Evidence Exchange: The Current State of Skill-based Gambling in North America

Final Report

Chanel Larche, Madison Stange, Kevin Harrigan, Daniel G. Brown & Mike J. Dixon

University of Waterloo Gambling Research Lab KTE Knowledge Hub University of Waterloo, Canada

Prepared for Gambling Research Exchange Ontario October 2016

Table of Contents

Executive Summary 1 Part I: Jurisdictional Scan 3 Introduction 3 Methods 3 Results 4 Summary 4 Nevada 5 New Jersey 10 Massachusetts 14 Ontario 17 Discussion 21 References 25 Part II: Scoping Review 27 Introduction 27 Methods 28 Search Strategy 28 Study Selection and Data Extraction 29 Results 31 Description of Included Studies 31 Discussion of Identified Themes 31 Theme 1: Structural Characteristics 32 Theme 2: Groups and Demographics 34 Theme 3: Harms and Consequences 37 Theme 4: Responsible Gambling 40 Discussion 42 Summary of Findings 42 Implications for Gambling Behaviour 42 Implications for Responsible Gambling 43 Conclusion 45 References 46 Appendix 56

Executive Summary

There are various legalized gambling games in North America that are skill- based. For example, card games like poker allow players to exercise objective skill in order to maximize their winnings. Slot machines, by contrast, legally operate as games of “pure chance”, in that players cannot influence their outcomes by any means. However, a recently emerging trend in the design of gambling games is to incorporate a component of objective skill into slot machine type games in the form of arcade-style bonus rounds. Take, for example, the recent development of a “Space Invaders” themed slot machine that is now available to players on casino floors in Nevada (Stutz, 2015). This particular game triggers a bonus round where a playerʼs skill (i.e. how well a player can perform in this game) actually determines the amount of credits they can gain. Such slot machine bonus rounds allow for the highly skilled to win more money than those who are less skilled, resulting in a payback percentage that varies with player performance.

Gambling Research Exchange Ontario issued an Evidence Exchange request for the purpose of examining these newly developed skill-based slot machines. We present two forms of research addressing this issue. First, we conducted a jurisdictional scan to investigate the legal status of these skill-based games, including details about their definitions found in legislation and how they are currently regulated. Next, we conducted a scoping review (a type of systematic review) of the current academic literature highlighting the potential risks and harms such games may present, as well as responsible gambling initiatives that can potentially remedy or lessen such ramifications. Below we have summarize the main findings documented in this final report.

Part I: Jurisdictional Scan Summary

• A comprehensive review of legislation and regulations surrounding skill-based gambling games for each of the specified jurisdictions (Nevada, New Jersey, Massachusetts, and Ontario).

• Plain language summaries of the changes to existing legislation and regulations in the examined jurisdictions.

• Inter-jurisdictional comparisons focused on the changes in legislation and regulations that accommodate the introduction and use of these skill-based games.

• Implications for the province of Ontario are then discussed.

1 Part II: Scoping Review Summary

• Games of skill, or games that involve skill, possess structural characteristics that differentiate them from games of chance and other traditional gambling games; legal classifications of these games often varies from jurisdiction to jurisdiction.

• Certain groups, based on age, gender and other demographic characteristics, may be more vulnerable to the harms of skill-based gambling or may be more likely to participate in these types of games.

• There are various harms and consequences associated with the involvement in skill-based gambling forms. Specific concerns surround the development of erroneous cognitions (particularly the illusion of control) and inaccurate perceptions of luck and skill in such games.

• We explore responsible gambling strategies to possibly reduce harm that accompanies participation in these games.

• Implications for gambling behaviour and responsible gambling strategies are discussed.

2 Part I: Jurisdictional Scan

Introduction

This is a jurisdictional scan of skill-based slot machines in North America. Skill- based electronic gambling games have been approved for use in three states: Nevada, New Jersey, and Massachusetts. Pennsylvania has submitted draft legislation outlining the development and distribution of skill-based games in licensed venues but it is not included in this scan as those changes have not been approved (Lapetina, 2016). For Ontario, which this jurisdictional scan is intended to inform, no legislative or regulatory changes have been announced that will permit skill-based gambling games.

The interest in skill-based slots has come about because the popularity and profitability of traditional chance-based slot machines is dwindling, especially among young adults (e.g. millennials). For example, in Ontario, revenue generated from slot machines and casinos have gradually decreased from $2.13 billion in 2011-2012, to $1.96 billion in 2013-2014 (OLG, 2013; OLG 2016).

As outlined in the methods section, we consulted the respective legislations and regulations of each listed jurisdiction for changes regarding the introduction of skill- based electronic gambling games. The changes in each jurisdiction are expanded upon in detail in the results section. Finally, we make inter-jurisdictional comparisons that highlight similarities and differences in the adopted changes. Additionally, any recommendations for responsible gambling (RG) practices outlined within the legislative or regulatory changes are emphasized.

Methods

Jurisdiction Documents Reviewed Nevada • Senate Bill No. 9 (SB-9) • Nevada Revised Statutes • Regulation 14 of the of the Nevada Gaming Commission and Nevada Gaming Control Board New Jersey • New Jersey Statutes Annotated (N.J.S.A), New Jersey Casino Control Act & Commission Regulations, Article 1:

3 Introduction and General Provisions • Division of Gaming Enforcement Regulations, Chapter 69E: Gaming Equipment; Subchapter 13:69E-1.28A Standards for the approval of a slot machine game • Division of Gaming Enforcement Temporary Regulations: Subchapter 13:69E-1.28Y Skill-based gaming Massachusetts • The 189th General Court of The Commonwealth of Massachusetts, General Laws, Part I, Title II, Chapter 23K, Section 2: Definitions • Massachusetts Gaming Commission, 205 CMR 102.00: Construction and Application Draft Amendments • Massachusetts Gaming Commission, 205 CMR 143.00 Gaming Devices and Electronic Gaming Equipment Draft Amendments Ontario • Part VI of the Criminal Code of Canada • Alcohol Gaming Commission Ontario (AGCO) Electronic Gaming Equipment Minimum Technical Standards 2014 • Alcohol Gaming Commission Ontario Lottery Licensing Policy Manual 2016

Table 1. Legislative and/or regulatory documents reviewed for each jurisdiction.

Results

Summary

The following sections outline both existing legislation, regulations and changes that have recently been approved to allow for new skill-based gambling games in each of the jurisdictions (Nevada, New Jersey, Massachusetts). We also consider regulations and law for Ontario, where no changes have been planned or implemented to reflect skill-based slot machines. For Ontario, we instead highlight the current legal structure for gambling games involving elements of skill, to draw attention to regulatory changes recommended should skill-based gambling games be approved in Ontario.

4 Nevada

In Nevada, the process of approving skill-based electronic gambling games began with the approval of Senate Bill 9 (SB-9). The contents of SB-9 were then incorporated into the Nevada Revised Statutes (NRS), which are always the current up- to-date codified laws of the State of Nevada (see http://admin.nv.gov/NRS/). Finally, Regulation 14 of the Nevada Gaming Commission was updated to incorporate the changes to the NRS. In this section we describe the important aspects of the SB-9, NRS, and Regulation 14.

Legislation (prior to and after the approval of SB-9 and the revised NRS)

Nevada approved skill-based electronic gambling games in 2015. Prior to these proposed changes, slot machines in Nevada adhered to the traditional, purely random chance format. Current definitions of “slot machines” and “gambling games” are drawn from Chapter 463 of the NRS (section 0191 and section 0153), which states:

“Slot machines are defined as any mechanical, electrical or other device, contrivance or machine which, upon insertion of a coin, token or similar object, or upon payment of any consideration, is available to play or operate, the play or operation of which, whether by reason of the skill of the operator in playing a gambling game which is presented for play by the machine or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash, premiums, merchandise, tokens or anything of value, whether the payoff is made automatically from the machine or in any other manner.”(NRS Chapter 463, section 0191).

In addition to legal definitions of slot machines, the state of Nevada also established definitions for all gambling forms including games of skill. All games, whether of chance or skill, were classified under the broad category “Gambling game”. The definition reads:

“Game or gambling game means any game played with cards, dice, equipment or any mechanical, electromechanical or electronic device or machine for money, property, checks, credit or any representative of value, including, without limiting the generality of the foregoing, faro, monte, roulette, keno, bingo, fan-tan, twenty- one, blackjack, seven-and-a-half, big injun, klondike, craps, poker, chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of fortune, chemin de fer, baccarat, pai gow, beat the banker, panguingui, slot machine, any banking or percentage game or any other game or device approved by the Commission, but does not include games played with cards in private homes or residences in which no

5 person makes money for operating the game, except as a player, or games operated by charitable or educational organizations which are approved by the Board pursuant to the provisions of NRS 463.409.” (NRS Chapter 463, section 0153)

In the two definitions above, “skill” was not defined legally. It was with the proposed changes to the legislation put forth in 2015 that lead to the development of a legal definition of skill in order to encompass skill-based electronic gambling games.

The new legislation for skill-based gambling games, presented by the Senate Bill 9 (SB-9), outlines various legal constraints that help dictate the design, manufacture, distribution and use of gaming devices that feature “innovative, alternative and advanced technology” (SB-9, pp. 1). Importantly, the nature of skill in these games is clearly defined as “the knowledge, dexterity or any other ability or expertise of a natural person”. Moreover, the skill-based games themselves are also described as “... game[s] in which the skill of the player, rather than chance, is the dominant factor in affecting the outcome of the game as determined over a period of continuous play” (SB-9, Section 4d, pp. 3). As elements of skill are expected to be integrated into chance-based games (e.g., slot machines), the legislation takes care to label these as “hybrid games”. In hybrid games “a combination of the skill of the player, and chance affects the outcome[s] of the[se] game[s] as determined over a period of continuous play.” (SB-9, Section 4b, pp. 2). SB-9 also states that technical standards in operation prior to these legislative changes must be revised in order to include features that fit these definitions for skill-oriented games. The legislative amendments to Chapter 463 of the NRS highlight the updated technical standards for manufacturers, requiring that they:

“ (a) Define and differentiate between the requirements for and the outcomes of a game of skill and a game of chance; (b) Allow flexibility in payout percentages or the outcome of a game as determined on the basis of nondiscriminatory identifiers; (c) Support integration of social networking technologies; (d) Facilitate among enrolled players the interactive and concurrent play of games supported by networked server computers; (e) Accommodate secure account wagering and transactions using electronic commerce; and (f) Require, when applicable, appropriate information to be disclosed to a player explaining that the outcome of a game will be affected by skill or identifiers.” (Section 3e-f, pp. 2)

In looking at these specifications, the differences of these games from regular slot machines are clear. Games specified within this legislation can include the compatibility with “social networking technologies” and an “identifier”, which essentially allows the gameʼs difficulty to adapt to the playerʼs level of skill. An exact legal definition of the

6 identifier is “any specific and verifiable fact concerning a player or group of players which is based upon objective criteria relating to the player or group of players” (Section 4c, pp. 2), and also pertains to:

“(1) The frequency, value or extent of predefined commercial activity; (2) The subscription to or enrollment in particular services; or (3) The use of a particular technology concurrent with the play of a gaming device.” (SB-9, Section 4c, pp. 3).

Regulations

After the amendments to NRS chapter 463 found in SB-9 were passed, new regulations for skill-based games and hybrid games were approved and implemented as Regulation 14 by the Nevada Gaming Control Board (NGCB). These regulations became effective as of February 15th, 2016 (Lapetina, 2016). Regulations by the NGCB dictate the constraints for manufacturers and distributors of potential gaming devices, casino operators (online and brick-and-mortar venues) and the game testing laboratories. Prior to SB-9 and the revision to the NRS, no NGCB regulations address any aspects of skill for game manufacturers and casino operators.

