Being connected to the gambling industry as I am, I am bombarded with stories of gambling addiction. Men and women losing the rent, losing the whole house. It is crazy! Then there are all the stories about gambling affecting the youth and all the dire warnings coming from the social-science “experts”. It is so bad that unless you are careful, you will think the world is coming to an end! There are even stories about adults and teens that commit suicide due to their overwhelming debt. I have read many stories about people in a trusted financial position, like treasurer, that have stolen money from their employer in order to continue their gambling.
But do not get lost in all that! A recent study by Stanford University and the University of Michigan Ross School of Business has offered some startling observations of the gambling industry. The authors of the study were Sridhar Narayanan, assistant professor of marketing at Stanford GSB and Puneet Manchuanda, associate professor of marketing at the University of Michigan. These two professors set out to study three common criticisms of the casino industry: Is it addictive? Do gamblers have irrational beliefs about their gambling? And, how effective is the marketing-psychology of the casinos.
For the first question, addiction?
“Medical researchers have estimated that between 5
percent and 8 percent of all gamblers show evidence
of addiction, and our findings were aligned with that.”
~ Sridhar Narayanan.
For me, that is a surprisingly low number. You would never know that by reading the online gambling news.
For the second question, irrational?
“People seem to be satisfied with relatively small wins, and will tolerate even smaller losses. Most of them won’t
play after a certain threshold of loss has been reached.
They tend to be conscious that, in the long run, they are more likely to lose than win.” ~ Sridhar Narayanan.
And for the third question, casino psychology?
Well, this was a no-brainer! Giving free rooms, free chips, and free drinks is going to get more people in the door obviously. The marketing strategy of the casinos works and of course, it works best on those people that already have an addictive mind-set.
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