Review and analysis of sports and race betting inducements

Nerilee Hinga, Kerry Sprostonb, Richard Bradinga and Kate Brookb aCentre for Gambling Education & Research, Southern Cross University bORC International

October 2015

© Copyright Victorian Responsible Gambling Foundation, October 2015

This publication is licensed under a Creative Commons Attribution 3.0 Australia licence. The licence does not apply to any images, photographs, branding or logos. For information on the Victorian Responsible Gambling Foundation Research Program visit responsiblegambling.vic.gov.au.

Disclaimer: The opinions, findings and proposals contained in this report represent the views of the author and do not necessarily represent the attitudes or opinions of the Victorian Responsible Gambling Foundation or the State of Victoria. No warranty is given as to the accuracy of the information. The Victorian Responsible Gambling Foundation specifically excludes any liability for any error or inaccuracy in, or omissions from, this document and any loss or damage that you or any other person may suffer.

To cite this report: Hing N., Sproston, K., Brading, R., and Brook, K. (2015) Review and analysis of sports and race betting inducements. Victoria, Australia: Victorian Responsible Gambling Foundation.

Conflict of interest declaration Nerilee Hing has worked with Echo Entertainment, Sportsbet and Singapore Pools over the four years previous to the study. She has also received funding over the past four years from the Victorian Responsible Gambling Foundation, Gambling Research Australia, the Queensland Government and the National Association of Gambling Studies (NAGS).

Kerry Sproston has received funding from Gambling Research Australia in the past four years. Richard Brading has worked with BetSafe Pty Ltd over the four years previous to the study.

The other author has no conflicts to declare.

Victorian Responsible Gambling Foundation Level 6, 14-20 Blackwood Street North Melbourne, Victoria, 3051 PO Box 2156 Royal Melbourne Hospital Victoria, 3050 Tel +61 3 9452 2600 Fax +61 3 9452 2660 ABN: 72 253 301 291

Our vision: A Victoria free from gambling-related harm

Review and analysis of sports and race betting inducements

Prepared by: Nerilee Hinga, Kerry Sprostonb, Richard Bradinga and Kate Brookb aCentre for Gambling Education & Research, Southern Cross University bORC International

October 2015

Review and analysis of sports and race betting inducements Hing, Sproston, Brading & Brook

Acknowledgements

This project was funded by the Victorian Responsible Gambling Foundation. The content is solely the responsibility of the author(s) and does not necessarily represent the official views of the Victorian Responsible Gambling Foundation.

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Table of Contents

EXECUTIVE SUMMARY ...... 8 CHAPTER ONE: INTRODUCTION TO THE STUDY ...... 14 1.1 Introduction ...... 14 1.2 Project requirements and research questions ...... 14 1.3 Project definition of wagering inducements ...... 15 1.4 Overview of the study’s methodology ...... 15 1.5 Scope of the study ...... 16 1.6 Structure of this report ...... 16 CHAPTER TWO: LITERATURE REVIEW ...... 17 2.1 Introduction ...... 17 2.2 Overview of sports and race betting in Australia...... 17 2.2.1 Wagering operators ...... 17 2.2.2 Betting odds ...... 18 2.2.3 Types of bets ...... 18 2.2.4 Betting channels ...... 18 2.2.5 Wagering participation and expenditure ...... 19 2.3 Marketing of sports and race betting ...... 20 2.3.1 Media used for wagering marketing ...... 20 2.3.2 Investment in wagering marketing ...... 21 2.3.3 Sponsored advertising and promotion of wagering marketing ...... 21 2.3.4 Target markets for wagering marketing ...... 22 2.3.5 Major messages conveyed in wagering marketing ...... 22 2.4 Marketing inducements ...... 23 2.4.1 Definition and purpose ...... 23 2.4.2 Types of inducements...... 24 2.4.3 Consumer responses to inducements ...... 24 2.4.4 Benefits of marketing inducements for sellers ...... 26 2.5 How the gambling industry uses inducements to promote gambling ...... 27 2.5.1 Types of gambling incentives offered ...... 27 2.5.2 How gambling incentives are obtained ...... 27 2.6 How the wagering industry uses inducements to promote gambling ...... 28 2.6.1 Types of wagering incentives offered ...... 28 2.6.2 How wagering incentives are obtained ...... 28 2.7 Influence of marketing inducements on gambling behaviour...... 30 2.7.1 Influence of gambling inducements on gambling behaviour ...... 30 2.7.2 Influence of wagering inducements on betting behaviour ...... 32 2.8 Influence of wagering inducements on gambling problems ...... 33 2.8.1 Gambling problems associated with wagering ...... 33 2.8.2 Risk factors for gambling problems associated with wagering ...... 34 2.8.3 Influence of wagering marketing on gambling problems associated with wagering ...... 35 2.8.4 Influence of gambling and wagering inducements on gambling problems ...... 36 2.9 Chapter summary ...... 38 CHAPTER THREE: POLICY ANALYSIS ...... 40 3.1 Introduction ...... 40 3.2 The Legal Landscape ...... 40 3.2.1 Background ...... 40

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3.2.2 The Australian betting market opens ...... 42 3.2.3 Reaction to the impacts of change ...... 43 3.2.4 Inducements, problem gambling and the courts ...... 43 3.2.5 Government reviews in Australia ...... 44 3.2.6 Responses from Australian governments...... 46 3.2.7 Codes of practice and codes of conduct ...... 48 3.3 International Developments ...... 50 3.3.1 Accessing offshore Internet wagering ...... 50 3.3.2 International directions...... 50 3.3.3 Europe ...... 51 3.3.4 United Kingdom ...... 52 3.3.5 Denmark ...... 52 3.3.6 Germany ...... 53 3.3.7 Italy ...... 53 3.3.8 Small jurisdictions ...... 53 3.3.9 International industry and organisational initiatives ...... 54 3.4 Policy Issues ...... 55 3.4.1 Terms and conditions of inducements ...... 55 3.4.2 Broadcasting and advertising ...... 56 3.4.3 Complaint resolution ...... 57 3.4.4 Credit ...... 57 3.4.5 Loyalty programs ...... 57 3.4.6 Affiliates ...... 58 3.5 Laws and self-regulatory measures ...... 58 3.5.1 Types of measures ...... 58 3.5.2 Commonwealth ...... 59 3.5.3 States and Territories ...... 59 3.6 Identifying options ...... 60 3.6.1 Elements of laws ...... 60 3.6.2 Determining the objectives of the regulatory approach ...... 60 3.6.3 Industry view ...... 61 3.6.4 Option 1: Prohibition of all inducements ...... 62 3.6.5 Option 2: Prohibition of some inducements ...... 62 3.6.6 Option 3: Restrictions on the type and terms of inducements ...... 62 3.6.7 Option 4: Restrictions on the type and form of advertising ...... 63 3.6.8 Option 5: Requirements for additional features – terms and conditions, independent dispute resolution . 63 3.6.9 Option 6: Improved self-regulation ...... 64 3.7 Chapter summary ...... 64 CHAPTER FOUR: THE AUDIT OF INDUCEMENTS ...... 65 4.1 Introduction ...... 65 4.2 Method ...... 65 4.3 Inducement types ...... 67 4.3.1 Sign up offer ...... 68 4.3.2 Refer a friend offer ...... 69 4.3.3 Happy hour (or similar) offer ...... 69 4.3.4 Mobile betting offer ...... 71 4.3.5 Multi bet offer ...... 71 4.3.6 Refund/stake back offer ...... 72 4.3.7 Match (or partially match) your stake/deposit (with bonus bets) ...... 72 4.3.8 Winnings paid even if you don’t win ...... 73 4.3.9 Bonus or better odds ...... 73

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4.3.10 Bonus or better winnings ...... 74 4.3.11 Competitions (where payout is in bonus bets) ...... 74 4.3.12 Reduced commission ...... 75 4.3.13 Free bets (selected punters) ...... 75 4.3.14 Other free bets (e.g. predict the outcome of a match) ...... 76 4.3.15 Cash rebate (no play through required)...... 76 4.3.16 Click to call bonus ...... 77 4.4 Summary statistics ...... 78 4.4.1 Number of inducements, by brand ...... 78 4.4.2 Inducement types ...... 79 4.4.3 Incentive provided ...... 82 4.4.4 Monetary value of incentives ...... 85 4.4.5 Sporting or racing ...... 86 4.5 Terms and conditions associated with inducements ...... 88 4.5.1 Overview ...... 88 4.5.2 Play through restrictions ...... 90 4.5.3 Jurisdictional restrictions...... 92 4.5.4 Restrictions on betting medium ...... 93 4.6 Responsible gambling messaging ...... 95 4.7 Chapter summary ...... 98 CHAPTER FIVE: DISCUSSION ...... 100 5.1 Introduction ...... 100 5.2 Main characteristics of inducements ...... 100 5.2.1 Prominence of inducements ...... 100 5.2.2 Most inducements change frequently, but some are perennial ...... 100 5.2.3 All inducements are price promotions ...... 101 5.2.4 Wide range of inducements and incentives ...... 101 5.2.5 Many inducements are for complex bet types and combined contingencies ...... 102 5.2.6 Most common types of inducements ...... 103 5.2.7 Inducements used by new entrants ...... 103 5.2.8 Differences between onshore and offshore inducements ...... 103 5.2.9 Sports betting inducements vs race betting inducements ...... 104 5.2.10 Complex terms and conditions ...... 104 5.2.11 Minimal embedded responsible gambling messages ...... 105 5.3 Considerations for harm minimisation ...... 106 5.3.1 Wagering inducements and the commencement of betting ...... 106 5.3.2 Wagering inducements and the continuation of betting ...... 107 5.3.3 Wagering inducements and the intensification of betting ...... 108 5.3.4 Wagering inducements and problem gambling ...... 109 5.4 Considerations for consumer protection ...... 110 5.4.1 Complex terms and conditions ...... 111 5.4.2 Minimal provision of responsible gambling messages ...... 111 5.4.3 Exposure of minors to promotions for wagering inducements ...... 111 5.5 Limitations of the study ...... 112 5.6 Conclusion...... 112 REFERENCES ...... 114

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List of Tables

Table 4.1 Brands included in the inducements audit, onshore/offshore operators ...... 65 Table 4.2 Total inducements by brand, by count...... 78 Table 4.3 Inducements by type ...... 79 Table 4.4 Average maximum monetary value, by brand ...... 85 Table 4.5 Average maximum monetary value, by onshore vs offshore ...... 86 Table 4.6 Average maximum monetary value, by type of inducement ...... 86 Table 4.7 Type of activity, by whether onshore or offshore ...... 86 Table 4.8 Type of activity, by brand ...... 87 Table 4.9 Type of inducement, by activity ...... 88 Table 4.10 Overview of restrictions, by whether onshore or offshore ...... 90 Table 4.11 Average play through requirements, by brand ...... 91 Table 4.12 Average play through requirements, by type of inducement ...... 92 Table 4.13 Jurisdictional restrictions, by brand ...... 92 Table 4.14 Jurisdictional restrictions, by type of inducement ...... 93 Table 4.15 Restrictions on medium, by whether onshore or offshore (% of inducements with a medium restriction)...... 93 Table 4.16 Has a restriction on medium, by brand (% of brand’s inducements) ...... 94 Table 4.17 Restrictions on medium, by brand (% of inducements with a medium restriction)...... 94 Table 4.18 Has a restriction on medium, by inducement type (% of type’s inducements) ...... 95 Table 4.19 Restrictions on medium, by type of inducement (% of inducements with a medium restriction)...... 95 Table 4.20 Responsible gambling messaging, by whether onshore or offshore ...... 97 Table 4.21 Responsible gambling messaging, by brand ...... 98