As the revised Regulation 14 came into practice, the concepts and definitions of game features outlined in the SB-9 were expanded to precisely specify how these games should be manufactured and accessed by the public. Skill-based games or hybrid games alike must meet minimum technical standards in Regulation 14 before they can be made available to casino operators. Technical standards mostly address the mechanisms responsible for determining game outcomes. Specifically, the payback percentage of the machines “must not be less than 75 percent for each wager available for play on the device” (NGCB, 14.040, p. 8). However, unlike chance-based slot machines, the payback percentage for skill-based games is influenced by a variety of other factors. Outcomes of skill-based or hybrid games must be determined by the application of: 1) Chance; (2) The skill of the player; or (3) A combination of the skill of the player and chance. (NGCB, 14.040, p. 8). Skill-based or hybrid slot machines must also adhere to the following standards:

“Display in an accurate and non-misleading manner: (1) The rules of play; (2) The amount required to wager on the game or series of games in a gaming session; (3) The amount to be paid on winning wagers; (4) Any rake-off percentage or any fee charged to play the game or series of games in a gaming session; (5) Any monetary wagering limits for games representative of live gambling games; (6) The total amount wagered by the player; (7) The game

7 outcome; and (8) Such additional information sufficient for the player to reasonably understand the game outcome. (d) Satisfy the technical standards adopted pursuant to Regulation 14.050”. (NGCB, 14.040, p. 8)

Other regulatory changes encompassing the nature of play and the determination of the outcomes in skill or hybrid slot machines include, but are not limited to the following:

“(a) All be of the same denomination and have equivalent odds of winning the common payoff schedule/common award based as applicable on either or both of the combined influence of the attributes of chance and skill; or (b) If of different denominations, equalize the expected value of winning the payoff schedule/common award on the various denominations by setting the odds of winning the payoff schedule in proportion to the amount wagered based as applicable on either or both the combined influence of the attributes of chance and skill, or by requiring the same wager to win the payoff schedule/award regardless of the deviceʼs denomination. The method of equalizing the expected value of winning the payoff schedule/award shall be conspicuously displayed on each device connected to the common payoff schedule/common award. For the purposes of this requirement, equivalent is defined as within a 5 percent tolerance for expected value and no more than a 1 percent tolerance on return to player or payback.” (NGCB, 14.040, p. 9)

To summarize, in addition to the actual, objective skill of the player, the technical standards applicable to games of skill and hybrid games even extend to how individual outcomes of the games are produced. In this case, payback percentage is described to fluctuate or vary based on the factors of chance and skill of the player. The overt, visible displays of how much skill or chance is involved in determining the outcome of the game, instructions for play, and the bet minimum/maximum are also expressed within these guidelines.

Additionally, revised Regulations 14 also emphasize the clear demarcation of the skill-based slot machines as separate from regular, chance-based slot machines. It states that “gaming devices that offer games of skill or hybrid games must indicate prominently on the gaming device that the outcome of the game is affected by player skill” (NGCB, 14.040, p. 9). It also states that such devices must “use an identifier to determine which games are presented to or available for selection by a player” (NGCB,14.040, p. 9)

The definition and details surrounding “identifiers” was broadened from that given in SB-9 and the NRS to specify the exact functioning of these components and how they

8 impact a playerʼs experience based on an individualʼs level of skill. For instance, identifiers have been specified to affect “payout schedules” such that they “may broaden and encourage participation in games with skill attributes, by providing, without limitation, for partial prize awards, and prize awards for games with different themes or based on the use of identifiers.” (NGCB, 14.100, p. 12). In accordance with the definition outlined in the SB-9 legislature, the revised Regulations 14 outlines the following factors that will allow gameplay to vary:

“(a) The frequency, value or extent of predefined commercial activity; (b) The subscription to or enrollment in particular services; (c) The use of a particular technology concurrent with the play of a gaming device; (d) The skill of the player; (e) The skill of the player relative to the skill of any other player participating in the same game; (f) The degree of skill required by the game; or (g) Any combination of (a) to (f), inclusive.” (NGCB, 14.010, p. 3).

In addition to Regulation 14 that dictates the nature of player experience, there are also other featural aspects being introduced that aim to transform individualized play. The aforementioned “social networking” compatibilities specified by the legislation was put into practice as modernized “inter-casino linked systems”. Since 1995, the inter- casino linked systems have been identified as being a “network of electronically interfaced similar games which are located at two or more licensed gaming establishments that are linked to conduct gaming activities, contests or tournaments” (NGCB,14.010, p. 3). Such sophisticated social network systems allow for players of identical games to legally compete for prizes, either within or between casino venues. In order to be compatible with skill-based games or hybrid games outlined under the SB-9, inter-casino linked systems must be modified in the following way:

“...in the case of an inter-casino linked system featuring a progressive payoff schedule that increases as the inter-casino linked system is played, have a minimum rate of progression for the primary jackpot meter of not less than .4 of one percent of amounts wagered. In the case of an inter-casino linked system featuring a progressive payoff schedule that increases over time, have a minimum rate of progression for the primary jackpot meter of not less than one hundred dollars per day. The provisions of this subsection do not prevent an operator from limiting a progressive payoff schedule as allowed by Regulation 5.112 (5). 2. Shall have a method to secure data transmissions between the games and devices and the main computer of the operator, as approved by the board. 3. Shall display the rules of play and the payoff schedule. 4. Shall meet the applicable minimum standards for internal control that have been adopted pursuant to Regulation 6.090.” (NGCB, 14.045, p. 9)

9 Finally, an important aspect of the modified Regulation 14 is the responsible gambling measures that must accompany these skill-based gambling games, which ultimately target manufacturers and skill-based casino operators alike. Typically, the responsible gambling practices in place are usually generalized to all forms of gambling. For skill-based gambling games exclusively, “A gaming device must not use a theme that is derived from or based on a product that is primarily intended or marketed for use by persons under 21 years of age, or depicts a subject or material that is obscene” (14.025, p. 7). These skill-based gambling games are expected to have several commonalities with videogames in general (which are legally available to underage persons) and thus discouraging underage interest for these particular games is warranted. Overall, these standards and guidelines clearly reflect the importance of discouraging underage gambling for this emergent form of gambling.

New Jersey

In New Jersey, temporary regulations have been enacted to allow for the inclusion of skill-based slot machine games in casinos. We discuss the applicable legislative definitions and the regulatory changes in this section.

Legislation

NJ Permanent Statutes (5:12-45) defines a slot machine as:

“Any mechanical, electrical or other device, contrivance or machine which, upon insertion of a coin, token or similar object therein, or upon payment of any consideration whatsoever, is available to play or operate, the play or operation of which, whether by reason of the skill of the operator or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash or tokens to be exchanged for cash, or to receive merchandise or anything of value whatsoever, whether the payoff is made automatically from the machine or in any other manner whatsoever, except that the cash equivalent value of any merchandise or other thing of value shall not be included in determining the payout percentage of any slot machine.” (pp. 31, N.J.S.A. 5:12-45)

Regulations

Pre-existing regulations specified various aspects surrounding slot machine standards and approvals. One aspect of the existing regulations describes how slot

10 machine games that involve skill should operate (13:69E-1.28A Standards for the approval of a slot machine game). Specifically, it is stated that:

“A slot machine game that requires skilled strategy choices, such as video poker, shall: 1. Have its theoretical RTP calculated based upon the player exercising optimal strategy during game play; 2. Disclose optimal strategy to achieve the highest theoretical RTP; or 3. Provide mathematically sufficient information for the patron to derive optimal strategy in order to achieve the highest theoretical RTP. (h) When a slot machine offers a play which relies on the knowledge of a patron, such as a trivia challenge, or their physical dexterity, such as a game utilizing a joystick, the overall payout percentage shall be calculated based on the play of the least knowledgeable or skilled patron.” (p. 198, Division of Gaming Enforcement, 13:69E-1.28A)

Presumably these criteria exist to govern already extant games such as video poker or video black jack, which do rely on an element of skill. These existing regulations contrast with the temporary regulations put forth on February 23rd, 2016 that allow for newer, more advanced skill-based slot machine games (13:69E-1.28Y Skill- based gaming). These regulations outlined a set of criteria to be implemented for the introduction of skill-based slot machines. As with other jurisdictions, these regulations made use of identifiers, defined here as:

“any specific and verifiable fact, used by a slot machine or skill-based game, concerning a player or group of players which is based upon objective criteria relating to the player or group of players, including, without limitation: 1. The frequency, value or extent of predefined commercial activity; 2. The subscription to or enrollment in particular services; 3. The use of a particular technology concurrent with the play; 4. The skill of the player; 5. The skill of the player relative to the skill of any other player participating in the same game; 6. The degree of skill required by the game; or 7. Any combination of (1) to (6), inclusive.” (p. 1, Division of Gaming Enforcement, 13:69E-1.28Y)

These identifiers may be used “to determine which games are presented to or available for selection by a player.” (p. 1, Division of Gaming Enforcement, 13:69E-1.28Y)

A definition of skill-based gambling was also included in the temporary criteria, specifying it as “any Division approved casino game where game outcome is dependent in whole or in part upon the playerʼs physical dexterity and/or mental ability.” (p. 1, Division of Gaming Enforcement, 13:69E-1.28Y) The new temporary regulations also specify that:

11 “Slot machine games with a skill-based component shall be required to theoretically pay out a mathematically demonstrable percentage of all amounts wagered, which shall not be less than 83 percent for each wager available for play on the device; and Games which rely entirely on skill or do not utilize an RNG are not required to achieve a minimum theoretical hold percentage.” (p. 1, Division of Gaming Enforcement, 13:69E-1.28Y)

Additionally, “A skill-based game or slot machine with a skill-based component may provide an adaptive feature to increase the payback percentage in order to improve the actual RTP.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

In terms of what information must be displayed to the player, skill-based slot machine games as governed by these regulations must clearly and accurately display the following information to the player:

“The rules of play; 2. The amount required to wager on the game; 3. The amount to be paid on winning wagers; 4. Any rake or fee charged to play the game; 5. The total amount wagered by the player; 6. That the outcome of the game is affected by player skill; and 7. Such additional information sufficient for the player to reasonably understand the game.” (p. 1, Division of Gaming Enforcement, 13:69E-1.28Y)

Additionally, “Gaming devices that offer games of skill or hybrid games shall indicate prominently on the gaming device that the outcome of the game is affected by player skill.” (p. 2, 13:69E-1.28Y) Other aspects of game play are also governed by the regulatory changes, specifically:

“...once a game containing a skill-based feature is initiated, no aspect or function of the gaming device may be altered during the play of the game based on the skill of the patron to make an event more or less likely to occur.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

Further, “All possible game outcomes shall be available upon the initiation of each play of a game upon which a player commits a wager on a gaming device.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

An interesting facet in the temporary regulations concerns player advantages that may be gained within a game, which are structurally similar to those in mobile casual games that involve a social-competitive element:

12 “Skill-based games may contain a feature allowing patrons to gain an advantage over other patrons provided that all patrons are advised of that feature. Such features may include but are not limited to patron purchased enhancements, randomly awarded enhancements or other advantages.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

When games allow for one patron to have an advantage over others, the game must:

“1. Clearly describe to all patrons that the feature is available and the benefit it gives to patrons; 2. Disclose the method for obtaining the feature; and 3. Provide patrons with sufficient information to make an informed decision, prior to game play, as to whether or not to compete against a patron who possesses such a feature.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

The temporary regulations also allow for players to compete against a computerized or “skilled house sponsored opponent” as long as the game:

“Clearly and conspicuously discloses when a computerized or skilled house sponsored opponent is participating; 2. Provides the patron with the ability to elect whether or not to play against a computerized or house sponsored opponent; and 3. Prevents the computerized or house sponsored opponent from having access to information that is otherwise unavailable to a patron (i.e. the opponentʼs hole cards or upcoming events).” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

A further guideline specifies that “Peer to peer skill-based gaming shall be monitored for collusion and money laundering activity using an automated feature or in accordance with the internal controls of the casino licensee.” (p. 2, Division of Gaming Enforcement, 13:69E-1.28Y)

Massachusetts

In Massachusetts, regulatory changes were put forth in February 2016 to allow for skill-based slot machines. The details and implications of these changes are discussed.

