Connecticut Gambling Report Highlights Problem Gambling Revenue Paradox

A Connecticut gambling report was released on Monday and looks at the impact of legalized gambling in the state. The lengthy report covered a number of topics concerning the legal gambling market, and it highlighted one key paradox within the sports betting operator world.

The report mentioned how reliant the industry's revenue is on problem gamblers, noting that those estimated to be fitting of the term account for 70.6% of the revenue despite making up 6.7% of the population.

Per the report, a recommendation is being made to "endeavor to reduce the industry’s financial reliance on at-risk and problem gamblers as the 70.6% of revenue from this 6.7% of the population is much too high which serves to increase the chronicity of problem gambling and the likelihood of ‘at-risk’ gamblers transitioning to problem gamblers. The most effective way of preventing future problem gambling is to mitigate the risk within this at-risk group."

On its face, this may seem like a very worrying fact, and the biggest key for the industry is to reduce the percentage of problem gamblers. But there are some productive takeaways to make from the report.

Why Are Problem Gamblers Responsible for So Much Revenue?

The first fact to isolate is why. Why are problem gamblers responsible for a much greater portion of revenue in the industry? Revenue comes from customer funds, meaning losses. Those engaging in problem gambling habits can fall into a few issues that result in exacerbated losses.

Chasing losses is a frequent negative habit that can typify those with problem gambling habits. This means that when one loses, they bet more and more to try and compensate for the loss, including depositing more money into accounts or raising the stakes of wagers.

Because this is not a form of disciplined wagering, the bettor becomes very vulnerable to losing more of their funds.

Even when in a positive period of results, individuals who struggle with gambling can often increase their stakes to try and win more, often losing the winning funds either in the short- or long-term.

Additionally, trading departments at sportsbooks are not aligned with responsible gaming departments at sportsbooks. This isn't a bad thing, but it means that responsible gaming departments don't necessarily have the ability to place limits on gamblers who are estimated to be engaging in problematic habits.

On the contrary, it's the goal of the trading department to maximize profits, meaning problem gamblers represent a valuable customer for sportsbooks. Perhaps in the long term, when we as an industry realize just how much harm is done with this model, that will change. But for now, that's the reality.

Positive Takeaways From Gambling Report

Some positive takeaways can be made from this report. Most notably, 93.5% of respondents reported gambling recreationally or not at all. There's an understanding of the potential consequences of gambling from a majority of the population, as many indicated a host of concerns that come with the activity, including the risk of addiction or harm.

Consistently educating bettors and potential bettors to make them more competent and aware when engaging in the activity is vital, but this is a fine starting point.

Additionally, it's encouraging to see the report recommend investing more funds into education and outreach for the state. In contrast, a recently proposed Massachusetts budget included cutting these funds, which would send the legal sports gambling industry on a fast track to harm.

For more information on Problem Gambling Awareness Month and educational content, please check out our responsible gaming hub.