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List of Figures

Figure 4.1 Example sign up offer ...... 68 Figure 4.2 Example refer a friend offer ...... 69 Figure 4.3 Example happy hour offer ...... 69 Figure 4.4 Example mobile betting offer ...... 71 Figure 4.5 Example multi bet offer ...... 71 Figure 4.6 Example refund/stake back offer ...... 72 Figure 4.7 Example match your stake/deposit offer ...... 72 Figure 4.8 Example winnings paid even if you don’t win offer ...... 73 Figure 4.9 Example bonus or better odds offer ...... 73 Figure 4.10 Example bonus or better winnings offer ...... 74 Figure 4.11 Example competition ...... 74 Figure 4.12 Example reduced commission offer ...... 75 Figure 4.13 Example free bets offer ...... 75 Figure 4.14 Example other free bets offer ...... 76 Figure 4.15 Example cash rebate offer ...... 76 Figure 4.16 Example click to call bonus offer ...... 77 Figure 4.17 Inducements by brand ...... 79 Figure 4.18 Inducements by type ...... 80 Figure 4.19 Inducement types by onshore/offshore ...... 80 Figure 4.20 Top two inducement types by brand - onshore ...... 81 Figure 4.21 Top two inducement types by brand - offshore ...... 82 Figure 4.22 Incentive types ...... 83 Figure 4.23 Incentive types by onshore/offshore ...... 83 Figure 4.24 Top two incentive types by brand - onshore ...... 84 Figure 4.25 Top two incentive types by brand - offshore ...... 84 Figure 4.26 Example of a responsible gambling message embedded within the inducement (not hyperlinked) ...... 96 Figure 4.27 Example of a responsible gambling message when scrolled to the bottom of the promotions page (contains hyperlink) ...... 96

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Executive summary

Introduction

This study was commissioned by the Victorian Responsible Gambling Foundation to inform its response to the use of inducements by the wagering industry. The project requirements were to:

. Review the literature on inducements to gamble. . Analyse the current legal status of inducements to gamble in Australian jurisdictions, and in relevant overseas jurisdictions. . Document the ways the gambling industry uses inducements to encourage take up of gambling, continued gambling or intensification of gambling. . Establish processes to allow the foundation to monitor inducements on an ongoing basis.

Methods

This study was conducted over seven weeks (4 May to 25 June 2015) and involved four main stages of research:

. Stage One involved a literature review to contextualise the study and to examine the existing Australian and international evidence in relation to the project’s research questions. . Stage Two involved a policy analysis to examine the laws and regulations relating to inducements across Australian jurisdictions and relevant international comparisons. . Stage Three entailed an audit of all inducements offered by 30 major wagering brands, comprising 18 operators licensed in Australia and 12 popular offshore operators that accept bets from Australian residents. All inducements offered on these operators’ websites were audited twice (at the beginning and end of a three week period: 8th-28th May 2015) to maximise the comprehensiveness of the audit, and to accommodate short term variations.1 The audit documented the key attributes of these inducements in a customised database, and analysed the results to produce summary statistics. . Stage Four involved the establishment of systems and processes to allow the continual monitoring of wagering inducements. The customised database was developed in Access and an accompanying manual was developed in order to enable comparable audits to be conducted and analysed in subsequent monitoring exercises.

1 One offshore brand’s website became unavailable during the audit period, due to maintenance, and a replacement brand was selected for the second, end of period count. The replacement brand had no inducements at that time. As the replacement brand was not included in the first count and had no inducements on its website during the second count, 30 brands, rather than 31, are referred to throughout this report.

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Results

The study’s main results are summarised below in relation to the study’s three research questions (RQs).

RQ1 How does the gambling industry use inducements to promote gambling products?

The following key results were found in the audit of wagering inducements:

. The 30 wagering brands offered 223 distinct inducements during the audit period that were categorised into 15 different types which offered a wide range of incentives to bet. . The most common types of inducements offered were refund/stake back offers (27% of all inducements), followed by sign up offers (13%), bonus or better odds (13%), and bonus or better winnings (12%). . Other types of inducements comprised multi bet offers (9%), winnings paid on losing bets, (7%), happy hours or similar (4%), match your stake/deposit (4%), cash rebates (4%), refer a friend offers (3%), free bets to selected punters (2%), other free bets (2%), mobile betting offers (1%), reduced commission (1%), and competitions (<1%). . Onshore brands (those licensed in Australia) offered nearly three times more inducements (average 11.6) than offshore brands (4.1), with the former more commonly providing refund/stake back offers, and the latter more frequently offering sign up bonuses. . The strategic importance of attracting new customers (sign up offers comprised 13% of inducements) was reflected in the associated average maximum financial incentive ($200 overall, $226 onshore, $146 offshore); whereas promotions involving the refund of non- winning stakes, which were more prevalent (27%), had a lower average maximum value ($85 overall, $80 onshore, $169 offshore). . Loyalty programs, provision of credit for betting, and affiliate referral programs also comprise inducements to bet. These were not included in the audit as they are not widely advertised on operator websites. . A recent development is ‘click to call’ technology which allows bettors to place in-play bets through their computer or mobile phone without needing to speak to a telephone operator. This system was introduced by williamhill.com.au and tomwaterhouse.com.au in May 2015. At the time of writing, these operators were offering matched bonuses for the first click to call bet made on any live market. However, these bonuses commenced after the audit period so were not included. . Wagering inducements in the audit were characterised by being prominently promoted on operator websites, subject to frequent change (except for the perennial recruitment inducements), and focused mainly on sports betting (50%), compared to race betting (32%) or both (18%). All inducements were a form of a price promotion offering temporary price cuts, monetary savings, bonus bets or refunds. Many inducements were for complex bet types and combined contingencies. All inducements were subject to a range of terms and conditions on their uptake. . Wagering inducements rarely had a responsible gambling message embedded in their website advertisements (12%), although almost all operator websites had a responsible gambling message (95%) with links to further information (94%). However, where responsible

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gambling messages were provided, they were in small font, usually in the margins of the screen, and therefore unlikely to be noticed, difficult to find and hard to read. . Inducements that incentivise the commencement of betting include sign up bonuses, refer a friend bonuses and affiliate programs. Sign up bonuses had an average maximum value of $200 which was usually paid in bonus bets requiring, on average, 4.9 play throughs (of the bonus bet and/or the initial stake and/or any winnings from the bonus bet). Refer a friend bonuses had an average maximum value of $69 and required an average of 2.6 play throughs. Wagering inducements aimed at commencement of betting can increase the overall number of bettors, overall betting consumption and the risk of possible harm. They also increase the use of multiple wagering accounts which can extend time and money spent through using bonus bets requiring matched amounts. Opening multiple accounts also exposes bettors to a plethora of additional marketing that encourages further betting. . Some types of inducements inherently encourage continuation of betting. Inducements with bonus bets and deposits received after an incentivised bet (or as a reward or through redemption of loyalty points) require continued betting to benefit from the incentive. These include the most common types of inducements identified in the audit. Mobile betting offers, multi bet offers, refund/stake back offers, competitions, free bets to selected punters, and other free bets all exclusively or mainly provided the incentive in the form of bonus bets or deposits. In contrast, inducements which provide the incentive as cash or better odds/winnings do not necessitate continued betting to benefit from the offer. They may, however, enhance the appeal of these bets and thus encourage additional consumption; alternatively, they may provide other benefits that serve to retain customer loyalty. Thus, the type of incentive offered appears to have most potential influence on continued betting, with bonus bets and deposits requiring subsequent bets clearly having most potential influence. . Some types of inducements stand out as having strongest potential for intensifying betting. Those with stringent play through conditions clearly increase the volume of an individual’s betting, the amount of time spent gambling, and exposure to a potentially addictive activity. Many bonus bets also require a matching bet, thus intensifying betting expenditure. Inducements for multi bets may encourage increased volume of betting, as these require heavier product use. Inducements for multi bets and exotic bets also incentivise betting on complex and combined contingencies with probabilities that are extremely difficult to calculate and for which loss rates are high. They therefore incentivise risky gambling decisions and may increase gambling-related harm as more losses occur. Happy hours can concentrate betting into short time periods, while the promotion of inducements at point-of-sale and through direct marketing can encourage impulse betting and therefore increase consumption. The provision of credit for betting has the potential to greatly intensify betting as some individuals become caught in a cycle of wagering losses, followed by betting on credit, leading to likely further losses and an inability to repay the debt. . Effects of wagering inducements on maintaining problem gambling behaviours are unknown, but there is no obvious reason to expect that they would be exempt from the heightened negative impacts on problem gamblers found for other gambling advertising. The heavy promotion of wagering inducements at point-of-sale, in mass media, social media and in direct communications to bettors means that this advertising cannot be avoided, exposing problem gamblers to an ongoing plethora of betting cues as inducements are continually refreshed. These cues are highly incentivised through offers of ‘free’ bets, deposits and money-back guarantees, and bettors can apply for credit for betting. Problem gamblers themselves have reported harmful effects, but further empirical research is needed with larger samples than included to date, and to determine any differential effects for different types of wagering inducements.

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. In addition to the potential harms raised from the sheer volume and diversity of wagering inducements that encourage the commencement, continuation and intensification of betting, and their likely detrimental effects on problem gamblers, other key issues undermining consumer protection are: 1) the complexity and lack of transparency of terms and conditions attached to inducements, which may be misleading and hinder informed choice; 2) minimal provision of responsible gambling messages attached to advertisements for inducements; and 3) the likelihood of children and adolescents being exposed to marketing messages for wagering inducements.

RQ2 What conditions does industry place on consumers taking up inducements?

The audit analysed the key terms and conditions of wagering inducements, with the following results found:

. All inducements were subject to certain terms and conditions, and their complexity and lack of transparency were key characteristics of those audited. . Terms and conditions were often not contained in the website display advertisement itself, but required clicking on a link to access them. . Inducements were typically also subject to a raft of general terms and conditions which were located elsewhere on the operator’s website. In many cases, it was up to the customer to locate these general terms and conditions, with no direct link provided. . The sheer volume of these general terms and conditions (e.g. 450 pages for one Australian operator) and the legalistic language used meant that it was not always obvious, and in some cases extremely difficult to ascertain, what restrictions applied to a particular inducement. The terms and conditions examined indicate that many fail to meet the basic requirements to enable informed choice. . The most commonly applied terms and conditions, applicable to more than half the inducements audited, were restrictions on the use of bonus bets (76% of all inducements), restrictions on the maximum value of the incentive/payout/bonus (60%), limited to recreational gamblers (55%), exclusive to registered members (52%), and subject to a time restriction (48%). . Terms and conditions applying to more than one-third (but less than half) of the inducements audited were a limit of one per person/account or household (42%), a limit of one per event (39%), a play through requirement (35%), and a limit to a particular betting medium (predominantly online) (36%). . Those found in fewer inducements were that they could not be used with any other offers (25%), they were limited to particular jurisdictions (27%, onshore only audited), they had minimum and/or maximum value limits for the associated bet (18%), and an explicit requirement for a minimum odds threshold was placed on the associated bet (13%). . Play through requirements were particularly difficult to understand, and varied in terms of requiring the bonus bet and/or initial stake and/or any winnings from the bonus bet to be played through. . Play through requirements were highest for mobile betting offers (5 times), followed by sign up offers (4.9) and happy hour offers (3.3). . Offshore brands were more likely to have a play through requirement and to stipulate multiple play throughs (average 5.8 times), compared to onshore brands that required an average of 1.1 play throughs.

