event (other than peer-to-peer) involves an element of skill, return to player percentage should be calculated using either the auto-play strategy or a standard/published strategy
   4. the house edge, margin or over-round, for example for a virtual race
   5. the probability of each winning event occurring, or such information as may reasonably be expected to allow the customer to calculate the probability that the event will occur. The nature of some games may mean that the game itself provides sufficient information, for example, the likelihood of rolling a six on a six-sided die would not require further explanation.
   6. The odds displayed in virtual event betting should reflect the probability of each event occurring as closely as possible.
2. Information may be included in artwork and text displayed within the virtual game or event, in ‘help’ or ‘how to play’ pages, or other supporting material.
3. Information should be easily accessible, for example by placing links on home pages for gaming or virtual event sections, game selection pages or menus, or within individual games.

It will be interesting to see the extent to which this study (a complete pre-print version of which can be accessed here) plays a part in the forthcoming deliberations with regard to the UK Government’s Review of the Gambling Act 2005.