Legislation (Law of Massachusetts)

13 Chapter 23K of the General Laws of Massachusetts specifies The Massachusetts Gaming Commission. Definitional terms include “Game” defined in M.G.L. Chapter 23K, Section 2 as “a banking or percentage game played with cards, dice, tiles, dominoes or an electronic, electrical or mechanical device or machine played for money, property, checks, credit or any other representative of value which has been approved by the commission” (M.G.L., Chapter 23K, Section 2). This section defines a “Gaming device or gaming equipment” as “an electronic, electrical or mechanical contrivance or machine used in connection with gaming or a game.” (M.G.L., Chapter 23K, Section 2). Perhaps most importantly is how slot machines are defined:

“a mechanical, electrical or other device, contrivance or machine which, upon insertion of a coin, token or similar object therein, or upon payment of any consideration whatsoever, is available to play or operate, the play or operation of which, whether by reason of the skill of the operator or application of the element of chance, or both, may deliver or entitle the individual playing or operating the machine to receive cash, or tokens to be exchanged for cash, or to receive merchandise or any other thing of value, whether the payoff is made automatically from the machine or in any other manner, except that the cash equivalent value of any merchandise or other thing of value shall not be included in determining the payout percentage of a slot machine.” (M.G.L., Chapter 23K, Section 2)

Aspects of skill were included in this definition so that the legislation would not have to be changed if skill-based slots were introduced. Specifically, a report Gambling Compliance states that “The inclusion of operator skill in the broad definition gives the state gaming commission the authority to implement skill-based gaming regulations without any amendments to the Expanded Gaming Act” (Gambling Compliance, 2016).

Regulations (Code of Massachusetts Regulations)

The existing regulations surrounding structural aspects of gaming devices (205 CMR 102.00, Construction and Application) previously contained no instances of the word “skill”. General definitions for “game”, “gaming device”, “gaming equipment”, and “slot machine” are drawn from the existing legislation described above.

Changes to the Massachusetts regulations concerned two specific sections, the first being Construction and Application (205 CMR 102.00). In this section, amendments indicated that a game of chance should be defined as “a game in which randomness determines all outcomes of the game as determined over a period of continuous play.” (p. 1, Massachusetts Gaming Commission, 205 CMR 102.02) A game of skill is defined

14 as “a game in which the skill of the player, rather than chance, is the dominant factor in affecting the outcome of the game as determined over a period of continuous play.” (p. 1, Massachusetts Gaming Commission, 205 CMR 102.02) A hybrid game is defined as “a game in which a combination of the skill of the player and chance affects the outcome of the game as determined over a period of continuous play.” (p. 1, Massachusetts Gaming Commission, 205 CMR 102.02) Skill itself is defined as “the knowledge, dexterity or any other ability or expertise of a player of an electronic gaming device.” (p. 2, Massachusetts Gaming Commission, 205 CMR 102.02) An identifier is defined as:

“any specific and verifiable fact concerning a player or group of players which is based upon objective criteria relating to the player or group of players, including, without limitation: 1) the frequency, value or extent of predefined commercial activity; 2) the subscription to or enrollment in particular services; 3) the use of a particular technology concurrent with the play of a gaming device; 4) the skill of the player; 5) the skill of the player relative to the skill of any other player participating in the same game; 6) the degree of skill required by the game; or 7) any combination of 1) to 7) inclusive.” (p. 1, Massachusetts Gaming Commission, 205 CMR 102.02)

Other changes were proposed for regulation 205 CMR 143.00, concerning Gaming Devices and Electronic Gaming Equipment. These included changing a general statement governing all slot machines to include:

“All gaming devices must determine game outcome solely by the application of: (1) chance; (2) the skill of the player, or (3) a combination of chance and the skill of the player. A gaming device that includes any element of chance shall, for that element of the game, at a minimum, utilize randomness in determination of prizes, contain some form of activation to initiate the selection process, and make use of a methodology for delivery of the determined outcome. Any gaming device may be separated in parts, where some may be within or outside the gaming device (e.g., gaming devices that function with a system).” (p. 1, Massachusetts Gaming Commission, 205 CMR 143.01)

Other sets of changes specify what information needs to be displayed to the player: “The rules of play for a game of skill or hybrid game must describe or display information adequate for a reasonable person to understand the method of game play prior to the player committing a wager.” (p. 1, Massachusetts Gaming Commission, 205 CMR 143.01) What needs to be included in the rules is determined by the following factors: the theme of the game, the general publicʼs already existing knowledge of the game, how much the game in question differs from comparable games outside the

15 casino environment, and the physical attributes of the game, such as whether it contains the following:

“inherent skill-based on physical dexterity, endurance and strategy, such as in an athletic activity; skill-based on expertise, education or experience, such as a word or trivia contest; and dynamic skill-based on variations in the difficulty or complexity of a skill activity that change in response to the playerʼs decisions, acuity, agility, dexterity, game duration or an inherent game feature, such as a military combat game”. (p. 1, Massachusetts Gaming Commission, 205 CMR 143.01)

These rules must be communicated by displaying them on the device, or in a tutorial/demonstration on the device or at another location within the venue. If applicable, rake-off percentages must be displayed to the player.

Changes to game play aspects of slot machine function were also proposed. For example, the regulatory amendments also state that

“...once a game containing a skill-based feature is initiated, no aspect or function of the gaming device may be altered during the play of the game based on the skill of the patron to make an event more or less likely to occur.” (p. 2, Massachusetts Gaming Commission, 205 CMR 143.01)

With reference to slot machine games that involve skill specifically:

“(a) All possible game outcomes must be available upon the initiation of each play of a game upon which a player commits a wager on a gaming device. (b) Gaming devices that offer games of skill or hybrid games must indicate prominently on the gaming device that the outcome of the game is affected by player skill. (c) Gaming devices must not alter any function of the device based on the actual hold percentage.” (p. 3, Massachusetts Gaming Commission, 205 CMR 143.01)

Payouts on skill-based or hybrid slot machines:

“shall be governed by GLI-11, section 3.4.1. In addition to section 3.4.1, for each enabled paytable, the gaming device must calculate the actual payback percentage every N games, where N is the number of games necessary to determine the theoretical payback percentage with a 95% confidence interval within a range of +/- 5%.” (p. 4, Massachusetts Gaming Commission, 205 CMR 143.01)

16 Payback percentages as specified by the G.L.I standards are 75%, but the various amendments bring this percentage up to 80% (specified in multiple places in the proposed changes)

Many of the amendments focus on identifiers, which can be used to govern which games a player gets to choose from. How identifiers are assigned depends on a specific set of criteria:

“(a) The frequency, value or extent of predefined commercial activity such as the patronʼs frequency of visitation or wagering activity at a gaming establishment(s)/casino(s); activity on social media; or accumulation of rank, points, or standing in either gaming or non-gaming activity; (b) The subscription to or enrollment in particular services such as membership in a gaming licenseeʼs customer loyalty program; (c) The use of a particular technology concurrent with the play of a game; (d) The level of skill of a patron as identified or maintained by the gaming system or self-identified by the patron; (e) The level of skill of a patron relative to the skill of other patrons participating in the same game; or (f) The degree of skill required by the game.” (pp. 3, Massachusetts Gaming Commission, 205 CMR 143.01)

Ontario

Legislation

Ontario has not put forth any legislative amendments concerning the inclusion of skill-based gambling games. Here, we describe existing legislation and regulations that reflect skill-based casino games (e.g. poker, blackjack, etc.). The federal Criminal Code of Canada forms the legislative framework for gambling activities in each province. Part VII of the Criminal Code is the central segment that determines the legality of a gambling activity. Throughout this section, gambling is generally regarded as an activity governed by chance. Although chance is not given a legal definition within the code of law, it has been defined by the Supreme court (R. v. Ross, Banks & Dyson ,1968). The notion that chance is given predominant attention in the code of law is evident by their definitions given for slot machines, wheels of fortune, dice and lotteries; here, we focus on slot machines. In subsection 2 of the Criminal Code, slot machines are defined as:

“...any automatic machine or slot machine that is used or intended to be used for any purpose other than vending merchandise or services” or (b) that is used or intended to be used for the purpose of vending merchandise or services if (i) the

17 result of one of any number of operations of the machine is a matter of chance or uncertainty to the operator, (ii) as a result of a given number of successive operations by the operator the machine produces different results, or (iii) on any operation of the machine it discharges or emits a slug or token, but does not include an automatic machine or slot machine that dispenses as prizes only one or more free games on that machine.” (Criminal Code, 1976)

As indicated above, the legislation refers to games that operate as games of chance. There is no mention of player skill being involved in the outcomes of the game. Even games that have a clear skill element involved, such as poker, are only discussed on the basis of their aspects of chance, such as “dealing of playing cards”. Among all the relevant sections in the Criminal Code, gambling games are only legally defined as games involving chance (e.g. games of chance, or mixed chance and skill; Criminal Code, 1976). Therefore, games of pure skill (e.g., chess) are not given any specialized attention under this legislative framework.

Such legislative definitions have been adopted to reflect the gambling practices and regulations throughout Ontario. Although there is no specific provincial legislation in place for the games themselves, we have located some that offer insight into how games are regulated in Ontario and by whom. The next section will explore these regulations for skill-based games in detail. As a way of establishing a provincial regime for the regulation of casinos and gambling venues, the Ontario Lottery Gaming Corporation Act (formerly Ontario Casino Corporation until 1999) was enacted in 1992. Under the OLGC, operators in Ontario were given authority to “(i) to conduct and manage games of chance, and (ii) to provide for the operation of casinos”. The Alcohol and Gaming Commission of Ontario (replacement of the Gaming Control Commission of Ontario in 1996 with the introduction and passage of the Alcohol and Gaming Regulation and Public Protection Act) is the current regulatory agency. The role of the AGCO as regulator of gambling activities includes, among other things: “(i) enforcing registration requirements and regulating the conduct of persons who supply goods or services to a casino operation; (ii) approving the actual goods and services supplied in a casino operation; (iii) approving the games of chance used in a casino operation; and (iv) approving the operation of a casino.”

Regulations

In their “Lottery Licensing Policy Manual” (2016), the Alcohol and Gaming Commission of Ontario (AGCO) outlines the following definitions and licensing criteria for games of skill and ʻhybridʼ games consisting of both chance and skill (Chapter 3, section 3.1.2) (AGCO, 2016). Specifically, it is noted that “in games of skill, the element

18 of chance is virtually non-existent. Checkers, chess, bowling, tennis, golf and all sports contests are examples of games of skill.” When describing games with a combination of skill and chance, “Games of ʻmixed chance and skillʼ combine both elements and include most games played with cards. Blackjack is an example of a game of mixed chance and skill” (Chapter 3, section 3.1.2) (AGCO, 2016). Evidently, these licensing guidelines for manufacturers and operators only include traditional gambling forms, especially how chance-and-skill hybrids games are framed as being restricted to card- type games like blackjack.