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RQ3 How are inducements currently regulated in Australia and similar jurisdictions?

The policy analysis found that the regulatory environment for wagering inducements currently lacks clarity on what constitutes an inducement, provides little specificity about which aspects of inducements are acceptable or not, and lacks consistency across Australian jurisdictions. A variety of relevant legislation, regulations and codes of practice exist for gambling, advertising and broadcasting, which might inform the provision and promotion of wagering inducements. However, their provisions are typically vague and often provide little specific direction to ensure that these inducements minimise gambling harm and provide adequate protection for consumers. International jurisdictions have responded in a variety of ways, but their responses have also been piecemeal and fragmented. More specifically:

. Wagering inducements in Australia are currently regulated through a mix of:

 Commonwealth laws, including the Interactive Gambling Act 2001 and the Broadcasting Services Act 1992.  State laws, such as the Gambling Regulation Act 2003 (Vic).  Mandatory codes of practice, such as the Northern Territory Code of Practice for Responsible Gambling.  Voluntary codes of practice, such as the Queensland Responsible Gambling Code of Practice.  Individual operators’ codes, such as the TABCORP Wagering Responsible Gambling Code of Conduct.  Broadcasting and advertising codes of practice. . Similar instruments are used to regulate wagering inducements in international jurisdictions and they offer some additional options in regulating wagering inducements, e.g. Denmark regulates how terms and conditions must be presented; some jurisdictions require pre- approval of all gambling advertising material by the regulator. . The issue of inducements has attracted significant attention in recent years. Governments and industry have made some progress in providing consumer protection measures; however, it appears that more should be done. . The current situation where each Australian jurisdiction has a different approach is clearly unsatisfactory and confusing for both the wagering industry and consumers. . The fact that most wagering operators are licensed in smaller jurisdictions with a low level of regulation is also problematic. . In Australia, the Commonwealth has the potential to take a more active role in relation to inducements. . Developments in Europe offer some additional options in managing wagering inducements. . Terms and conditions of inducements should be made accessible and easily understood so they can be compared and enable informed choice. . Broadcasting and advertising codes of practice could be expanded to cover the advertising of inducements in more detail. . Complaints resolution processes are important. . The availability of credit or delayed payment of betting accounts is an inducement that has the potential to cause significant harm.

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. Affiliates and loyalty programs of wagering operators are rarely mentioned in regulation or codes of practice. . There are a number of regulatory options available to better manage the provision of wagering inducements.

Limitations of the study

The main limitation of this study was its reliance on secondary data. While use of secondary data was adequate and appropriate to meeting the project requirements, lack of available data on the effects of wagering inducements on betting behaviours limits the implications that can be drawn from this study’s results. Other limitations of this study relate to the short time period available for the policy analysis and audit. While the policy analysis is highly inclusive of numerous jurisdictions and of legislation, regulation, codes and cases relevant to the provision and promotion of wagering inducements, a longer timeframe may have allowed a more detailed analysis. The one month time period for the audit precluded the capturing of any seasonal variations and a truly representative approach. While the results of the audit are accurate for the time period covered, it is not known whether the same results would be obtained in an audit over a longer time period. The rapidly changing nature of inducements during the audit period suggests they may be highly variable over time. The short time frame also did not allow the audit to include any terms and conditions relating to wagering inducements that were contained in the vast volume of general terms and conditions on operator websites. Nevertheless, the audit captured the key attributes of the inducements and enabled an analysis of the main features that have the potential to impact on betting behaviour.

Conclusion

This study is the first known detailed examination of wagering inducements in Australia. The study provided a comprehensive account of how the wagering industry uses inducements to promote its products, the conditions placed on consumers taking up these inducements, how gambling inducements are regulated in Australia and in similar jurisdictions, and a range of policy responses available to governments. This study has therefore contributed foundational information to assist efforts to evaluate, monitor, regulate and respond to the prolific supply and promotion of wagering inducements in ways that best promote responsible gambling, consumer protection and harm minimisation for bettors.

However, the lack of research into wagering inducements currently precludes an evidence-based approach to policy. Empirical research is needed to draw firm conclusions about the actual influence of wagering inducements on the commencement, continuation and intensification of betting, on the maintenance of problem gambling, and on consumer protection when betting. Research that identifies bettors’ responses to different types of inducements and incentives, and for bettors at different levels of risk for gambling problems, is also urgently needed.

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Chapter One: Introduction to the study

1.1 Introduction

The increased proliferation of wagering inducements offered by sports and race betting operators has been part of their broader intensification of wagering marketing. Many Australians report feeling bombarded by wagering marketing, particularly for sports betting (ACMA, 2013). Concerns about its potential to normalise betting, contribute to problem gambling, and expose minors to gambling messages have been raised in several government inquiries (Department of Broadband, Communications and the Digital Economy [DBCDE], 2012; Joint Select Committee on Gambling Reform [JSCGR], 2011, 2013; Select Committee on the Impact of Gambling, 2014). Research has also found substantial community unease about its proliferation, as well as preliminary evidence that exposure to wagering marketing is associated with increased betting participation and betting problems (Hing, Vitartas & Lamont, 2014a; Sproston, Hanley, Brook, Hing & Gainsbury, 2015).

One contentious type of wagering marketing that has recently emerged involves the offering of inducements to bet, such as ‘free’ bets, money-back guarantees, matching deposits, and sign up bonuses for opening a betting account. These wagering inducements represent point-of-sale promotions as they are offered through each operator’s website and mobile betting apps where consumers have an immediate opportunity to purchase. They are also advertised through other digital channels including social media, online advertising banners, direct emails and mobile messaging, as well as through traditional media including television, radio and print. While these inducements can provide interest, entertainment, monetary savings and other benefits for consumers, they may also encourage uptake, continuation and intensification of betting and contribute to betting-related harm. However, very few studies have examined the nature and impacts of gambling inducements, and research specifically examining wagering inducements is all but non-existent.

The increased proliferation of wagering inducements, along with related community concerns, have prompted jurisdictions to consider how best to evaluate, monitor, regulate and respond to them. To formulate appropriate responses, a clear understanding is needed of how these inducements are offered and their intended effects, as well as their likely impacts on the commencement, continuation and intensification of betting. Their implications for consumer protection and harm minimisation in wagering are also critical considerations. This report analyses these issues to inform the Victorian Responsible Gambling Foundation’s response to the use of inducements by the wagering industry.

1.2 Project requirements and research questions

The project requirements were to: . Review the literature on inducements to gamble. . Analyse the current legal status of inducements to gamble in Australian jurisdictions, and in relevant overseas jurisdictions. . Document the ways the gambling industry uses inducements to encourage take up of gambling, continued gambling or intensification of gambling. . Establish processes to allow the foundation to monitor inducements on an ongoing basis.

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Key research questions underpinning this study were: . How does the gambling industry use inducements to promote gambling products? . What conditions does industry place on consumers taking up inducements? . How are inducements currently regulated in Australia and similar jurisdictions?

1.3 Project definition of wagering inducements

No officially recognised definition of wagering inducements exists. The research team therefore developed the following definition for this project based on a review of the marketing inducements literature, as well as an examination of the array of wagering inducements on offer to Australians by major wagering brands.

Project definition of wagering inducements Sports and race betting inducements are typically presented as sales promotions and have the following essential components: . They offer one or more incentives to bet that are additional to what is normally received as part of the core wagering product. . The incentive to bet is offered in conjunction with a specified betting-related activity and/or redeemed in a form that encourages betting. . This incentive aims to trigger one or more of the following consumer responses: - induce an immediate sale or move the sale forward - retain existing customers by matching or bettering competitors’ incentives - prompt brand switching from competitors to the promoted brand - increase or intensify purchasing - encourage future purchasing - increase the customer base (number of account holders) - encourage usage of particular betting channels (e.g. smartphone, tablet) - encourage betting on a particular event and/or - encourage betting during particular time periods.

1.4 Overview of the study’s methodology

This study was conducted over seven weeks (4 May to 25 June 2015) and involved four main stages of research:

. Stage One involved a literature review to contextualise the study and to examine the existing Australian and international evidence in relation to the project’s research questions.

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. Stage Two involved a policy analysis to examine the laws relating to inducements across Australian jurisdictions and relevant international comparisons, along with commentary on the implementation of these laws and their effectiveness. . Stage Three entailed an analysis of sports and race betting inducements. An audit of all inducements offered by 30 major wagering brands was conducted, including by 18 operators licensed in Australia and 12 of the most popular offshore operators that accept bets from Australians in AU$. All inducements offered on these operators’ websites were audited twice (at the beginning and end of a three week period: 8th-28th May 2015) to maximise the comprehensiveness of the audit, and to accommodate short term variations. One offshore brand’s website became unavailable during the audit period, due to maintenance, and a replacement brand was selected for the second, end of period count. The replacement brand had no inducements at that time.2 The audit documented the key attributes of these inducements in a customised database, and analysed the results to produce summary statistics. . Stage Four involved the establishment of systems and processes to allow the foundation to continue to monitor inducements offered by wagering operators. The customised database was developed in Access and an accompanying manual was developed in order to enable comparable audits to be conducted and analysed in subsequent monitoring exercises.

1.5 Scope of the study

In addition to methodological restrictions on the scope of this study, other limitations applied. The most important of these related to the range of wagering inducements examined. The Stage Three audit included the following types of sports and race betting inducements: sign up bonuses, refer a friend offers, happy hour and similar offers, mobile betting offers, multi bet offers, refund/stake back offers, matching stakes/deposits, winnings paid for losing bets, bonus odds, bonus winnings, free bets, reduced commission, cash rebates, and competitions where the payout is in bonus bets. The audit was restricted to inducements advertised on operator websites and able to be viewed without opening an account.3 Some types of wagering inducements were not included in the audit because they tend not to be promoted on operator websites and we assume they are directly targeted at individuals, via email or within their account pages, and the terms/extent of rewards is dependent on expenditure. These included loyalty programs, provision of credit for betting, and affiliate programs. These types of inducements are discussed in the literature review and policy analysis, but are not included in the audit.

1.6 Structure of this report

This report is divided into five chapters. Chapter Two contains the literature review, while Chapter Three contains the policy analysis. Chapter Four presents the results of the audit, before Chapter Five provides a discussion and conclusion. The audit database and accompanying manual are provided separately to this report.

2 As the replacement brand was not included in the first count and had no inducements on its website during the second count, 30 brands, rather than 31, are referred to throughout this report. 3 Wagering inducements publicly advertised through additional media are also displayed on operator websites. Thus, the audit captured all publicly advertised inducements offered by the selected operators during the audit period.

