Is Means-Testing Online Gamblers A Practical Goal?

The gambling industry is having a robust (and long overdue) responsible gambling discussion. One of the critical subplots in the conversation is means-testing or affordability checks and, by extension, reducing revenue gambling companies obtain from problem gamblers.

This topic was recently tackled on Twitter by Eilers & Krejcik Gaming analyst Alun Bowden.

In a series of three yes and no questions, Bowden asked his followers:

1. We hear a lot about evidence led with gambling legislation but nothing about ethics or morality. Which seems a miss to me as it’s more broadly applicable in life. Anyway. Question. Is it OK for a business to make money from people OCCASIONALLY spending far above their means?
2. Is it OK for a business to make MOST of its money from people OCCASIONALLY spending far above their means?
3. Is it OK for a business to make money from people FREQUENTLY spending far above their means? Not should it be legal. But is it OK?

These questions may seem simple, but each is highly nuanced. Here are my thoughts on each of these questions (based on the Twitter responses, people interpret these questions in very different ways), along with how I answered.

Question 1: The All or Nothing Approach

Question 1 is pretty straightforward, “Is it OK for a business to make money from people OCCASIONALLY spending far above their means?”

My reading of this question is that it’s not asking if a company can or will do this, but rather, is it ok for a company to make money from some customers who occasionally spend above their means. My answer to the question is, yes, with the caveat that occasional is along the lines of once a year.

Occasional splurging is something the vast majority of us do. Whether it’s a fancy celebratory meal, a vacation, a new car, or the latest tech gadget that you must possess, people will occasionally purchase something that’s not in their budget. It’s hard to make a case that the occasional gambling splurge is somehow different.

Question 2: Different Question, Same Answer

Question 2 is very similar to Question 1, “Is it OK for a business to make MOST of its money from people OCCASIONALLY spending far above their means?”

My answer is unchanged. The only difference is the company is explicitly targeting people who occasionally spend above their means in Question 2.

This is essentially the business model of high-end dining. Yes, there might be rich regulars, but the bulk of your business is from one-off customers looking for an experience.

Another example is Disney World. Most visitors are overextending themselves, but it’s typically a one-and-done experience.  In gambling, this is where the classification of a casino comes into play. Is it a destination venue, or is it a local gambling parlor?

However, if we’re talking about online gambling, it’s hard to envision a customer showing up once a year to overspend when they have instant access 24 hours a day. I’ve never met someone who logs into an online gambling account and burns through a couple of thousand dollars, then logs off for 12 months before repeating this behavior. As such, if this question is purely about an online gambling company, my answer changes to no.

Question 3: This One Is a Hard No from Me

Question 3 changes the dynamic from a large percentage of customers who occasionally overspend to a smaller percentage who frequently overspend: “Is it OK for a business to make money from people FREQUENTLY spending far above their means? Not should it be legal. But is it OK?”

This is where the issue is very clear-cut.

These aren’t people celebrating their anniversary, taking an annual trip to Vegas, or splurging on a big-ticket Christmas item for their kid. These customers are often gambling above their means, be it weekly or monthly, which means the company’s business model is to attract customers who consistently spend money they don’t have.

And once again, if an online gambling company is targeting overspenders, this is the type of customer they are targeting.

How Does This Play into Means Testing?

The above questions do a terrific job of laying out the burning need for means-testing in online gambling, and at the same time, expressing the difficulty of setting specific means-testing limits.

As previously mentioned, occasional overspending can’t be chalked up to a vacation or milestone celebration in the online gambling world. Still, there are scenarios where a person could fall into that infrequent overspend category.

What if a customer places small bets on NFL games but routinely places a $1,000 bet on the Super Bowl?

What if a middling-level poker player wants to enter an entire online tournament series?

Means-testing would likely prevent either from happening, so there shouldn’t be a blanket restriction on overspending. That said, the need for better guardrails is obvious.

This is a complex but not unsolvable problem, and I can imagine a few different ways to establish means-testing without alienating bettors. Unfortunately, the likely result is means-testing that will use a chainsaw instead of a scalpel.