Additionally, the AGCO also highlights specific technical standards for Electronic Gaming Machines (EGMs) in the “Electronic Gaming Equipment Minimum Technical Standards” (2014) for manufacturing and design purposes. Embedded within this regulatory document is a formal definition of a “skill feature” that is common among the games of skill described (e.g. video poker). Specifically, a skill feature is defined as a “play on gaming equipment that requires a patron to make a choice as to how to proceed in the game, where the ratio of the expected return from optimal play to the expected return from worst play is at least 1.005.” (AGCO, 2014, pp. 80). Moreover, Chapter 14 section 8 is of most relevance in terms of the requirements for games of skill, and what skill can entail in possible machines. For instance, “skill” within EGMs is articulated as “physical ability”, or “selection” to the extent of conveying “strategy”. As a control measure for such games, the AGCO outlines that:

“Where strategy or selection advice is provided to the player, it must be fair and not misleading, and the player must be able to override automatic selection and reject any or all strategy advice provided. Once a patron has achieved the highest award offered on a play by a strategy/skill feature, the gaming equipment must not permit the patron to risk the award by making an additional strategy or skill choice. If the outcome of a game cannot be impacted by a playerʼs physical ability, the game must not offer an option to the player which appears to require physical ability, unless the game provides a disclaimer that states that player interaction has no impact on game outcome.” (Chapter 14, Section 8, points 1-3) (AGCO, 2014)

These technical standards govern the extent that “skill” should function in these games. Importantly, these guidelines also touch upon the way these games must be unambiguously described to the player - especially in the presence of “skill” features that in actuality do not influence the outcome. In cases where EGMs involve objective skill, such games are further regulated by the following standards:

19 “a) The physical ability component shall only affect the amount of the feature award and shall not affect the amount of the base game payouts; b) If a patron is awarded the feature, the player must receive some bonus payout; c) It must be disclosed on the exterior of the gaming equipment (i.e. either on the exterior of a physical cabinet, or on the video screen any time wagering is possible) that a player's physical ability will affect the amount of the bonus awarded; d) The gaming equipment must be able to maintain and display information that can be used to determine the contribution of the physical ability component to the overall payback of the game. e) Games that utilize peripherals, or other equipment to interact with the gaming equipment for the purposes of physical ability based gaming must employ a mechanism to detect any failure of that peripheral/equipment, and prevent gaming activity if a failure is detected.” (Chapter 14, Section 8, points a-e) (AGCO, 2014)

These standards alone seem to suggest that a skill element involving physical ability can be included in some EGM games, under the condition that it is limited to a “bonus feature award” only. Because these guidelines specifically make reference to “bonus awards”, we interpret that this would allow for games that have elements of physical skill within the bonus rounds (e.g., the “space invaders” bonus round game alluded to in the Executive Summary).

The technical standards also reflect on the impact on the payback percentage or any factors that impact the outcome of the game. These are well articulated for games of mixed skill and chance, such as poker, but become more complex when calculated within games of “physical ability” or other legalized skill-based games beyond table games. For example:

“The theoretical payout percentage for games with physical ability features will be calculated using a minimum ability level. The minimum theoretical payout percentage must be eighty-five (85.000) percent for all such games.” (Chapter 20, section 1, point 9) (AGCO, 2014)

Regulations also describe the calculation of the payback percentage for games of skill that are “non-card” format. These regulations include:

“The theoretical payout percentage of skill and/or strategy non-card games that provide information to the patron that is sufficient to derive the optimal strategy will be calculated using blind strategy (random choice). The minimum theoretical payout percentage must be eighty-five (85.000) percent for all such games. The theoretical payout percentage of skill and/or strategy non-card games that do not

20 provide strategy or selection advice to the patron, and do not provide other information to the patron that is sufficient to derive the optimal strategy will be calculated using blind strategy (random choice). The minimum theoretical payout percentage must be eighty-eight (88.000) percent for all such games.” (Chapter 20, section 1, points 6-8) (AGCO, 2014)

And finally:

“Notwithstanding the payout requirements of 20.1.4 and 20.1.5, such skill and/or strategy games are permitted if the gameʼs theoretical payout percentage calculated using blind strategy is eighty-five percent (85.000) or greater.” (Chapter 20, section 1, point 8) (AGCO, 2014)

In general, Ontario does seem to allow for skill-based or hybrid games involving both physical ability and choice/strategy. Our interpretation that this is the case is made cautiously as we are unaware of any slot machine game in Ontario that has bonus rounds based on physical skill as part of their play.

Discussion

Between the examined jurisdictions (Nevada, New Jersey, Massachusetts and Ontario), slot machines have already been legally defined. Interestingly, in the American jurisdictions only, definitions had already contained “skill”, potentially due to regulators foreseeing the skill-oriented modifications of slot machines in the near future. Definitions of games of chance, skill and hybrid games (involving both chance and skill) were very similar across the North American jurisdictionsʼ regulatory changes. For instance, the concept of skill required to operate these new games is generally defined as knowledge, dexterity, and expertise that a player possesses. With regards to the functioning of the actual games, skill-based games were similarly defined as those that allow the skill of the player to be the dominant factor in affecting the outcome of the game, as opposed to chance. Hybrid games were also mentioned within the legislative changes for Nevada, and in turn the regulations for all three jurisdictions. Hybrid games are essentially games where a combination of skill and chance both contribute to a gameʼs outcome. The respective contributions of skill and chance determining the outcome within these games is unspecified. The overarching implication of the changes for skill-based slot machines are that a given gameʼs outcomes will be influenced by a playerʼs level of skill. As such, payback percentage within these games will no longer be constant: the

21 maximum payback percentage will vary based on an individualʼs level of skill. To protect players, a minimum payback percentage is specified, regardless of skill level.

Another common technical standard adopted by the three North American jurisdictions within their legislative and regulatory changes is the inclusion of an “identifier” feature for player participation in games of skill. Identifiers are similarly defined as player information that can be utilized to affect the gaming experience of the player. The definition given for these features are extremely broad, as the way player information is gathered and used can vary to include whether or not players use certain services, or even the level of skill a player may have. Although all three jurisdictions that included definitions of identifiers used similar, broad descriptions of the characteristics from which to derive adaptable features within the game, Massachusetts has provided specific examples of what information will be used to generate these features. For example, all identifier definitions included some variation of a playerʼs predetermined commercial activity, which is expanded upon in the Massachusetts regulatory changes to include “the patronʼs frequency of visitation or wagering activity at a gaming establishment(s)/casino(s); activity on social media; or accumulation of rank, points, or standing in either gaming or non-gaming activity” (pp. 3, 205 CMR 143.01). It is unclear what the exact limits will be for the use of this information. Another example is the identifier that is based on a playerʼs enrollment or subscription to specific services. This is expanded upon in the Massachusetts regulations to include “membership in a gaming licenseeʼs customer loyalty program” (pp. 3, 205 CMR 143.01). Of major concern for this review is the way in which information is collected and utilized to determine the degree of a playerʼs skill in a game. For example, indices of a playerʼs skill can include their own individual skill, as well as their skill in comparison to another player who is engaging with the same game. As with the other identifiers, Massachusetts further defines this as skill “identified or maintained by the gaming system or self-identified by the patron” (pp. 3, 205 CMR 143.01). Finally, each of the jurisdictions defined an identifier that encompassed the use of a certain technology, presumably a smartphone or other mobile device. Perhaps added game features will be available to players who wish to use them in tandem with their regular slot machine counterparts. Overall, identifiers seem to be designed in a way that allow for more adaptive, dynamic games that are tailored to the skill and preference of an individual player.

According to Nevada and New Jersey documentation, new skill-based slot machine games can be developed to encompass a social-interactive or competitive aspect. The way players of the same game compete varies by jurisdiction. For instance, Nevada aims to develop games that mirror the concept of “social networking” through the use of inter-casino linked systems. Inter-casino linked systems were previously

22 established in 1995, and are defined by electronically interfaced similar games that are linked to conduct tournament style gaming activities. These games can be located in two different venues. Inter-casino linked games allow for players to compete for the same prize, as indicated by a progressive payout schedule that increases with the number of players participating. Additionally, the regulations alluded to the fact that the current inter-casino linked system will need to be upgraded to accommodate the formats of the new skill-based games. Any explicit acknowledgement of competitive play is restricted to the legislative changes (see the SB-9), and is not deliberately outlined within Regulation 14. Conversely, in New Jersey, regulatory changes specify that players may gain an advantage over other players, presumably other players who are engaging in the same game. Specifically, players may purchase enhancements or be randomly awarded them throughout the game. The regulations also specify that the competing players must be informed that they are playing against a player who possesses one of these enhancements. Further, the regulations stipulate situations in which players may compete against a house-sponsored or computerized opponent. The presence of a house-sponsored or computerized opponent must be clearly disclosed to all players, and these opponents must not have any additional information about the game than a regular player possesses (i.e. there is no unfair advantage).

Finally, a common technical standard outlined by all three North American jurisdictions was the clear labelling of games of skill and hybrid games as containing skill-elements, specifically this information must be displayed prominently to the player. Although this was not framed as an RG strategy in the regulations explicitly, the fact that players are being informed of the presence of skill helps to increase player knowledge and eliminate unnecessary confusion between game types. In the case of Nevada, a responsible gambling measure was highlighted explicitly in the regulations. The regulation outlines how skill-based gambling games must not contain themes derived from games that are primarily intended for individuals under 21 years of age. This specification is presumably included by means of discouraging the attraction of underage players to these skill-based games.

In terms of Ontario, it is clear that the way in which games are discussed and regulated differ from other North American jurisdictions due to the limitations outlined by the Criminal Code. Specifically, the language of the Criminal Code defines legal gambling games by their chance elements. This language even extends to card games with a clear element of skill. Games that do contain skill elements are nonetheless defined by their aspects of chance (e.g. “dealing of cards”, which is a chance-based event). Despite this, games with the skill elements are not completely omitted from the regulatory standards outlined by the AGCO. Indeed, separate payback percentage

23 calculation standards are allocated to skill table games as well as non-card games that involve skill or strategy. Conversely, slot machine regulations outlined by the Criminal Code do not currently permit skill to be included as a factor to determine an outcome. However, in Ontario EGM features that give players “physical ability” or selection are permitted under the condition that they are restricted to bonus games. Yet, the games to which these specific standards apply are unspecified, and therefore we cannot make any further assumption as to how the payback percentage functions in games with such features. Importantly, the fact that the legal definition of slot machines outlined by the Criminal Code gives precedence to chance-generated outcomes may be a limiting factor to the introduction of skill-based slot machines in Ontario that allow skill in the base game, unless a new term is created to clearly distinguish skill-based slot machines from chance-based slot machines.

In general, the legal frameworks that have characterized slot machine gambling have been transformed immensely to modernize the gambling landscape for skill-based or hybrid games. There were similarities among the major changes made to American jurisdictions, as well as key differences. The standards that dictate the structural makeup of potential games were relatively uniform, such as the calculation of payback percentages or the definition of skill or hybrid games. However, there were nuanced differences between some game features, such as the role of competition within these games (New Jersey and Nevada) and the inclusion of advantageous features (New Jersey). A central contrast between the regulatory changes concerns the inclusion of responsible gambling oriented guidelines. Specifically, Nevada was the only jurisdiction thus far to outline a method of discouraging underage players from their venues by omitting themes. However, all jurisdictions mention that that machines including skill elements must be prominently labelled for the player. Overall, care must be taken when designing legislative and/or regulatory changes to ensure that the potential risk of harm associated with these games is minimized.

24 References

The 189th General Court of The Commonwealth of Massachusetts. (2016). Definitions. General Laws, Part I, Title II, Chapter 23K, Section 2. Retrieved from https://malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter23K/Section2.

Alcohol and Gaming Commission of Ontario (2014). Electronic Gaming Equipment Minimum Technical Standards. Retrieved from http://www.agco.on.ca/pdfs/en/EGM_standards_march2014.pdf

Alcohol and Gaming Commission of Ontario (2015). Registrarʼs Standards for Gaming. Retrieved from: http://www.agco.on.ca/pdfs/en/guides/4345_g.pdf

Alcohol and Gaming Commission of Ontario (2016). Chapter 3: General Lottery Licensing Policies. Lottery Licensing Policy Manual. Retrieved from http://www.agco.on.ca/llpm/en/chap3.pdf

Criminal Code of Canada, R.S.C. 1976, c. 93, s. 10.