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Chapter Two: Literature review

2.1 Introduction

This chapter reviews Australian and international literature to provide relevant context for this study and its research questions. It commences with an overview of wagering in Australia in terms of industry structure, products, betting channels and uptake. It then provides a synopsis of how wagering is marketed in Australia, including media used, marketing investments, target markets and key messages conveyed. The chapter then focuses on marketing inducements, describing their purpose, characteristics, types and consumer responses. The impacts of marketing inducements for other potentially addictive products are also considered. Inducements for gambling and for wagering are then described and the research evidence on their influence on gambling/betting behaviour and on gambling problems is reviewed.

2.2 Overview of sports and race betting in Australia

Wagering encompasses all legal forms of gambling on racing and sporting events. Race betting comprises betting on the outcome of horse and greyhound races, while sports betting comprises wagering on approved types of local, national and international sporting activities (Queensland Government, 2014). This section provides some context for the study by describing the Australian wagering industry’s structure in terms of operators, products and betting channels.

2.2.1 Wagering operators

Several types of wagering operators are licensed to accept bets in Australia:

. Totalisator Agency Boards (TABs) are exclusively licensed in each jurisdiction to operate totalisator (or parimutuel) betting. TABs operate through stand-alone retail agencies, as well as agencies within hotels, clubs and casinos, and also through non-exclusive telephone and Internet betting services (Productivity Commission, 2010; Queensland Government, 2014). . Corporate bookmakers are fully incorporated and often listed companies licensed to offer a wide range of betting products by telephone and Internet 24/7 (Productivity Commission 2010). Since the first licensed Australian online sports bookmaker (Centrebet) commenced operations in 1996, this sector has shown enormous growth, with about 20 online bookmakers now licensed in Australia. . On-course bookmakers are licensed in each jurisdiction to operate at racecourses and typically offer simple fixed odds bets such as win and place bets. Punters can wager any amount above a specified minimum and will receive pay-outs based on the bookmaker’s odds at the time of placing the bet (Productivity Commission, 2010; Queensland Government, 2014). . Betting exchanges create a marketplace for punters, similar to the stock exchange. Bettors post potential wagers, odds and stake sizes on specific events which other individuals may accept (Gainsbury, 2012; Productivity Commission, 2010). Betfair is the largest betting exchange, comprising about 90% of the betting exchange market (Church-Sanders, 2011).

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2.2.2 Betting odds

Betting odds are calculated using one of two main systems. Fixed odds betting is where payouts are based on the bookmaker’s odds at the time of placing the bet, regardless of whether these odds are later revised by the bookmaker (Queensland Government, 2014). Fixed odds betting has been increasing with the growth in popularity of corporate bookmaking services. Parimutuel betting is operated exclusively by the TAB. To calculate payouts, the TAB deducts a percentage of total units wagered (for costs including tax), with the remainder distributed as prizes based on multiples of the unit wagered by each bettor (Queensland Government, 2014).

2.2.3 Types of bets

Bet types offered have expanded beyond simple win and place bets to now include a wide variety of more innovative betting options, including the following that are relevant to this report:

. Exotic bets are fixed odds bets that can be placed either before or during an event. They are placed on individual events and contingencies occurring within the game, such as who will score first or the score at half-time (Church-Sanders, 2011; Gainsbury, 2012). . Micro-bets are characterised by a high frequency of events, a restricted number of potential outcomes and small timeframes (under five minutes) between bets being accepted and the outcome being determined. Examples include betting on the outcome of the next ball in a cricket match or the next point in a tennis match (DBCDE, 2012). Micro-bets are a form of in- play betting. . In-play betting involves betting on real time propositions about outcomes within the game, such as which team will score next or whether a golfer will sink the next putt. In-play betting can also refer to bets placed after the game has commenced (Church-Sanders, 2011; Gainsbury, 2012). . Multi bets are a type of bet where the bettor combines a series of single bets into one bet with the odds multiplying with each additional bet. Each time a leg is successful, the dividend and original bet from that leg are bet on the next leg. The more legs in a multi bet the larger the dividend will be (http://bet-types.com.au/multi-bet/). Some multi bets allow up to 25 legs.

2.2.4 Betting channels

Betting channels available for most bet types include retail outlets (TAB outlets, both stand-alone and in gambling venues), on-course bookmakers, telephone and online. An exception is that in-play bets (those placed after commencement of an event) can only be placed in person at a venue or by telephone (DBCDE, 2012). However, a recent development is ‘click to call’ technology which allows bettors to place in-play bets through their computer or mobile phone. Bettors select their bets online, use the click to call button to connect to a telephone operator and confirm their bet with another click. They do not need to speak to the telephone operator. This system was introduced by williamhill.com.au and tomwaterhouse.com.au in May 2015. At the time of writing, these operators were offering matched bonuses for the first click to call bet made on any live market.

Uptake of online betting channels continues to gain popularity. Estimates in 2013 were that 40% of Australian wagering was conducted online, 40-45% at off-course agencies, and only a small proportion by telephone (JSCGR, 2013). By 2014, 50% of all wagering industry revenue was expected to be derived through online channels, and anticipated to rise to 67% by 2023 (Morgan Stanley, 2014).

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An Australian household survey in 2012 found that 63% of wagering customers had online accounts (CLSA, 2013). A recent Australian survey, weighted to be nationally representative, found that approximately 55% of Internet gamblers used only online channels for sports betting and 39% for race betting (Hing, Gainsbury et al., 2014).

2.2.5 Wagering participation and expenditure

Race wagering is now the third most popular gambling activity in Australia after lotteries and scratch tickets (Hing, Gainsbury et al., 2014). However, a comparison between the most recent nationally representative gambling survey (Hing, Gainsbury et al., 2014) and the only previous one (Productivity Commission, 1999) reveals that participation in race wagering has declined over the last decade or so, from 24% of the adult population in 1999 to 22% in 2012. Nevertheless, this rate of decline is less than for all other forms of gambling, except sports betting. Sports betting is the only gambling form to have attracted increased participation in Australia and it is now the fourth most popular activity with an annual participation rate of 13% of adults (up from 6% in 1999). Prevalence studies have found that both sports and race bettors tend to be young adult males aged 18–34 years (Billi, Stone, Marden & Yeung, 2014; Hare, 2009; Humphreys & Perez, 2012; Sproston, Hing & Palankay, 2010; Wardle & Seabury, 2012).

Race betting attracts substantially higher expenditure ($2.8 billion in 2012-13) than sports betting ($484.8 million), according to the most recent official Australian statistics (Queensland Government, 2014). Reflecting trends in participation rates, race betting expenditure has marginally declined over the last decade; however, real sports betting expenditure (adjusted for inflation) has increased nearly five-fold in the last 10 years (Queensland Government, 2014). This revenue growth has been achieved not just through greater numbers of Australians participating in sports betting, but also an increase in per capita expenditure. For example, real per capita expenditure on sports betting in Victoria has increased from $3.19 in 1999 to $36.09 in 2012-13; at the same time, real per capita racing expenditure declined from $190.82 to $138.27 (Queensland Government, 2014).

Wagering expenditure is concentrated through the TAB, which accounted for 79.4% of all racing expenditure and 64.8% of all sports betting expenditure in Australia in 2012-13 (Queensland Government, 2014). About one-third (33.8%) of sports betting expenditure is through fixed odds betting with bookmakers, and this is a growing sector. Thus, the growth of sports betting at the cost of race betting, and the increased popularity of fixed odds betting through corporate bookmakers, are two recent trends in the wagering sector. Internet and mobile technologies have been key drivers of growth, enabling expansion of services across national borders by multinational corporate bookmakers, while providing advantages such as easy access, convenience, anonymity and better prices for consumers (Gainsbury, Wood, Russell, Hing & Blaszczynski, 2012; Hing, Vitartas et al, 2014a; Sproston et al., 2015). Further adoption of mobile betting through smartphones and tablets, and product innovations such as new sport markets, bet types, and offers are predicted to drive the continued growth of Australian online wagering at 10-15% per annum (Morgan Stanley, 2014).

Regulated Australian wagering sites (as well as lotteries) are exempt from the Commonwealth Interactive Gambling Act 2001 which prohibits the supply of other forms of online gambling to Australian residents. However, Australians have easy access to illegal offshore wagering sites. In addition to legal wagering, Australians are estimated to have lost $611 million in 2011 to offshore online sports betting sites, a substantial increase from the $264 million spent in 2006 (Global Betting and Gaming Consultants [GBGC], 2011). Illegal offshore wagering is estimated to be about 30% of the size of the online wagering market (Morgan Stanley, 2014), with punters attracted by the ability to place in-play bets and, sometimes, more competitive prices (Hing, Gainsbury et al., 2014).

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Wagering is particularly popular in Victoria, attracting the largest sports betting expenditure and the second largest race betting expenditure in 2012-13 compared to other Australian jurisdictions (Queensland Government, 2014). This partly reflects the popularity of signature events such as the Melbourne Cup, and of Australian Rules Football (AFL). Together, the AFL and the National Rugby League (NRL) attract approximately 50% of all sports wagering in Australia, with this expenditure predicted to double by 2016 (Deloitte, 2012). In 2011, Australian wagering operators made profits of $15.5 million on AFL betting and $13.4 million on NRL betting after deducting marketing and other direct costs (Deloitte, 2012). As well as the AFL and NRL, Australians can place bets on a wide variety of Australian and international sporting fixtures, as well as local and international racing events.

2.3 Marketing of sports and race betting

Increased offering of wagering inducements in recent years has been part of a broader intensification of advertising and promotions for wagering products. A representative survey found that two-thirds of Australians have noticed recent increased advertising for betting agencies (ACMA, 2013). Numerous factors have heightened competition in the Australian wagering market, prompting betting agencies to escalate their marketing. While demand for wagering products, especially for sports betting, has been stimulated by widespread uptake of faster Internet and mobile technologies and increased race and sports coverage, the deregulation of online wagering has also greatly increased the number of operators competing for the wagering dollar (Hing, Vitartas, Lamont & Fink, 2014b). A major catalyst to increased competition was a landmark High Court decision in 2008 which deemed it unconstitutional to prohibit bookmakers operating in one jurisdiction from advertising in another. This decision prompted strong interest in the Australian betting market from international wagering operators, heralding the subsequent entry of numerous corporate bookmakers into the Australian market (Horn, 2011; Nettleton, 2013). A proliferation of wagering marketing has ensued as new entrants have attempted to gain brand recognition and market share. A wide range of advertising and promotional techniques are used, including a variety of inducements for wagering which are promoted through numerous digital and traditional media channels.

This section provides an overview of how wagering is marketed in Australia to provide further context for the analysis of wagering inducements presented later in this report. This overview draws heavily on a study recently conducted by some of the present authors and which conducted the most detailed examination of wagering advertising in Australia to date (Sproston et al., 2015). It used a mixed- methods approach, comprising case studies of advertising by six major wagering brands (TAB, Tattsbet, Sportsbet, Sportingbet, Tom Waterhouse, Betfair), media monitoring in traditional and social media, content analysis of advertisements, observational studies of live and televised wagering events, 10 focus groups with various research audiences, and a survey of 3,200 respondents from six different research segments. Key findings are summarised below, supplemented with other research findings where available. Research specifically into wagering inducements is covered in a later section in this chapter.