Lapetina, A. (2016). Skill-based gaming in the U.S. Gambling Compliance. Retrieved from, https://gamblingcompliance.com/hot-topics/skill-based-slots.

Massachusetts Gaming Commission. (2016). 205 CMR 102.00: Construction and Application Draft Amendments. Retrieved from http://massgaming.com/wp- content/uploads/205CMR102.02-DRAFT-AMENDMENTS-2-19-16.pdf.

Massachusetts Gaming Commission. (2016). 205 CMR 143.00: Gaming Devices and Electronic Gaming Equipment Draft Amendments. Retrieved from http://massgaming.com/wp-content/uploads/205CMR143.01-and-143.09-DRAFT- AMENDMENTS-2-19-16.pdf.

Nevada Revised Statutes (2016). Chapter 463: Licensing and Control of Gaming. Retrieved from https://www.leg.state.nv.us/nrs/NRS-463.html

Nevada Gaming Control Board (2016). Regulation 14 of the of the Nevada Gaming Commission and Nevada Gaming Control Board Gaming Statutes and Regulations. Retrieved from http://gaming.nv.gov/modules/showdocument.aspx?documentid=2921

New Jersey Statutes Annotated (N.J.S.A). (2016). Article 1: Introduction and General Provisions. Retrieved from http://www.njccc.gov/casinos/actreg/act/docs/cca- article01.pdf.

25 Ontario Lottery & Gaming (2013). Annual Report 2011/2012. Retrieved from http://www.olg.ca/assets/documents/annual_report/annual_report_11-12.pdf.

Ontario Lottery & Gaming (2016). Annual Report 2014/2015. Retrieved from http://www.olg.ca/assets/documents/annual_report/annual_report_14-15.pdf.

R. v. Ross, Banks & Dyson (1968) , [1968] , S.C.R. 786.

The State of Nevada, Committee on Judiciary (2015). Senate Bill No. 9. Retrieved from, https://www.leg.state.nv.us/Session/78th2015/Bills/SB/SB9_EN.pdf

The State of New Jersey, Department of Law and Public Safety, Office of the Attorney General, Division of Gaming Enforcement. (2016). Regulations, Chapter 69E: Gaming Equipment. Subchapter 13:69E-1.28A Standards for the approval of a slot machine game. Retrieved from http://www.nj.gov/oag/ge/docs/Regulations/CHAPTER69E.pdf.

The State of New Jersey, Department of Law and Public Safety, Office of the Attorney General, Division of Gaming Enforcement. (2016). Temporary Regulations, 13:69E-1.28Y Skill-based gaming. Retrieved from http://www.nj.gov/oag/ge/docs/TempRegs/skilledbasedgaming.pdf.

26 Part II: Scoping Review

Introduction

Recently, the state of Nevada adjusted their legislation to include elements of skill in chance-based slot machine games (Stutz, 2015). These changes were issued as a solution to the general decline in casino profits and patron participation in traditional chance-based slot machines. This decline was supposedly attributable to a decrease in young adults who play slots (Feldberg, 2016). This decline prompted game developers and casino management to seek a new form of slot machine that appeals to young adults. The design of these new skill-based slots has been greatly influenced by the design of video games and casual games, which are popular with young adults. Although some pre-existing bonus features in slot machines have interaction features that mimic video game play, with these changes, players will now have the ability to develop skill and actually influence game outcomes: with more skill or expertise in the game, players can maximize their wins and increase overall success. This decision has profound implications for gamblers as well as researchers who examine gambling behaviour. Responsible Gambling (RG) strategies designed to address the potential harms associated with specific gambling forms are also impacted by these changes.

One prominent concern surrounds the common misperception of skill in purely chance-based games that already exist in casinos. For example, we know that slot machine players often exhibit forms of illusory control over their outcomes in a game (Toneatto, Blitz-Miller, Calderwood, Dragonetti & Tsanos, 1997). This is propagated by the way players interact with certain structural features present in slot machines, ranging from the ability to stop the reels (e.g. using a stop button), or modifying oneʼs betting strategies during gameplay (Ladouceur & Sevigny, 2005; Dixon, 2000). These beliefs are not a reflection of actual skill; instead, these features influence a playerʼs perception of their control over the game as a whole. Because of these established effects on players, the notion of games that contain objective skill elements fuels concern over the potential for abuse of these games.

Given the growing concern surrounding the development of these games by the public, researchers, and game regulators (see Berzon, 2016), we set out to review the extant literature surrounding skill-based gambling. Specifically, we are interested in investigating the effects of skill-based games that currently exist, and to evaluate the amount of skill that is actually involved in such games, be this illusory skill (as in slot

27 machine games) or actual, objective skill (as in poker). We also aimed to examine research that addresses the consequences of these games, with respect to erroneous cognitions, and the emergence and maintenance of problem gambling behaviour. Additionally, we aimed to provide a comprehensive overview of the available RG strategies that have been examined in the literature, that have been specifically designed to address the harms of skill-based gambling. To this end, we employed a scoping review methodology to answer the following research questions:

1. What do we know about existing skill-based gambling games (and to what extent is skill present in such games)? 2. What are the consequences and harms (if any) associated with these gambling forms? 3. What RG initiatives exist to address the consequences of skill-based gambling forms?

By targeting these areas of interest in our review, we hope to elucidate the impact that these games may have on existing or future gamblers. Additionally, by identifying these impacts, we hope to extend the reviewed evidence, and speculate as to how these games may be safely integrated into the existing gambling landscape.

Methods

Search Strategy

To undertake our scoping review, we searched a total of four online databases (PubMed, PsychInfo, Scopus, and ProQuest). These databases were selected based on their relevance to psychology, public health, sociology, and mental health. These disciplines encompass the majority of academic research involved in the study of gambling behaviour and its associated impacts. The search terms consisted of various combinations of the following: skill, gambling, blackjack, poker, skill slot machine, slot machine, pokies, fruit machine, electronic gambling machine, lottery, casino, arousal, harm, consequence, erroneous cognition, distorted cognition, cognitive bias, illusion of control, illusory control, gamblerʼs fallacy, hot hand bias, health, addiction, problem gambling, pathological gambling, disordered gambling, pathology, responsible gambling, intervention, initiative, education, and improvement. General terms (such as gambling and skill) were searched with truncation where applicable. These terms were selected in order to capture the wide range of subjects relevant to our research questions. These search terms yielded 957 results and 306 duplicates were identified and removed (see Figure 1).

28 Grey literature searches were also conducted on two databases (Gambling Research Exchange Ontario [GREO] Knowledge Repository Grey Literature and Google Scholar). Such Grey Literature databases were selected based on field relevance. Additionally, grey literature sources allow access to resources and information that is created by and intended for broader audiences and stakeholders (e.g. government, non- profit, research reports, etc.). The same search terms used for our database search were applied for the Google Scholar search. Search results were restricted to the first 100 pages, as this was deemed an appropriate cut-off for source relevancy (see Mackay, Petermann, Hurrell, & Hodgins, 2015). The only search term used for the GREO Knowledge Repository Grey Literature search was skill, as all publications and resources available in the database are gambling-specific. Combined, these grey literature searches returned a total of 143 sources, from which 32 duplicates were identified and removed (see Figure 1).

Study Selection and Data Extraction

Once we finalized our search results, we then defined a set of exclusion and inclusion criteria. Initial screening of each sourceʼs title and abstract was undertaken to ensure that each met the inclusion criteria specified, and was relevant to our research questions. Upon screening the sources, 646 were removed as they did not meet inclusion criteria. This left 116 sources to enter the second screening procedure, in which the full-text of each source was examined. Following this screening, 23 sources were removed leaving us with a finalized pool of 93 sources.

We reviewed each source for the purpose of identifying key themes. Key themes were derived from the motivation, design, main findings, and implications of each source. We took note of the study origin, design and author of each source. A summary of the characteristics of each source is displayed in the Appendix.

29 Records identified through Additional records identified database searching through other sources (n = 957) (n = 143) Identification

Records after duplicates removed

(n = 762) Screening

Records screened Records excluded (n = 762) (n = 646)

Eligibility Full-text articles assessed for Full-text articles excluded, with eligibility reasons (n = 116) (n = 23)

Included Studies included in synthesis (n = 93)

Figure 1. PRISMA diagram outlining the scoping review process.

30 Results

Description of Included Studies

A majority of the studies were conducted in origin, between the years of 1975- 2016. Studies varied in methodology, and ranged from qualitative interviews to case studies. A complete overview of the source characteristics can be found in the Appendix.

The pool of publications mainly took the form of quantitative research studies (78.49%), qualitative (17.20%), and the remaining studies consisted of legal analyses, statistical modelling, neural network modelling or evaluation of skills training (4.31%).

Discussion of Identified Themes

We established four themes from the final pool of sources: structural characteristics, groups and demographics of skill-based game players, harms and consequences associated with skill-based gambling, and RG initiatives or strategies targeting the harms tied to skill-based gambling forms. The first theme concerns the structural characteristics associated with a variety of gambling forms that contain (e.g. poker, blackjack) or are thought to contain elements of skill (e.g. sports betting, slots). The second theme identified a wide span of groups that participate in the aforementioned forms of skill-based gambling. These groups were defined based on demographic variables (e.g. age, gender) or other common group-level characteristics (e.g. gambling online or offline, playing professionally). The third theme pertained to a broad array of harms or consequences that have been identified as being associated with skill-based gambling. The majority of these consequences were cognitive in nature (e.g. the illusion of control, perception surrounding personal skill and risk) but also included behavioural and other external ramifications for the player. The fourth and final theme concerned various RG strategies that were pertinent to the harms associated with skill-based gambling (e.g. messaging, representations in media, education). It is important to note that findings within themes may also be relevant to other themes identified. However, we have categorized findings in this way to highlight the most dominant theme expressed in each source. Each of these themes are then discussed in more detail below.

31 Theme 1: Structural Characteristics (n = 16/93)

Structural characteristics are the defining features of gambling activities that influence how players interact with a game or gambling form. For instance, in games with a skill element (e.g. poker, blackjack), the playersʼ performance will influence the potential outcomes of the game. By contrast, in games of pure chance (e.g. traditional slot machines, roulette), the playersʼ performance will not have any affect on the outcome of the game, as outcomes are determined randomly and players cannot exert any influence on the outcome. However, there are various features present in games of pure chance that foster the illusion that players can build skill and improve their chances of success in such games. Thus, it is imperative to understand how elements of pseudo- skill permeate such features and influence the player.

In the literature, poker is generally thought of as objectively containing skill (Javarone, 2015; Siler, 2010) in that some players can adopt specific strategies to have a positive expected return in the long-term. However, one study showed that the format of poker dictates the amount of skill one can apply. Specifically, tournament style poker games (i.e. where players bet chips in each game, pay an entry fee to play, and are competing for an overall “pot” of winnings) were found to rely more on rational play and skill of the player, while cash-based poker games (i.e. where players bet real money in each game, pay no entry fee to play, and there are no “pot” winnings) were found to be more akin to regular chance-based gambling (Javarone, 2015). In terms of legal classifications of the degree of skill present in poker, one study deduced that the dominant factor in poker is in fact skill (Levitt, Miles, & Rosenfield, 2012). In a similar vein Siler and colleagues (2010) were able to identify the skills necessary for successful play in poker: cognitive skills (e.g. risk assessment based on the performance of other players), accuracy of skill-assessment (e.g. playing in specific stake size games that match their skill), ability to suppress or control oneʼs own emotions (e.g. avoiding “tilt”, negative emotions that lead to rash decision-making in play). Similarly, blackjack, another popular card game played in casinos, combines elements of chance and skill. One study found that specific skills required to succeed in blackjack (e.g. card-counting) can be enhanced through targeted training strategies (Speelman, Whiting & Dixon, 2015). Conversely, skill in poker was found to only be influential in the first few games played (over a long series of sequential games), leading the authors to conclude that skill is less involved in poker than originally thought (Chan, 2010).