2.3.1 Media used for wagering marketing

Sproston et al. (2015) reported that all wagering operators they studied used multi-channel marketing. However, advertising on free-to-air and subscription television dominated advertising spend, and was reflected in being the top-of-mind medium for wagering marketing amongst focus group and survey respondents. Of all types of wagering advertising in traditional media, survey respondents reported greatest exposure over the past 12 months to TV advertisements for betting companies, and

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promotions for betting companies during sports and race broadcasts. Outdoor signage, radio and print media were also used, but more frequently by brands with physical retail outlets. Corporate bookmakers providing only online and telephone betting services relied mostly on television and digital media for their advertising.

All case study brands had digital marketing strategies, and focus group participants reported receiving wagering marketing messages through social media, online advertising banners, websites, direct emails and mobile messaging. Nearly six in ten survey respondents had seen online sports betting advertisements in the previous 12 months, four in ten had received emails from sports betting operators, and two in ten had received mobile messages. Similar figures were found for digital race betting marketing. Active and increasing use of digital advertising channels by wagering operators has also been reported by bettors in other research (Hing, Cherney et al, 2014b). An audit of social media use by Australian gambling operators found that betting agencies have the highest social media presence of all gambling operator types (Gainsbury, Delfabbro, King & Hing, 2015).

2.3.2 Investment in wagering marketing

The six case study wagering brands in Sproston et al.’s study (2015) each reported marketing and advertising expenses of $10-$40 million during 2012-13. An audit of their wagering advertising during a 10 week period from 30 August to 7 November 2014 found that they collectively aired approximately 13,000 advertising events just on free-to-air television, national radio and in major national press titles, costing a total of $12 million. Advertising was closely tied to upcoming events and peaked prior to major sporting events and racing carnivals. Thus, advertisements were continually refreshed, with the number of discrete advertisements per brand ranging from 103 to 870 during the 12 months to April 2014. Similar marketing budgets were reported by Morgan Stanley (2014) for other operators in 2014: $49 million for the Australian division of William Hill, and almost $20 million each for Bet365 and Ladbrokes.

These substantial advertising expenditures reflect intense competition in the wagering industry and that wagering operators require substantial financial reserves to support competitive advertising strategies, including continual refreshment of message content (Sproston et al., 2015). Renewing message content is necessary for advertisements which relate to promotional inducements as these can change frequently. Websites and other electronic media are particularly suited to promoting wagering inducements as changes to content can be made quickly and cheaply. However, it is noteworthy that about one-fifth of the most expensive advertisements amongst six major brands were for promotional inducements relating to specific bets (Sproston et al., 2015). The media monitoring of wagering marketing conducted by Sproston et al. (2015) did not include online advertisements and direct marketing through email and SMS, so the exact extent of digital advertising of wagering inducements remains unclear. However, it is evident that they are prominently displayed on operator websites and mobile betting apps, and bettors report receiving a plethora of direct electronic marketing for inducements once they open a betting account (Hing, Cherney et al., 2014b).

2.3.3 Sponsored advertising and promotion of wagering marketing

Along with extensive commercial and digital advertising, as described above, sponsorship arrangements have provided wagering operators with opportunities to use a wide range of other marketing techniques. Studies of embedded promotions during live and televised sporting events, and during sports entertainment shows, have documented a vast array of fixed, dynamic, integrated and commercial break advertising largely tied to the wagering sponsorship of sporting teams, events and

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stadiums (Hing, Vitartas et al, 2014a; Milner, Hing, Vitartas & Lamont, 2013, Sproston et al., 2015; Thomas, Lewis, Duong & McLeod, 2012a). Focus group participants in Sproston et al.’s study (2015) particularly noted the heavy use of promotional inducements, presenting betting odds in a similar format to news broadcasts, appeals to sports team loyalty, and use of celebrities to endorse brands. All six case study brands in that research utilised sponsorship, with some spreading investments across several racing and sporting codes, while others concentrated investments in fewer codes.

Qualitative research has indicated that sports viewers feel inundated by this marketing, while survey research shows high levels of exposure amongst television audiences (ACMA, 2013; Hing, Vitartas et al, 2014a; Sproston et al., 2015). A representative survey found that around 80% of Australians support a reduction in wagering advertising during live sports broadcasts and restrictions on the time of day that betting advertising can be shown in order to shield minors (ACMA, 2013). However, this survey was conducted before broadcasting codes of practice were changed in August 2013 to curtail the promotion of live betting odds embedded into sports broadcasts. The advertising monitoring firm Ebiquity reported that gambling advertising has increased 251% since this ban (Schetzer, 2014), reflecting that wagering operators have increased their paid advertising as one way of compensating for reduced opportunities to promote exotic, micro and other in-play bets as part of in-match commentary.

2.3.4 Target markets for wagering marketing

The major market for wagering is young adult males who themselves report feeling targeted by this advertising (Hing, Vitartas et al., 2014a; Sproston et al., 2015; Thomas, Lewis, McLeod & Haycock, 2012b). Wagering advertisements often include attractive females, sexualised images and language, images of betting in bars and other male social settings, and engagement in betting by young men (Sproston et al., 2015). Milner et al. (2013) note the aspirational identities portrayed through wagering advertising, reflecting the power of brands as social symbols. While wagering brands differ in their appeals and personalities, their advertising messages variously convey that using the brand will enhance the bettor’s power, success, wealth, male bonding, and attractiveness to women (Sproston et al., 2015). A noticeable shift has been to portray betting as an activity engaged in by well-groomed, professional, confident, tech-savvy young males, in contrast to its earlier associations with older working-class men in dingy retail betting outlets (Milner et al., 2013). Research has also found a widespread perception that wagering advertisements are targeted at young people as future customers through normalising gambling as an everyday activity and by building their familiarity with betting products and wagering brands (Lamont, Hing & Vitartas, in press; Sproston et al., 2015).

2.3.5 Major messages conveyed in wagering marketing

Wagering marketing is heavily brand focused. Sproston et al.’s (2015) content analyses of advertisements revealed that the brand’s value for money was commonly emphasised through promotional inducements such as ‘free’ bets and cash back offers, along with the best odds/pay-outs. Ease of access to betting at any time (online or through mobile apps) was also frequently stressed. Focus group participants recognised that constant branding subconsciously builds brand trust, brand recognition, brand image and brand engagement, which may be further enhanced through use of celebrities and linking brands with favourite teams. This aligns with findings by Ebiquity that televised wagering advertisements have shifted over recent years from a focus on practical/retail themes, to brand engagement and emotional persuasion. This was borne out in survey results: respondents with higher exposure to wagering marketing reported higher brand recall and greater influence of marketing on brand choice, suggesting that repeated exposure builds brand preference.

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While some wagering advertisements analysed in Sproston et al.’s study (2015) were factual and direct, others were fast-paced, upbeat and humorous. Ease of access, winning, fun, excitement, low risk, male bonding, power, success, wealth, sexual attractiveness, and value for money were dominant themes, with themes of winning particularly noticed by adolescents and problem gamblers. Similar messages were found in an audit of social media posts by Australian wagering operators: that betting is glamorous, exciting, fun and action-packed and is quick and easy to access, with messages leveraging off sports fans’ interests and team loyalties, emphasising winning, and encouraging brand engagement (Gainsbury, Delfabbro et al., 2015). These findings generally align with previous research noting that gambling advertising utilises stimulating colours, sophisticated graphics, humour and upbeat music to depict gambling in an overwhelmingly positive light and as a fun, exciting, glamorous lifestyle promising social and financial success (Derevensky, Sklar Gupta & Messerlian, 2010; Lamont, Hing & Gainsbury, 2011; Milner et al., 2013; McMullan, 2011; McMullan & Miller, 2008; McMullan, Miller & Perrier, 2012; Monaghan, Derevensy & Sklar, 2008).

However, advertising may not always elicit the desired response. Most survey respondents in Sproston et al.’s study (2015) reported negative responses (e.g. sceptical, bored, annoyed) rather than positive responses (e.g. excitement, hopefulness) to wagering advertising, in alignment with other research findings that sports betting marketing in particular can diminish the pleasure of watching sport (ACMA, 2013; Hing, Vitartas et al., 2014a; Lamont, Hing et al., in press; McMullan, 2011). Mixed cognitive responses were found, with the majority of survey respondents having both positive (e.g. you could be a winner) and negative (e.g. I don’t care) responses. The researchers concluded that this may indicate that the message is understood but does not necessarily influence behaviour. Research into the influence of wagering marketing on betting behaviour is reviewed later in this chapter.

Having provided some background on the Australian wagering industry and its marketing, this review now turns specifically to marketing inducements, including their purpose, characteristics and influence on consumers.

2.4 Marketing inducements

2.4.1 Definition and purpose

The purpose of any inducement is to change behavior through changing people’s judgments and actions (Emanuel, Currie & Herman, 2005). An inducement to purchase has been described as an advantage or benefit aimed at precipitating the action of buying (Gale Group, 2008). In marketing theory, activities which provide inducements to enhance sales are categorised as sales promotions and also referred to as promotional inducements. Beem and Shaffer (1981) explain that three distinct modes of marketing are: 1) the basic offer mode, which is the core product that meets the needs of target customers; 2) the persuasive communications mode, which stimulates consumer wants through advertising and other forms of communication; and 3) the promotional inducement mode, which triggers customer action desired by marketers. Thus, promotional inducements are recognised as constituting specific offers that provide additional incentives to purchase beyond those routinely provided by the core product.

Promotional inducements (in general) typically have three essential components. First, they offer one or more inducements to purchase, that is an additional incentive beyond what is normally received. Second, this incentive aims to induce an immediate sale or to move the sale forward. Third, sales promotions are non-routine offers and are usually of short-term duration. Promotional inducements therefore provide a temporary shift in stimuli aimed at prompting an immediate shift in purchasing behavior through providing triggers to consumer action (Van Waterschoot & Van den Bulte, 1992).

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Through use of these triggers, or inducements, sales promotions attempt to overcome consumer inertia due to psychological, physical, risk or competitive barriers (Ailloni-Charas, 1984; Beem & Shaffer, 1981; Rossiter & Percy, 1987). They may also change how people balance benefits and risks (Emanuel et al., 2005), including those associated with purchasing and consuming the product.

These generic characteristics of sales promotions were drawn upon to develop the definition of wagering inducements presented in Chapter One. Two main adjustments were made. While many definitions of sales promotions emphasise that they are short-term offers, our review of wagering inducements revealed that many are offered continuously (e.g. sign up bonuses, refer a friend bonuses, provision of credit for betting, affiliate referral programs). Thus, our definition does not restrict wagering inducements only to short-term offers, because to do so would exclude many types of inducements which have been the subject of criticism and concern. Additionally, our definition unpacks the general goal of promotional inducements (to trigger an immediate or expedited sale), to recognise that wagering inducements can also aim to increase the number of account holders, retain existing account holders, prompt brand switching, increase and intensify purchasing, encourage future purchasing, and encourage betting on specific events, during particular time periods and/or using particular betting channels. While the ultimate goal is to increase sales, wagering inducements aim for a variety of consumer responses which should lead to additional sales.

2.4.2 Types of inducements

While types of wagering inducements are examined later, generic examples of inducements used in sales promotions include price cuts, cash back offers, extra product, higher quality product, extended warranties, loyalty points, free delivery, free gifts, free samples, product trials, and entry into prize draws. Inducements may temporarily enhance the product offered, its price or its accessibility, with the offer communicated through advertising, publicity and/or personal selling. As such, sales promotions may pervade all elements of the classic marketing mix of product, price, distribution and communications (Van Waterschoot & Van den Bulte, 1992).

Chandon, Wansink and Laurent (2000) propose that sales promotions can provide consumers with utilitarian benefits, including monetary savings, enhanced product quality and/or shopping convenience; and hedonic benefits such as value-expression, entertainment and/or product exploration. While many wagering inducements offer monetary savings to customers (although restrictive terms and conditions can limit or negate these), little is known about the hedonic benefits consumers may derive from them. Raghubir, Inman and Grande (2004) advanced Chandon et al.’s model (2000) to identify three distinct consumer benefits of sales promotions: 1) an economic benefit of saving money and the time and effort to make a decision; 2) an information basis that consumers use as a cue to purchase or a basis to draw inferences about the product; and 3) an affective element that impacts how consumers feel about their purchasing transaction. Individual wagering inducements might provide one or all of these consumer benefits.

2.4.3 Consumer responses to inducements

Consumer responses to sales promotions can include brand switching, purchase acceleration, stockpiling, product trial, repeat and additional spending (Raghubir et al., 2004). Evidence suggests that different types of promotions tend to elicit different responses. For example, Shi, Cheung and Prendergast (2005) found that monetary incentives were considered most effective in inducing purchase acceleration, stockpiling and spending more, while product demonstrations were felt to be mainly effective in encouraging product trial. In contrast, sweepstakes and games were perceived as

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relatively ineffective. From a review of related research, Blattberg, Briesch and Fox (1995) concluded that price promotions (temporary price discounts) substantially increase short-term sales, but lower consumers’ reference point with increased frequency, and therefore erode brand equity and produce lower sales spikes over time. They also concluded that price promotions increase store traffic and sales of complementary items.

Responses to sales promotions are also likely to vary depending on the nature of the product or service being promoted. One study of 175 large-scale grocery sales promotions found that sales increases were primarily from existing customers (Ehrenberg, Hammond & Goodhardt, 1994). However, whether this finding holds true for non-essential purchases such as betting products is unclear. While most wagering inducements target existing customers in the sense that consumers need to have opened an account with that operator to access the inducement, operators also spend considerable amounts to acquire new customers. For example, William Hill (2014) reported in February 2014 that it was spending an average of £299 ($561) to sign up each new customer to one of its Australian sites (at the time), Sportingbet, Centrebet or Tom Waterhouse.

Additionally, consumer responses to sales promotions may differ for potentially addictive products. As noted earlier, wagering inducements can be considered as point-of-sale promotions as they are offered where consumers have an immediate opportunity to purchase (on betting websites and mobile apps). In relation to alcohol, growing evidence suggests that point-of-sale promotions are positively associated with drinking and contribute to nurturing a pro-alcohol environment by offering incentives for consumers to increase purchase quantities (Jones, Barrie, Robinson, Allsop & Chikritzhs, 2012). Higher binge-drinking rates amongst university students in the United States (US) have been correlated with point-of-sale alcohol advertising in bottle shops, including promotions offering volume discounts, price specials or coupons (Kuo, Wechsler, Greenberg & Lee, 2003). An Australian study found that point-of-sale promotions involving price or volume discounts have a strong impact on youth and especially encourage increased volumes to be purchased (Jones & Smith, 2011). Overall, however, surprisingly little research has been conducted into the impacts of point-of-sale promotional inducements for alcohol, even though research into other types of alcohol advertising is extensive. Thus, promotional inducements are an under-studied area in both alcohol and gambling research.

More research has been conducted into point-of-sale tobacco promotions, which have been found to encourage product trial and to increase purchase volume (Gilpin, Pierce & Rosbrook, 1997). In the UK, smoking status has been correlated with tobacco point-of-sale promotions, including free gifts with purchases and discount pricing (MacFadyen, Hastings & MacKintosh, 2001). In Australia, adolescents exposed to tobacco point-of-sale marketing were found to have higher recall of cigarette brands, and weaker intentions to not smoke (Wakefield, Germain, Durkin & Henriksen, 2006). Further, adolescents exposed to examples of point-of-sale tobacco advertising were more likely than those exposed only to a cigarette pack for the same brand to report positive brand user imagery (Donovan, Jancy & Jones, 2002). Point-of-sale tobacco advertising also provides purchase cues to people intending or trying to quit (Lavack & Toth, 2006). An Australian study found that 25% of adult smokers reported impulse purchasing and a third of recent ex-smokers reported urges to start smoking after seeing tobacco displayed (Slater, Chaloupka, Wakefield , Johnston & O’ Malley (2007). A systematic review concluded that there was ample justification for banning point-of-sale tobacco displays (Paynter & Edwards, 2009) which has now occurred in Australia. However, caution is needed in extending findings from tobacco research to gambling, given that tobacco is addictive for all users. While research into the influence of point-of-sale tobacco promotions on non-smokers may have some parallels to gambling, research involving (addicted) smokers provides insights that may apply only to problem/pathological gamblers and those in earlier stages of gambling addiction. Despite these cautions, the general direction of research into promotional inducements for alcohol and tobacco is clear: they are associated with increased product trial, increased purchase volume, impulse

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purchasing, stronger brand recall, increased purchase intention amongst youth, and heightened urges amongst addicted and ex-users.

2.4.4 Benefits of marketing inducements for sellers

Real or anticipated advertising restrictions have been catalysts for increased use of point-of-sale promotional inducements by the tobacco and alcohol industries (Howard Flora, Schleicher & Gonzalez, 2004, Lavack & Toth, 2006). Point-of-sale promotions are advantageous to sellers because they are subject to fewer regulatory controls and oversight than other forms of advertising, and the adoption of voluntary regulations is rare (Howard et al., 2004). This also appears to be the case for wagering inducements, as discussed in Chapter Three. With tighter restrictions on gambling advertising in traditional media and on in-match betting promotions, wagering operators are increasingly embracing digital advertising (Gainsbury, Delfabbro et al., 2015; Gardner, 2013; Sproston et al., 2015), including those for promotional inducements which can be accessed through betting websites and apps.

Point-of-sale promotions are also advantageous for retailers because they target customers at the place where they can actually buy the product (Howard et al., 2004), thereby increasing the likelihood of impulse purchasing (Donovan et al., 2002). Wagering inducements also provide this advantage for operators, but little is known about their influence on impulse betting. Research has found that bettors shop around for the best bonuses by purposefully comparing offers on wagering websites and apps (Hing, Cherney et al., 2014b; Hing, Gainsbury et al., 2014). However, no research has investigated whether and to what extent incidental exposure to these inducements prompts unplanned purchasing. One study involving a convenience sample of 544 Australian sports bettors found that 30.3% of their sports bets were reportedly made on impulse before match commencement, and 8.5% of bets were made on impulse during a match (Hing, Lamont, Vitartas & Fink, 2015b). However, the role of promotional inducements in triggering these impulse bets was not investigated.

Not all sales promotions are beneficial for retailers. From the seller’s perspective, the overall profitability of sales promotions is increased only if consumers respond by switching to the promoted brand, or by buying more of the promoted brand than they would have done without the promotion (McAlister, 1985). This includes purchases by new users. Conversely, the profitability of sales promotions is decreased if consumers do not respond to promotions, or respond by purchasing a branded product that they would have chosen anyway. Thus, marketing inducements aim to attract new users, prompt brand switching and increase purchasing to enhance the seller’s profitability.

From the perspective of the consumer, overall consumption does not change if only brand switching occurs in response to a promotion. However, overall consumption increases where an inducement increases an individual’s purchasing. For addictive products such as gambling, this increased consumption can have harmful effects if it moves gamblers along the gambling continuum to higher levels of risk and associated problems. Thus, it is critical to know which types of inducements increase overall gambling consumption and their potential for shifting gamblers to higher levels of gambling risk. This is a critical area for future research.

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2.5 How the gambling industry uses inducements to promote gambling

2.5.1 Types of gambling incentives offered

In its study of gambling inducements offered by land-based venues, the Responsible Gambling Council (RGC, 2013) identified several types of incentives which may be offered. These include cash, free gambling credits, and free or discounted accommodation, food, beverages, merchandise and entertainment (both within and external to the venue), as well as airfares or other transport to and from the venue.

2.5.2 How gambling incentives are obtained

Three ways in which gamblers can obtain these incentives in land-based gambling venues are through loyalty programs, comps and promotions (RGC, 2013), with each described below. Of note is that loyalty programs and comps reward past gambling behaviour and are given to the most loyal customers; conversely, promotions aim to influence future behaviour and therefore can target the least loyal customers to encourage venue visitation and expenditure (RGC, 2013). Because of this, promotional offers are considered the most important type of inducement for venues (RGC, 2013).

Gambling loyalty programs

The RGC (2013) explains that loyalty programs are very common in land-based gambling venues and seek to both increase customer expenditure and maintain the current customer base through heightening venue loyalty. Loyalty programs typically award points to patrons based on their gambling activity, and also sometimes based on their food, beverage, entertainment and other venue purchases. Points can then be redeemed for services or merchandise, sometimes including gambling credits, with some programs awarding bonus points for gambling activity above a certain level. Most gambling loyalty programs are tier-based, with higher tiers offering more rewards. Moving up a tier requires the accumulation of a certain number of points, and remaining at that tier usually also requires patrons to continue to earn a minimum number of points during a specified time period. The RGC (2013) notes that, in Canada, gamblers may have to bet up to CA$35,000 to gain second tier level and up to CA$400,000 to gain higher tier status. Membership at the highest tier is often by invitation only, thereby conferring a certain prestige on these members.

Williams, West and Simpson (2012) are highly critical of loyalty programs, particularly in jurisdictions with a single monopolistic gambling provider where, they argue, these programs simply reward people for their amount of gambling so as to induce them to gamble even more. While loyalty programs may be more justifiable as a competitive marketing strategy in jurisdictions with several gambling operators, Williams, West et al. (2012) argue that they are incompatible with encouraging responsible gambling behaviour because they promote further gambling and may help heavy and problem gamblers to reconcile their losses. They are also incompatible with responsible provision of gambling because operators collect and actively respond to knowledge of gamblers’ betting activity by providing increasingly strong inducements for further gambling (Williams, West et al., 2012). Similar concerns were shared by some interviewees in a qualitative study of venue-based responsible gambling measures involving interviews with 36 venue managers, staff and patrons (Hing, 2007). Interviewees criticised loyalty systems for providing undue encouragement to gamble through constantly rewarding the behaviour and for cultivating a community of big gamblers.

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Gambling comps

A second type of reward often offered by land-based gambling venues involves complimentary goods and services, or ‘comps’, which typically increase with money and time spent gambling. Indicators which provide the basis of comps can include loyalty points, theoretical loss, or other variables (RGC, 2013). Low value comps, such as free food and beverages, can be provided to patrons irrespective of their gambling activity; however, high value rewards such as free flights and accommodation are typically reserved for high rollers. Comps are issued in venues by hosts, and also by mail, email, SMS and telephone (RGC, 2013).