In contrast to games that do involve elements of skill to play, structural characteristics of other gambling formats have the propensity to induce the illusion that players can acquire skills to increase their personal success. In gambling forms that involve placing bets on specific teams or competitors, the expertise of the bettor

32 (domain-specific knowledge in a particular sport) is generally thought to have a robust influence on the outcome of said bet. However, in actuality, many authors have concluded that the amount of skill involved in these games is negligible such as in horse racing (Dickerson, 1979; Browne, Rockloff, Blaszcynski, Allcock, & Windross, 2015) and in sports betting (Towfigh & Glöckner, 2011; Gainsbury & Russell, 2015; Khazaal, Y., Chatton, A., Billieux, J., Bizzini, L., Monney, G., Fresard, E., ... & Khan, R. 2012; Kwak, 2016). It has also been shown that inflated control beliefs strengthen win expectations, which consequently may lead players to place higher bets (Kwak, 2016). Similarly, in games of pure chance (e.g. slot machines), players interact directly with structural features that bring forth the illusion of skill during play. In particular, players feel more skillful while playing multiline slot machines (i.e. when betting on multiple lines simultaneously) as opposed to single line slot machines (Dixon, Graydon, Harrigan, Wojtowicz, Siu, & Fugelsang, 2014). When reel-stopping devices are present on slot machines, players often misattribute its use to involving skilled action (Ladouceur & Sévigny, 2005). Some slot machines also feature buttons that allow the players to either “hold” one of the reels from spinning, or “nudge” a reel to move up or down to the next desired symbol - although this is an illusory skill (Griffiths, 1990a). These also contribute to the exaggeration of perceived skill during slot machine play.

Looking to the legal classifications that separate skill-based games (e.g. prize machines, such as the classic “Claw” arcade games that players pay to play) from chance-based gambling games, the Gambling Commission (UK) has developed a systematic model that determines whether or not a prize machine should be considered a gambling game (see Figure 2; Gambling Commission, 2010). As depicted in the classification model, the amount of skill and chance involved in a prize machine game is considered, as well as the way in which the game is presented to the player (e.g. whether or not it contains predominant gambling themes or actions required to play). If a game contains both chance and skill, but the element of chance is large enough to influence the outcome, the game is still considered a gambling game. Additionally, if the amount of chance involved is negligible (but still present), yet the game still contains gambling themes and actions on behalf of the player (e.g. spinning a wheel, flipping a coin), then the prize machine is classified as a gambling game. It is clear that determining the respective contributions of skill and chance in gambling is at times rather ambiguous or highly dependent on legislative or contextual parameters that distinguish gambling from non-gambling activities. It is important for regulators to take care in drawing a dividing line when separating gambling and skill-based gaming, as it has broad implications for its accessibility and uptake by the public.

33

Figure 2. Determining whether a game is considered gambling or gaming. Reproduced from “Is a prize machine a gaming machine?” (Gambling Commission UK, 2010).

Theme 2: Groups/Demographics (n = 37/93)

Our search allowed us to identify particular groups that commonly participate in skill-based gambling over other forms. Overall, many research studies have examined age-related differences in gambling involvement. Of particular concern is that children commonly report gambling on games of skill, although other forms of gambling are engaged in more heavily, such as lottery games (Ladouceur, Dubé, & Bujold, 1994). Interestingly, children in grade school report being able to differentiate the role of skill and luck between game types (Derevensky, Gupta & Baboushkin, 2007). Despite this

34 ability, wagering amounts and risk taking behaviour appears to increase with age in blackjack play (Derevensky, Gupta, Della-Cioppa, 1996). Many sources reported that adolescents also frequently bet on games of skill (e.g. betting on games of personal skill such as pool; Welte, Barnes, Tidwell, & Hoffman, 2009; Adebayo, 1998; Turner, Macdonald, Bartoshuk, & Zangeneh, 2008; Winters, Stinchfield, & Kim, 1995; Arizona Criminal Justice Commission, 2006). Additionally, like the aforementioned grade-school children, adolescents appear to understand the differences between skill and luck gambling games (Kristiansen, Jensen & Trabjerg, 2014), yet still believe that skill is involved in gambling as a whole (Gupta & Derevensky, 1996). Adolescents who report problematic levels of gambling believe that there is more skill involved in all gambling games compared to their non-problematic gambling counterparts (Delfabbro, Lahn, & Grabosky, 2006). One study found that skill-based gambling engagement was associated with more reports of gambling problems among adolescents. Additionally, participating in gambling activities that involve selecting a winner (e.g. sports betting) was found to be a significant predictor of gambling problems (Bell & Boldero, 2011). These findings lead the authors to conclude that skill-based gambling may be particularly problematic for adolescents (Bell & Boldero, 2011). Among adolescent fruit machine PGs, “skill” is often thought to be deployed by using specific structural features that can extend playing time, such that players can stretch their bankrolls through the use of feature-based strategies (Griffiths, 1993a). Additionally, adolescent fruit machine gamblers also believe that both luck and skill are involved in gameplay. Specifically, misidentified skillsets included knowledge of the reels (symbols) and other special machine features, such as buttons (Griffiths, 1993a). In fact, another study showed that adolescent slot machine PGs (and higher frequency players) often attributed outcomes to their own skill rather than luck (Carroll & Huxley, 1994). Other meaningful differences emerged surrounding gender in this group: specifically, adolescent males tended to emphasize the importance of skill involved in gambling compared to adolescent females (Kristiansen, Jensen & Trabjerg, 2014), and adolescent males (moreso than females) are socialized by their fathers to participate in skill-based forms of gambling (Shead, Derevensky & Meerkamper, 2011).

Young adults and college students also commonly report playing skill-based games (Biddix & Hardy, 2008; Gausset & Jansbøl, 2009). Specifically, among college students, involvement in skill-based gambling tends to vary with major of study, in that it is a more common preference for business and math students (Williams, Connolly, Wood, & Nowatzski, 2006; Gausset & Jansbøl, 2009). Additionally, while college students who engage in skill-based games report spending less time and money on gambling in general (Williams et al., 2006), engagement with skill-based gambling forms in this population is nonetheless associated with heightened Problem Gambling Severity

35 Index (PGSI) scores compared to chance-based gambling forms (Boldero & Bell, 2012). A specific subset of the college student population that has been studied in relation to skill-based gambling participation is college athletes. College athletes tend to experience more gambling problems than their non-athlete counterparts, and also commonly report betting on games of personal skill (Kerber, 2005; Huang, Jacobs, Derevensky, Gupta, & Paskus, 2007). More generally, athletes not necessarily affiliated with an academic institution are similarly inclined to play skill-based gambling games compared to non-athletes (Weiss & Loubier, 2010). This study also indicated that familiarity and expertise (e.g. increased knowledge) surrounding specific sports may be a risk factor for PG in this group (Weiss & Loubier, 2010). Of particular interest, as identified in one study, is the notion that preference for skill or chance-based games shifts with age (Stevens & Young, 2010; Fang & Mowen, 2009). Specifically, older adults have been shown to prefer chance-based games as opposed to skill-based games (Stevens & Young, 2010).

Considering other factors beyond age, gender differences also emerged from our search results. A common finding concerns how males generally prefer playing skill- based games more than females (Boldero & Bell, 2012; Gausset & Jansbøl, 2009; Stevens & Young, 2010; Fang & Mowen, 2009). This is found to be the case with student athletes (Huang, Jacobs, Derevensky, Gupta, & Paskus, 2007), older adults (Wiebe, Single, Falkowski-Ham, & Mun, 2004), and individuals who play skill-based online games (Woods & Williams, 2008). In terms of playing motivations, gamblers who prefer skill card games play for reasons related to money, excitement, social contact, and self-esteem (Fang & Mowen, 2009). Significant characteristics in people involved in skill-based card gambling included competitiveness, interest in numerical information, and introversion (Fang & Mowen, 2009). Additionally, one study found that gamblers who prefer skill-based games are typically high in positive emotionality, high in aggression, and tend to possess low behavioural constraint and levels of magical ideation (Savage, Slutske, & Martin, 2014). Further distinctions emerge when considering the mode of skill-based gambling, specifically whether play is occurring online (e.g. on a gambling website) or offline (e.g. in a brick-and-mortar venue). One specific finding concerned how the success of online poker players was related to perceiving oneself to be skillful at the game, yet crucially not overestimating oneʼs skill level (Griffiths, Parke, Wood, & Rigbye, 2010). External ramifications of online skill- based gamblers were also observed within our search results, particularly in terms of more reports of criminal theft and fraud within this group (Woods & Williams, 2008). In line with online gambling-related harms, increased problem gambling risk was observed in fraternity members who participated in skill-based gambling online (Biddix & Hardy, 2008). Additionally, online gambling is often undertaken to demonstrate skills, and

36 players who report this motive have been found to be more likely to experience gambling-related problems (Goldstein, Vilhena-Churchill, Stewart, Hoaken, & Flett, 2016).

There are unique characteristics associated with problem gamblers who prefer skill-based games, regardless of mode (e.g. offline or online). In particular, these individuals have been shown to be higher in sensation seeking than other types of gamblers (Bonnaire, Bungener, & Varescon, 2009). Other characteristics associated with this population includes the presence of more illegal acts and an increasing propensity to be male (Challét-Bouju, Hardouin, Lagadec, Burlacu, Valleur, Magalon, ... & Grall-Bronnec, 2016). Stress and time spent have been found to be significant predictors of PG in poker players specifically (Hopley, Wagner, & Nicki, 2014). In line with these findings, research has identified characteristics that dissociate expert and professional-level poker players from novices and amateurs. Specifically, expert poker players have been found to be more efficient at processing poker-related information (St. Germain & Tenenbaum, 2011), and specific poker skills are related to increased financial success (Leonard & Williams, 2015). Interestingly, professional poker players do not tend to see poker as a form of gambling, and instead associate gambling with games that are completely chance-based (Radburn & Horsley, 2011). Compatible with these results is the finding that semi-professional and professional gamblers are less likely to engage in chance-based games (Hing, Russell, Blaszczynski, & Gainsbury, 2015). Additionally, semi-professional and professional PGs experience more gambling- related harm than amateur PGs (Hing, Russell, Gainsbury, & Blaszczynski, 2016).

Theme 3: Harms and Consequences (n = 33/93)

The largest theme that surfaced from our search is the harms and consequences associated with skill-based gambling. A major facet of these harms include general erroneous cognitions that players of skill-based games may exhibit. For example, the illusion of control is a prominent phenomenon that is characterized by an inflated sense of agency over the outcomes of the game. Langer (1975) formally defines the illusion of control as “an expectancy of a personal success probability inappropriately higher than the objective probability would warrant” (pp. 313). These types of cognitions are problematic in instances where the game is predominantly chance-based. Additionally, players may overestimate the amount of skill that they possess during play, or in turn, believe that there is skill involved in a game that is purely chance-based. Conversely, players may also overestimate the amount of luck present in a game, or may perceive themselves to be “lucky” (e.g. perceiving symbols or signs as indices of impending

37 fortune). Other consequences associated with these games include impacts on and the development of problem gambling behaviour.

According to our search results, general erroneous cognitions can range from perceiving a “skill orientation” during play, to special techniques that players adopt as a way to increase success. Males have been found to develop an erroneous skill orientation in chance-based games, and this is also more likely to be found among PGs (Toneatto et al., 1997). Players who exhibit higher perceived controllability over game outcomes show a preference for skill-based games (Christie, Wohl, Matheson & Anisman, 2005). Moreover, in a study of payback percentages and player slot machine selection, it was found that players were able to differentiate between “tight” (i.e. lower payback percentage) and “loose” (i.e. higher payback percentage) machines; the authors noted that this true ability may run the risk of becoming overgeneralized by players leading them to erroneously believe they can pick machines on which they can consistently win (Dixon, Fugelsang, MacLaren, & Harrigan, 2013). Additionally, another study highlighted how higher frequency slots players played machines longer than non- gamblers, and made more irrational verbalizations and cognitions during play (Griffiths, 1994). These players were also found to play the slot machine faster, potentially believing that they can accrue more winnings (Griffiths, 1994).