Gambling venue promotions

In-venue promotions have been a longstanding feature of gambling operations in Australia and elsewhere. Some in-venue promotions are for rewards club members or venue members only, while others are available to all patrons. The RGC (2013) notes that these promotions aim to enhance frequency of venue visitation, gambling revenue and patrons’ venue experiences. Land-based venue promotions are many and varied, but typical examples include members’ draws to win cash and other prizes, slot tournaments, and special days (ladies days, senior days) with discount pricing and prize draws (RGC, 2013). A qualitative study of club members in Australia (Hing, 2005) found that in-house promotions were criticised as irresponsible because they encouraged patrons to gamble for extended periods while waiting for prize draws, with winners only able to claim prizes if present in the venue.

2.6 How the wagering industry uses inducements to promote gambling

2.6.1 Types of wagering incentives offered

No previous research has systematically examined wagering inducements, but a scan of operator websites indicates that several types of incentives are offered. These include cash (which usually has to be played through before it can be withdrawn), ‘free’ or bonus bets (which may or may not require a matching bet), improved odds and winnings, payment or refunds for non-winning bets, reduced commission on bets, loyalty points, prizes such as merchandise, and awards. Chapter Four presents results from our audit of 30 wagering operator websites where the types of incentives they offer are analysed.

2.6.2 How wagering incentives are obtained

Similarly to land-based gambling venue incentives, wagering inducements can be obtained via loyalty programs, comps and promotions, as described below. Additionally, individuals may be incentivised to bet through the offer of credit. Affiliate programs incentivise the referral of customers to a wagering operator.

Wagering loyalty programs

No peer review publications have examined wagering loyalty programs, but some basic information has been sourced from betting and betting information sites. Gamblingsites.com describes betting loyalty programs as widely available and aimed at encouraging bettors to continue using a site by providing on-going rewards to regular customers, including VIPs and high rollers as well as more

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infrequent and lower stakes bettors. Wagering loyalty programs typically reward customers based on amounts wagered, or sometimes lost, with rewards comprising additional bonuses, cash back or ‘free’ bets. Gamblingsites.com explains that cash-back rewards are typically given at the end of a specified period (usually one month), with customers receiving back a percentage of their month’s losses, which they may or may not have to bet through before withdrawing from their betting account. Some programs provide a cash reward based on amount staked and also sometimes factor in the odds of these wagers. Together, these are converted to points and redeemed as a bonus at the end of each month. Instead of cash bonuses, which may be able to be withdrawn without any betting requirements, some sites reward bettors with ‘free’ bets. For example, points earned in the TAB Rewards program can be used for free bets, as well as tickets to sporting events, racing hospitality, merchandise, gift cards and competition entries. Crownbet’s loyalty program is a five-tier program offered in association with Crown Resorts that enables redemption of loyalty points from Crown’s restaurants, hotels, retail precincts and gambling products. However, loyalty programs may be less commonly offered by online wagering operators as they derive less utility from them compared to land-based venues, given that they already have details of their account holders to inform their marketing.

Wagering comps

The provision of comps for race and sports bets appears to be less common and less generous than for other types of gambling. Land-based venues operate race and sports books on a commission basis as agents for the wagering operator. Thus, their profit margins on wagering activity do not justify the comping of bettors in the same way as for slots or table games bettors. Some casinos therefore use a club or loyalty card system so that bettors earn points based on their betting volume, although points earned are typically less than for other gambling forms (Nagel, 2011). It is unclear if and how comping is offered by online wagering operators, although a review of some betting websites indicates that free hospitality at major sporting events and other rewards may be offered to big punters. Other wagering comps appear to be tied to loyalty programs, such as the discounted hotel rates and free parking offered to all members of Crownbet’s Signature Club, regardless of betting activity.

Wagering promotions

As explained in Chapter Four, our audit of 30 wagering operator websites identified the following types of wagering promotions:4

. Sign up offers . Refer a friend offers . Refund/stake back offers . Winnings paid even if you don't win (e.g. protest payouts, in extra time) . Multi bet offers . Bonus or better odds (not including happy hour type inducements included below) . Bonus or better winnings . Happy hour or similar offers . Mobile betting offers

4 Loyalty programs were not included in our audit as very few wagering operators promote them on their websites. It may be that customers are advised of loyalty programs after they have opened an account, e.g. through direct emails. As such, loyalty programs were deemed out of scope for the audit element of the project which is restricted to inducements presented on operator websites (without opening an account). For the same reason, provision of credit for betting and affiliate referral programs were not included in the audit.

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. Competitions (where payout is in bonus bets) . Match (or partially match) the stake/deposit (with bonus bets) . Reduced commission . ‘Free’ bets (for selected punters) . Other ‘free’ bets (e.g. predict the outcome of a match) . Cash rebates (no play through required) One classification of the above types of promotions is based on whether they are aimed at recruiting new customers to register for an account or aimed at retaining existing customers as active account- holders (Weibe, 2008). Sign up bonuses and refer-a friend bonuses are clearly registration strategies. The remainder of the above promotions can be considered retention strategies. Of note is that several Australian jurisdictions (Victoria, NSW, South Australia and Western Australia) prohibit wagering inducements aimed at recruiting new customers.

Provision of credit to bet with

Wagering operators can extend credit to their customers through ‘delayed settlement facilities’ which allow a customer to place bets and reconcile the account later. This typically involves the customer making an application for credit in increments up to $1,000. Wagering operators also accept payment from customers’ credit cards. The ability to provide credit and accept payment from credit cards is contrary to other forms of gambling where credit cannot be provided for gambling and where venue- based ATMs do not enable cash withdrawals from credit cards. These restrictions were introduced in response to the obvious risks associated with credit betting. The Australian Wagering Council has signaled that it will be adopting a self-regulatory industry-initiated code of practice which will define the principles to be adopted by members when providing credit to customers.

Affiliate referral programs

These programs are offered by wagering operators to increase referrals and recruitment of new account holders. Affiliates provide a link from their website to the betting website and are paid for customers who click on the link and then open an account with the wagering operator within a specified time period (usually 45 days). Payment can be a flat fee (e.g. $50 per referral) or a percentage of the customer’s losses (often 25-30%) over the lifetime of that customer’s betting with that operator, usually paid per month. The latter option can be particularly lucrative if heavy bettors are referred. There is no cost to the referrer for participating in an affiliate program. Thus, these programs incentivise the referral of customers to betting websites, but not the customers themselves, although the latter can take up sign up offers and receive the associated incentives.

2.7 Influence of marketing inducements on gambling behaviour

2.7.1 Influence of gambling inducements on gambling behaviour

As reviewed below, a small amount of research has investigated the impacts on gambling behaviour of inducements provided by land-based venues. These studies have focused on the effects of loyalty programs, comps and venue promotions. Many of these studies have focused on a single venue and together have yielded mixed findings, so results to date are inconclusive.

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Gambling loyalty programs

Research into the impacts of gambling loyalty programs has identified limited effects overall, but that different market segments respond differently. Barsky and Torzov (2010) used panel data from 4,894 US respondents who had recently visited a casino to identify differences in customer segments in their responsiveness to casino loyalty programs. They found that elite membership creates a very engaged group of customers; however, other market segments were largely unresponsive. Similarly, Palmer and Mahoney’s (2005) research found little effect of loyalty programs and that different segments had widely varying needs. They explained that the large numbers of gambling venues usually available to consumers, their substantial marketing incentives to attract new customers, and low switching costs between venues, means that gamblers have reasons and opportunities to patronise multiple venues and to join multiple loyalty programs. Customer loyalty to one particular venue can therefore be very difficult to gain.

Gambling comps

Inconsistent results have been found in studies examining the effects of comps on gambling activity. Studies in individual Las Vegas casinos have found no positive effect on blackjack cash drop from match-play coupons (Lucas, 2005), no significant increase in individual trip slot volume from a direct mail campaign with free-play offers (Lucas, Dunn & Singh, 2005), and no effect on the gambling volumes of slots and table games from complimentary showroom entertainment (Suh & Tanford, 2012). Further, Suh (2012) found that a $50 free-play incentive was more profitable than a $100 offer, implying that a higher incentive value is not necessarily more effective in increasing slot gaming volume and coupon profitability. Conversely, two studies have found positive effects of comps on gambling activity. Suh, Tanford & Singh (2012) found that the incremental gambling revenue from patrons receiving complimentary meals was much higher than those who paid for meals. Based on two years of loyalty card data from a US casino, Narayanan and Manchanda (2012) found that receiving comps was associated with a shorter time between venue visits, and that increased comps increased both short-term and long-term gambling activity.

Gambling venue promotions

Mixed results have also been found for the effects of in-venue promotions. Two studies have found that they increase expenditure on electronic gaming machines (EGMs). Research in a Las Vegas casino indicated that prize draws with higher cash prizes produced higher slot machine volume, reflecting that these promotions increased sales (Lucas & Bowen, 2002). An Australian survey of 414 respondents aged 60 years and over found that, of those participating in venue promotions (50%), 18% reported usually spending more time, and 14% reported usually spending more money, gambling on EGMs than they would have done without a promotion, and 8% reported being introduced to playing EGMs through a venue promotion (Southwell, Boreham & Laffan, 2008). Conversely, another Australian study (Edelhoff, Grimes & Battista, 2014) found that venue promotions did not affect gambling behaviour, although the combining of different types of promotions (loyalty programs, trade promotion lotteries, raffles and bingo) may have obscured results. Amongst the 120 members of six Australian clubs surveyed, about one-half agreed that these promotions had encouraged them to become members of the venue; about three-fifths agreed they visited the club more often and stayed longer due to promotions; and about two-thirds reported spending more money at the club during a promotion. Higher perceived value of promotions was reported to increase members’ length of stay at the club, how frequently they visited, and their expenditure in the venue, but not their reported gambling activities. Use of self-reported data in both these Australian studies may limit the accuracy of their findings.

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2.7.2 Influence of wagering inducements on betting behaviour

A few studies have examined the self-reported influence of marketing inducements on betting participation, but none have distinguished the influence of different types of wagering inducements nor quantified the extent of this influence.

Hing, Cherney et al. (2014b), in an interview study of 50 gamblers from the general population and 31 problem gamblers in treatment, found evidence of increased gambling consumption amongst both samples in response to bonus offers such as ‘free’ bets and bonus deposits. Several respondents reported that they found promotions quite influential and would seek them out to take advantage of ‘free’ credits and signed up with multiple operators as a result. While this study revealed limited reported effectiveness of these inducements in converting non-gamblers to gamblers, they identified some brand switching amongst existing gamblers and increased gambling in response to promotional offers. However, their study focused on advertising and promotions for Internet gambling in general, and so did not yield a clear picture of the specific influence of wagering inducements.

Also in a qualitative study, Thomas et al. (2012b) found that young men in particular reported being encouraged by online gambling advertising to switch from physical to online betting environments, to open accounts due to ‘free’ bonuses offered, and to move between sports betting websites to take advantage of the different incentives offered. Many were reportedly focused on what was on offer, rather than any long-term risks or consequences. However, whether conversion to online betting and uptake of these betting incentives affected overall betting involvement amongst these participants was unclear. Older males were reportedly more circumspect about these inducements, and felt that the risks of signing up for these offers outweighed any longer-term benefits.