A specific erroneous cognition that is strongly implicated in games that involve skill (or a combination of skill and chance) is the aforementioned illusion of control, a belief that one has more control over the outcomes of a game than they do in actuality. This cognition is particularly pertinent to games that involve skill, as the presence of some skill elements in a game can promote the overestimation of the amount of control that the player has over the game. Active illusory control was found to be the most common erroneous cognition in one sample of gamblers (Toneatto et al., 1997). Illusion of control is also significantly correlated with problem gambling severity (Teed, Finlay, Marmurek, Colwell, & Newby-Clark, 2012). Moreover, gamblers who prefer both skill- based games and skill-and-chance games were found to score higher on illusion of control measures (Myrseth, Brunborg, & Eidem, 2010). Looking at near-miss outcomes (e.g. outcomes that fall short of a win in slots), the degree of illusion of control was found to interact with the motivating effects of near-misses (Billieux, Van der Linden, Khazaal, Zullino, & Clark, 2012). In a similar vein, near-miss effects are thought to be partially dependent on skill learning mechanisms in humans (Clark, Liu, McKavanagh, Garrett, Dunn, & Aitken, 2013). Additionally, gamblers with a higher degree of illusion of control in games were found to be more likely to reference peak performance (e.g., when they were “up”) when experiencing losing outcomes in order to maintain the belief that they actually have skill (Cowley, Briley, & Farrell, 2015). In a study investigating the

38 impact of videogame play on gambling behaviour, videogame players were more likely to attribute their gambling wins to having direct control over the outcomes of a chance- based gambling task (King, Ejova, & Delfabbro, 2012). A related finding posited that familiarity of gambling-related stimuli influences playerʼs perceptions of control in a game (Bouts & Van Avermaet, 1992).

Another brand of erroneous cognition includes oneʼs belief or perception of skill in a given gambling situation. Skill (in any context) was found to be a dominant factor in the phenomenology of problem gambling, as indexed by the number of instances of the word “skill” in an online problem gambling forum (Rantala & Sulkunen, 2012). Additionally, perceptions of streaks and sequences has been found to be dependent on the context in which they are encountered potentially impacting a playerʼs judgment of personal skill within a playing session (i.e. with regards to the gamblerʼs fallacy; Matthews, 2013). Considering the influence of skill-assessment on risk in blackjack, it was found that if a player perceives themselves to be skillful in a game, in addition to having a greater amount of expected enjoyment, it also leads them to underestimate the amount of risk involved in playing (Dean, 2011). For sports betting, seemingly another skill-based game, bettors have been shown to overestimate their ability to predict an outcome based on their knowledge and expertise of the sport in question (Cantinotti, Ladouceur, & Jacques, 2004). Moreover, in the context of slot machines, a case study of an adolescent fruit machine addict revealed that his initial motivation for play stemmed from his desire to demonstrate his “skills” to his peers, despite the fact that he was engaging in a purely chance-based gambling form (Griffiths, 1993b). In both slot machines and poker, belief in oneʼs own skill was found to be related to gambling frequency (Zhou et al., 2012). Additionally, in comparison to offline poker players, online poker players were found to be more vulnerable to a greater perception of skill, among other cognitive distortions (Cantinotti, Ladouceur & Jacques, 2004). Consistent with the notion of skill overestimation in the illusion of control, the perceived skill of the player does not translate into more successful play (Cantinotti, Ladouceur & Jacques, 2004). In contrast to online poker players, offline poker players have reported that skill is heavily relevant to play, specifically technical, psychological and financial skills (Bouju, Grall- Bronnec, Quistrebert-Davanne, Hardouin, & Vénisse, 2013). Additionally, pathological gamblers reported having greater skill orientation during slot machine play (Källmén, Andersson,& Andren, 2008), and give more biased evaluations of their performance and reasons for their suboptimal play (Griffiths, 1990b). Compared to satiated controls, gamblers with an unresolved need state (e.g. a heightened state of hunger) reported more skill orientations (e.g. increased wagers) in gameplay, thereby leading to overconfidence in obtaining wins (Biner, Angle, Park, Mellinger & Barber, 1995). Similarly, perception of skill (as a consequence of having an illusion of control), tied to

39 positive appraisal during gambling, was found to predict craving to gamble. Perception of luck was also found to have an influence on craving, and did not vary by game type (Christie et al., 2010).

Turning to the concept of perceived luck in gambling, a few studies identified the impact of these beliefs on gambling behaviour as a cognitive distortion. In pure chance- based gambling activities, beliefs about personal luck leads gamblers to erroneously conclude that they have influence over their outcome, consequently leading to an illusion of control (Wohl & Enzle, 2002). Clearly, belief in luck is intimately related to the illusion of control in gambling, as evidenced by illogical thinking about oneʼs probabilities of obtaining a specific outcome. This justifies its inclusion as a harm and consequence of gambling in this review. Perceiving the presence of personal luck in skill-chance games was found to be more robust than in games of pure chance (Wohl, Young, & Hart, 2005). Additionally, people who play skill-based games have been shown to hold superstitious beliefs, which may further contribute to developing an illusion of control (D'Agati, 2014). That said, beliefs in personal luck were found to be uncorrelated with gambling severity in one study (Teed et al., 2012).

Skill-based gambling has implications in the development of problem gambling, and symptoms related to problem gambling. Specifically, it was found that stress uniquely predicts problem gambling in online poker players, as does having an internal locus of control (Hopley, Dempsey & Nicki, 2012). Of notable importance is the repeated finding that harms associated with poker do not resemble those traditionally associated with problem gambling (Bjerg, 2010). Prominent harms of poker play identified by Bouju et al. (2013) included emotional harm and time spent gambling, rather than financial consequences. When controlling for gambling involvement, betting on games of skill, horse racing and sports lotteries in particular all retained significant relationships with problem gambling (Afifi, LaPlante, Taillieu, Dowd, & Shaffer, 2014). Overall, negative consequences associated with skill-based games (e.g., poker, blackjack) are varied, and are different from those associated with chance-based gambling forms (Cunningham, Callaghan, Toneatto, & Cordingley, 2005).

Theme 4: Responsible Gambling (n = 7/93)

Currently, there are many strategies available to counteract the harms and consequences of skill-based gambling. One preventative form commonly endorsed is education; either to promote increased knowledge surrounding game play or to spread awareness of the harms associated with skill-based gambling. Although it is a

40 commonly held notion that increased knowledge will lead to more informed decisions when approaching gambling situations, Lambos and Delfabbro (2007) found that such knowledge of gambling odds or skills in numeracy are unlikely to decrease risk of problem gambling. In fact, problem gamblers generally have the same understanding of gambling odds as NPGs (non-problem gamblers; Lambos & Delfabbro, 2007). Additionally, some authors have also theorized that online communities may be useful in combatting the development of PG through increased awareness of symptomatology. Specifically, virtual online communities of poker players may offer a supportive space to communicate information amongst players. This information may be related to skill- development (to aid novice players; Parke & Griffiths, 2011). Among different risk- groups, NPGs, low-risk (LR) and moderate-risk (MR) gamblers are more supportive of the term “Responsible Gambling” in general, with NPGs and LRs being more certain of what RG means (Hing, Sproston, Tran, & Russell, 2016). In terms of RG strategy adoptions, PGs are less likely to report using control strategies (e.g. using time and/or money limits) and are more likely to gamble as a way to challenge their skills and to beat the odds (Hing Sproston, Tran, & Russell, 2016).

Analyses of representations of gambling in the media allows insight into how attitudes toward skill-based gambling can be adopted. In Western gambling advertisements (as they aired in Nova Scotia), the majority promote skill-based gambling forms (e.g. poker and blackjack) over other casino game forms. Advertisements of skill-based games tended to over-represent the amount of skill involved to play, in addition to other positive portrayals of such games (McMullan & Miller, 2008). The presence of RG messaging in these advertisements was negligible, such that it was limited to age restrictions and presented in a non-salient formats (e.g. located at the bottom of the screen in small fonts; McMullan & Miller, 2008). Similarly, the depiction of gambling in Chinese gambling-themed movies was found to be overwhelmingly positive or neutral, in that negative depictions of the consequences of gambling behaviour were rarely explored in the films. The most common type of cognitive distortions portrayed in these films was the illusion of control in chance-based games. Specifically, skill-efficacy was the most common type of illusory control depicted in the sample (Un & Lam, 2016).

41 Discussion

Summary of Findings

Overall, the results of our scoping review distilled the relevant literature into four main themes. First, we were able to infer the impact of the structural features of a game with respect to the degree of skill and chance involved, and how they are classified within a legal framework. Our second theme touched on the types of people who play skill-based games and those who may be most at risk to the negative impacts of these games. Third, we summarized a broad range of cognitive distortions, harms, and other consequences that may result from engaging in skill-based gambling forms. This was by far the most comprehensive and robust of all of the themes identified. This highlights the importance of considering erroneous cognitions and the wide range of variation in problem gambling symptomology, attitudes and beliefs that these games may facilitate in a player. Lastly, we identified a theme concerning RG initiatives. Overall, the paucity of initiatives available in the literature that are specially designed for skill-based games highlight the need for the development of new tools and strategies.

Implications for Gambling Behaviour

Although we failed to find any specific studies on the new types of skill-based slot machines that will be introduced onto casino floors, this review is pertinent to these hybrid games for two reasons. For one, it allows us to succinctly summarize what we know about existing games that involve skill or pseudo-skill elements as well as the harms and risks with which they are associated. Secondly, our findings allow us to anticipate the types of harms that may potentially be associated with these new, modified slot machine games. Many studies addressed the illusion of control for purely chance-based gambling forms. With the introduction of skilled elements into games that are universally recognized as being exclusively chance based, these cognitive distortions have the potential to be much more complex and more difficult to address with the same tactics that are used currently to dispel these distortions in slot machine players. One distinct possibility is that players may overgeneralize the extent of their skill when a game involves both skill and chance-based elements. For example, the study by King and colleagues (2012) demonstrated that video game players had a greater propensity to attribute their chance-based outcomes to their skill. As video games traditionally involve the development of specific skills to improve performance over time (as will the newly introduced skill-based gambling forms), we can speculate from this finding that an overgeneralization of skill beliefs may manifest with the

42 introduction of skill elements into chance-based games. An additional complication is the fact that gamblers commonly play multiple slot machines within a gambling session; as such, it is possible that players may “jump” from one machine that does have a skill element to another machine that does not, providing further opportunity for skill-related beliefs to be applied to an inappropriate setting.

The obtained results also highlighted specific groups that may be attracted to skill-based slot machine games. Most concerning is the recurring finding that underage adolescents and young adults commonly report betting on games of skill, indicating a possible preference for these types of gambling activities. Such findings, coupled with the known link between early exposure to gambling and increased risk of problem gambling (Wood, Griffiths, & Parke, 2007) make the inclusion of skill elements in slot machine games particularly worrisome. Males also seemed to gravitate toward skill- based gambling forms, such as poker, blackjack, sports betting, horse racing, and betting on games of personal skill such as darts or pool. Although not of immediate concern (it currently remains unknown whether online versions of the anticipated skill- based slot machines will be available), in the future, it may be worthwhile to consider that online gambling seems to facilitate a unique set of problematic conditions for some gamblers. This is evidenced by the greater number reports of gambling-related problems amongst individuals who initiated online gambling for the purposes of demonstrating their own skills to other players (Goldstein, Vilhena-Churchill, Stewart, Hoaken, & Flett, 2016), and by results showing that frat members who engaged in skill- based gambling online were at a greater risk for gambling problems (Biddix & Hardy, 2008).

Implications for Responsible Gambling

Findings that addressed the effectiveness of RG strategies specific to skill-based casino games were generally absent, as most addressed gambling harms more generally. Pertinent literature has mainly addressed the use of education-centered interventions as preventative measures from gambling harms. Although education may intuitively appear as an effective form of prevention, recent research has cast doubt on the utility of such measures for dispelling the erroneous cognitions or functional understanding of casino games (Monaghan & Blaszczynski, 2009). In particular, knowledge of the odds or probability associated with specific gambling games may not be truly protective against the rise of cognitive distortions in gamblers. Authors have speculated that the timing of the delivery of information that clearly explains how odds and probability function in gambling specific situations may act as one way to improve

43 the efficacy or practical use of such knowledge (Lambos & Delfabbro, 2007). That is, if such information is presented through school curriculum or community programs prior to any emotional and financial investment in gambling activities, then there is a greater opportunity of uptake and appropriate use of this information by gamblers.

As we expected, there were no investigations of RG strategies for skill-based slot machines. One RG strategy that can be used for skill-based gambling is the use of messaging within games (e.g. through the use of labels to identify the skill-based versus purely random slot machines), as it avoids the overgeneralization of skill that players might inappropriately apply to games that use only chance. Additionally, as playersʼ decisions to play these games are strongly influenced by the appeal of game features, and the overall expected return determined by skill and chance characteristics, it is important to ensure that they are represented accurately. Clearly labelling the degree of skill involved in the particular games, highlighting the amount of efficacy that the player does have in the game (e.g. how much the payback percentage can be affected), and the fact that chance is still a dominant component of slot machine games could be effective strategies in combating any misperceptions that may arise with respect to these games.

The impact of representations of gambling were also assessed (e.g. advertisements, movies). We highlight that care must be taken when portraying such activities to the public. The need for direct communication of RG messaging was also emphasized through this research. To this end, an optimal RG strategy that may reduce the level of harm tied to skill-based casino gaming should include public messaging that expands beyond adherence to age restrictions (as in McMullan & Miller, 2008). Expanding upon the aforementioned issue of chance-skill classification for games, public messaging should also incorporate deliberate information about the degree of skill and chance actually present in skill-based slot machines. Such interventions may be beneficial in terms of ensuring that players make informed decisions concerning their gambling activities. Although suggestions can be made for the application and use of RG strategies to prevent the onset of problem gambling behaviours, these suggestions must be appropriately developed and thoroughly evaluated to ensure that they are effective. Moreover, as there was a lack of research pertaining to intervention-based tools in the source of gameplay within our search that are already in use within venues (e.g. self-imposed monetary and time limits, self-exclusion), we advocate for the development of in-game interventions that target the problematic behaviours that surface in skill-based games.

44 Conclusion

There are some key aspects of the skill-based gambling experience that remain elusive in the gambling literature. As previously mentioned, future research should aim to qualify the amount of objective skill involved in currently existing games and games that will be developed and adopted in the near future. Additionally, there is much work to be done in developing, evaluating, and implementing RG strategies that are specific to skill-based gambling forms. As skill-based slot machines are still not yet available on the casino floor, we can prepare for future research studies that should examine their structural characteristics, how they influence erroneous cognitions (if at all), and which groups engage with them. Regulators and operators should be aware of skill-based slot machine games and how these games may impact the player (in terms of harms and consequences), and RG strategies that accompany their arrival, maximizing responsible enjoyment for all patrons.

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49 Griffiths, M. D. (1990b). The cognitive psychology of gambling. Journal of Gambling Studies, 6(1), 31-42. doi:10.1007/BF01015747

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50 Javarone, M. A. (2015). Is poker a skill game? New insights from statistical physics. EPL (Europhysics Letters), 110(5), 58003.

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51 Lambos, C., & Delfabbro, P. (2007). Numerical reasoning ability and irrational beliefs in problem gambling. International gambling studies, 7(2), 157-171.

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52 Rae, D., & Haw, J. (2005). The Effect of Depression and Perceived Skill on Anticipated Emotions and Persistence in Off-course Betting. International Gambling Studies, 5(2), 199-208. doi:10.1080/14459790500303386

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53 Towfigh, E., & Glöckner, A. (2011). GAME OVER: Empirical support for soccer bets regulation. Psychology, Public Policy, and Law, 17(3), 475.

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54 Wood, R. T. (2009). Internet gambling: Prevalence, patterns, problems, and policy options (Doctoral dissertation, University of Lethbridge).

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55 Appendix. Characteristics of documents included in scoping review.

Author/year Country Type of Literature Theme 1: Structural Characteristics Gainsbury & Russell (2015) Australia Quantitative Research

Ladouceur & Sévigny (2005) Canada Quantitative Research (Study 1 and Study 2) Chan (2010) China Neural Network Modelling Siler (2010) United States Quantitative Research Speelman, Whiting & Dixon (2015) United States Evaluation of Skills Training Javarone (2015) Italy Statistical physics/modelling Barrault, Untas, & Varescon (2014) France Interviews with Quantitative Analysis Levitt, Miles, & Rosenfield (2012) United States Qualitative (Legal Analysis) Dickerson (1979) UK Quantitative Research (Observational) Towfigh, & Glöckner (2011) Germany Quantitative Research

Dixon, Graydon, Harrigan, Canada Quantitative Research Wojtowicz, Siu, & Fugelsang (2014) Khazaal, Chatton, Billieux, Bizzini, Switzerland/ Quantitative Research Monney, Fresard, . . . Khan (2012) Belgium/ Canada Kwak (2016) United States Quantitative Research (Study 1 and Study 2) Browne, Rockloff, Blaszcynski, Australia Quantitative Research Allcock & Windross (2015) (Modelling) Gambling Commission (2010) UK Policy/Legal Griffiths (1990) UK Qualitative Theme 2: Groups and Demographics Biddix & Hardy (2008) United States Quantitative Research

Boldero & Bell (2012) Australia Qualitative Research Carroll & Huxley (1994) UK Qualitative Research

56 Derenvensky, Gupta & Della Canada Quantitative Research Cioppa (1996) Derevensky, Gupta & Baboushkin Canada Quantitative Research (2007) Dreber, Rand, Wernerfelt, Garcia, Sweden/ Quantitative Research Vilar, Lum & Zeckhauser (2011) United States Gausset & Jansbøl (2009) Denmark Quantitative Research Hopley, Wagner & Nicki (2014) Canada Quantitative Research Kristiansen, Jensen, & Trabjerg Denmark Quantitative Research (2014) Leonard & Williams (2015) Canada Quantitative Research Radburn & Horsley (2011) UK Qualitative Research Shead, Derevensky & Meerkamper Canada Quantitative Research (2011) St. Germain, Tenenbaum (2011) United States Quantitative Research Weiss & Loubier (2010) United States Quantitative (Survey) Williams, Connolly, Wood & Canada Quantitative Research Nowatski (2006) Goldstein, Vilhena-Churchill, Canada Quantitative Research Stewart, Hoaken & Flett (2016) Griffiths, Parke, Wood & Rigbye UK/Canada Quantitative Research (2010) (Survey) Welte, Barnes, Tidwell, & Hoffman United States Quantitative Research (2009) (Survey) Adebayo, B. (1998) Canada Quantitative Research (Survey) Turner, MacDonald, Bartoshuk, & Canada Quantitative Research Zangeneh (2008) (Survey) Gupta & Derevensky (1996) Canada Quantitative Research (Survey) Winters, Stinchfield & Kim (1995) United States Quantitative Research (Survey) Ladouceur, Dubé & Bujold (1994) Canada Quantitative Research (Survey) Kerber (2005) United States Quantitative Research (Survey)

57 Huang, Jacobs, Derevensky, Canada/ Quantitative Research Gupta & Paskus (2007) United States (Survey) Bonnaire, Bungener & Varescon France Quantitative Research (2009) Fang & Mowen (2009) United States Quantitative Research (Survey) Savage, Slutske & Martin (2014) United States/ Quantitative Research Australia (Structured Interviews) Hing, Russell, Blaszczynski & Australia Quantitative Research Gainsbury (2014) (Survey) Hing, Russell, Gainsbury & Australia Quantitative Research Blaszczynski (2016) (Survey) Delfabbro, Lahn & Grabosky Australia Quantitative Research (2006) (Survey) Challét-Bouju, Hardouin, Lagadec, France Quantitative Research Burlacu, Valleur, Magalon. . . (Structured Interview) Reynaud (2016) Arizona Criminal Justice United States Quantitative Research Commission (2006) (Survey) Bell & Boldero (2011) Australia Quantitative Research (Survey) Griffiths (1993a) UK Qualitative Research Weibe, Single, Falkowski-Ham & Canada Quantitative Research Mun (2004) (Survey) Stevens & Young (2010) Australia Quantitative Research (Survey) Theme 3: Harms and Consequences Biner, Angle, Park, Mellinger & United States Quantitative Research Barber (1995) Bouju, Grall-Bronnec, Quistrebert- France Qualitative Research Davanne, Hardouin, & Vénisse (2013). Bjerg (2010) Denmark Qualitative Bouts & Van Avermaet (1992) Belgium Quantitative Research Cantinotti, Ladouceur & Jacques Canada Quantitative Research (2004)

58 Christie, Wohl, Matheson & Canada Quantitative Research Anisman (2010) Cunningham, Callaghan, Toneatto, Canada Quantitative Research & Cordingley (2005) Dean (2011) United States Quantitative Research Griffiths (1990b) UK Qualitative Research Griffiths (1994) UK Quantitative Research Hopley, Demsley, & Nicki (2012) Canada Quantitative Research Källmén, Andersson & Andren Sweden Quantitative Research (2008) Ladouceur & Mayrand (1984) Canada Quantitative Research Ladouceur, Mayrand, Dussault, Canada Quantitative Research Letarte, & Tremblay (1984) Langer (1975) United States Quantitative Research MacKay, Bard, Bowling & Hodgins Canada Quantitative Research (2014) Myrseth, Brunborg & Eidem (2010) Norway Quantitative Research Rae & Haw (2005) Australia Quantitative Research Teed, Finlay, Marmurek, Colwell & Canada Quantitative Research Newby-Clark (2012) Wohl & Enzle (2002) Canada Quantitative Research (Study 1 and Study 2) Wohl, Young & Hart (2005) Canada Quantitative Research Zhou, Tang, Sun, Huang, Rao, China Quantitative Research Liang & Li (2012) Dixon, Fugelsang, MacLaren & Canada Quantitative Research Harrigan (2013) Matthews (2013) UK Quantitative Research Toneatto, Blitz-Miller, Calderwood, Canada Qualitative (Interviews) Dragonetti & Tsanos (1997) Billieux, Van der Linden, Khazaal, Switzerland/ Quantitative Research Zullino & Clark (2012) Belgium/UK Clark, Liu, Mckavanagh, Garrett, UK Quantitative Research Dunn & Aitken (2013)

59 Cowley, Briley & Farrell (2015) Australia Quantitative Research King, Ejova & Delfabbro (2012) Australia Quantitative Research Griffiths (1993b) UK Qualitative Research (Case Study) Rantala & Sulkunen (2012) Finland Qualitative Research D'Agati (2014) Italy Qualitative Research Afifi, LaPlante, Taillieu, Dowd & Canada/ Quantitative Research Shaffer (2014) United States (Survey) Theme 4: Responsible Gambling (RG) Initiatives Lambos & Delfabbro (2007) Australia Quantitative Research Hing, Sproston, Tran & Russell Australia Quantitative Research (2016) (Survey) McMullan & Miller (2008) Canada Qualitative (Content Analysis) Parke & Griffiths (2011) UK Qualitative (Content Analysis) Wood & Williams (2008) Canada Quantitative Research Un & Lam (2016) China Qualitative Research Quilty, Avila Murati & Bagby (2014) Canada Quantitative Research

60