A series of surveys conducted as part of a large Queensland study (Hing, Vitartas et al, 2014a), and published as several papers (Hing, Lamont, Vitartas & Fink, 2015a, 2015b; Hing, Vitartas et al., 2014b) highlighted the appeal of sports betting promotions to adults, adolescents and sports bettors. This study focused on types of promotional techniques (e.g. celebrity endorsement, gambling logos, stadium signage) rather than types of inducement. However, the study did find that about one-third of sports bettors agreed that the promotion of special bet offers (e.g. available only to the first 100 callers) during a sporting event encouraged them to bet on the sport to which this inducement applied, and about one-quarter agreed that it increased the likelihood of them placing impulse bets during a sports match.

A quasi-experimental stage of the same study (Hing, Vitartas et al, 2014a) also highlighted the greater importance of type of bet in eliciting the desire to place a bet, compared to type of commentator, type of promotional technique and type of appeal used. Amongst the types of bet included in the conjoint design, bets offering a money-back guarantee (if the team bet on lost by 10 points or more) had more appeal than a traditional bet (on the outcome of the match), an exotic bet (which team would score the first point in the match), and a micro-bet (which player would give away the next penalty). In fact, the utility for ‘risk-free’ bets was so strong that all other utilities had little weight in countering its effect. The authors concluded that this indicates that, in the marketplace, a ‘risk-free’ offer will have very strong drawing power on bettors and strongly entice them to make a bet.

In Sproston et al.’s study (2015), focus group participants drew attention to promotional inducements conveyed through direct marketing including by email, SMS and telephone, as well as through mass media, and also that these promotions increased in the lead-up to major events. They commented on the pervasiveness of inducements offering matching bets and deposits, refer a friend bonuses, and ‘risk-free’ bets that offered a refund under certain conditions for losing bets. Some participants commented that ‘risk-free’ bets in particular can create the false impression that winning the bet is a certainty, and so they can be highly influential in encouraging betting. In fact, while participants

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generally felt that they themselves were not highly influenced by wagering marketing (although they felt that others were, indicating a third-person effect), promotional inducements were one type of marketing that was felt to directly influence even their own betting. These promotional inducements were said to have encouraged some participants to open wagering accounts and others to shop around for the best incentives, while some participants clearly enjoyed getting ‘free’ bonuses for bets they placed.

While far from conclusive, the above findings suggest that promotional inducements do have an influence on betting participation, and in fact may be more effective than other types of wagering marketing in increasing betting behaviour. However, this influence has yet to be rigorously quantified and is likely to vary amongst different demographic groups. While brand switching in response to inducements was reported, there is also self-reported evidence that these inducements increase betting consumption and impulse betting, especially amongst existing sports bettors who may also shop around for the best deals. ‘Risk-free’ bets appear to particularly encourage additional betting, although further research is needed to verify this contention.

2.8 Influence of wagering inducements on gambling problems

This review now considers the role of wagering inducements in the development and maintenance of gambling problems. Research into the association between problem gambling and race and sports betting is briefly reviewed before risk factors for wagering problems are discussed.

2.8.1 Gambling problems associated with wagering

While gambling problems amongst Australians are most commonly linked to EGM gambling (Productivity Commission, 2010), race wagering has also been strongly associated with problem gambling. As Delfabbro (2012) points out, both EGM and race betting appear to be similarly risky in terms of the development of problem gambling when the relative numbers of EGM and race gamblers in the population are controlled for. In reaching this conclusion, he reviews evidence from several studies of regular EGM and race gamblers. He cites the Productivity Commission’s national gambling survey (1999) which found that 23% of weekly EGM gamblers compared to 15% of weekly race bettors were problem gamblers. Further evidence is drawn from a NSW prevalence study (Dickerson et al., 1996) where 30% of regular EGM gamblers and 22% of regular race bettors scored as probable problem gamblers. A New Zealand prevalence study (Abbott & Volberg, 2000) found that about one- quarter of regular EGM gamblers and about one-fifth of regular race bettors were lifetime problem gamblers.

More recent evidence comes from a survey of 4,688 Australian gamblers, weighted to be nationally representative (Gainsbury, Russell et al. 2015). This analysis found that 31.2% of moderate risk/problem Internet gamblers and 4.5% of their non-internet gambler counterparts nominated race betting as the gambling form contributing most to their gambling problems. Also in Australia, the longitudinal Victorian study found that participation in race betting independently predicted moderate risk/problem gambling after controlling for occupation, lifetime gambling risk, psychological distress and depression (Billi et al., 2014). That study also found that 34% of at-risk and problem gamblers participated in race betting, compared to 16% of the general Victorian population.

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Data on current levels of problem gambling amongst sports bettors are less reliable, given the relatively recent emergence but exponential growth of this gambling form. Several studies have shown an association between sports betting participation and problem gambling. A worldwide review of gambling prevalence studies conducted between 1975-2012 (Williams, Volberg & Stevens, 2012) revealed that sports betting is one of the gambling forms that is most strongly associated with problem gambling. Specifically, participation in sports betting was found to be a correlate of problem gambling in 18 national, 15 US, three Australian and two Canadian studies. Further, sports betting participation was found to be a predictor of problem gambling in multivariate analyses of large nationally representative US surveys when participation in other gambling forms was controlled for (Kessler et al., 2008; Welte, Barnes, Wieczorek, Tidwell & Parker, 2004). Billi et al. (2014) found that 16% of at- risk and problem gamblers participated in sports betting, compared to 4% of the general Victorian population. However, while these studies point to strong associations between engagement in sports betting and increased risk of problem gambling, causal evidence is lacking. Stronger evidence is provided from the weighted online survey cited above (Gainsbury, Russell et al., 2015a) which found that 16.2% of moderate risk/problem Internet gamblers and 2.6% of their non-Internet gambler counterparts nominated sports betting as their most problematic gambling form.

Evidence from treatment services also suggests that gambling problems amongst sports bettors are increasing. One Australian clinic has noted a rapid rise in reported problems with sports betting, increasing from less than 5% of clients in 2006-07 to 15-20% of new clients by 2010-11 (University of Sydney Gambling Treatment Clinic, 2011). Similarly, sports betting was the most commonly reported principal gambling activity for 40% of Internet gamblers attending NSW gambling help services in 2011-12, increasing from 25% in 2007-08 (Hing, Gainsbury et al., 2014). This pattern was reversed for race betting: 25% in 2011-12 and 36% in 2007-08 (Hing, Gainsbury et al., 2014). Thus, increased participation and expenditure on sports betting and declines in the same for race betting are reflected in these help-seeking statistics. Amongst clients to Victorian Gambler’s Help Services in 2012-13, 32% of Internet gamblers nominated race betting as their primary gambling activity, while 28% nominated sports betting (Hing, Gainsbury et al., 2014).

2.8.2 Risk factors for gambling problems associated with wagering

Research suggests that there are certain demographic, behavioural and normative risk factors for wagering-related gambling problems. These are important to consider when assessing the potential of wagering inducements to contribute to gambling problems.

Being a young adult male has consistently been identified as a risk factor for problem gambling (Billi et al., 2014; Delfabbro, 2012; Johansson, Grant, Kim, Odlaug & Götestam, 2009; Williams, Volberg et al., 2012; Williams, West et al., 2012). Thus, the predominantly young male profile of sports and race bettors indicates that, as a group, they are particularly vulnerable to gambling problems. Some Australian empirical research supports this heightened vulnerability. Multivariate analysis comparing non-problem gamblers to moderate risk/problem gamblers in a recent Victorian prevalence study (Hing, Russell, Tolchard & Nower, 2015) found that risk factors for gambling problems amongst males included being 18-24 years of age and betting on races or sports (as well as some other continuous gambling forms). Analysis of nationally representative data from 4,688 Australian gamblers suggests that young adult males may be particularly susceptible to problem gambling associated with online wagering (Hing, Gainsbury et al., 2014). Amongst the moderate risk/problem gamblers in the sample, online gamblers were more likely to be younger, male, married, living in Victoria or Queensland and to bet on sports, races or poker compared to non-Internet gamblers. Treatment services also report that young men in particular are increasingly reporting difficulties in controlling their online sports betting (Blaszczynski & Hunt, 2011).

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Risk factors can also relate to betting behaviours. The Victorian longitudinal gambling study reported a threshold effect, where PGSI scores increased at a race betting frequency of 1-3 times per month (Billi et a., 2014). Other studies have found, not surprisingly, that more numerous, frequent and larger bets distinguish at-risk and problem sports bettors from non-problem sports bettors (LaBrie & Shaffer, 2011; LaPlante, Nelson & Gray, 2014; Xuan & Shaffer, 2009). In-play betting has also been implicated as a risk factor in several studies examining betting behaviours amongst online sports bettors (Braverman, LaPlante, Nelson & Shaffer, 2013; Gray, LaPlante & Shaffer, 2012; LaPlante, Schumann, LaBrie & Shaffer, 2008; Nelson et al., 2008). These types of bets were found to be particularly attractive to problem gamblers in a study measuring sports bettors’ responses to different message elements in sports betting promotions (Hing, Vitartas et al, 2014a). In-play betting may be inherently risky as it provides opportunities for fast-paced continuous betting, and requires quick and perhaps impulsive decisions without much time for reflection (Nelson et al., 2008).

A further risk factor appears to be the increased normalisation of betting in Australian society. Participants in Sproston et al.’s study (2015) described how regular discussions and placement of bets now occur in social and workplace settings, with advertisements portraying gambling as an everyday activity, an important social lubricant amongst young adult males, and an activity no longer associated with any social stigma. Survey respondents also noted that sports betting marketing has increased how much their friends and family talk about sports betting, and their interest, desire and actual betting on sports. Sports betting appears to be particularly normalised amongst young men. Thomas et al. (2012b) found a growing sub-culture of sports betting amongst young adult males who reported peer group pressure to bet in order to fit in with their friends and avoid social isolation. Similarly, Gordon, Gurrieri and Chapman (2015) researched lifestyle consumption communities amongst 18-30 year old males in the context of sports betting in Australia. They found that sports betting was embedded in their everyday lives, a regular feature of their leisure and social interactions, manifest in their sub- culture and highly normalised. While participants were non-problem gamblers, shared cultural values, within-group rivalry, loyalty to favoured sports teams, and the desire to display betting acumen, skills and knowledge drove some risky consumption practices that could provide a pathway to sports betting problems.

The above findings suggest that wagering inducements that target young adult males, that promote more frequent, more intense and in-play betting, and that appeal to peer rivalry, sports team loyalty, peer bonding and betting acumen, may undermine harm minimisation by targeting at-risk groups and by encouraging risky betting behaviours.

2.8.3 Influence of wagering marketing on gambling problems associated with wagering

Given the potential for marketing cues to reinforce addictive behaviours (Martin et al., 2013), it is not surprising that problem gamblers tend to report more stimulus from gambling marketing, compared to other gamblers (Binde, 2009, 2014; Derevensky et al., 2010; Grant & Kim, 2001; Hing, Cherney et al., 2014b). In the few studies that have specifically investigated wagering marketing, higher risk gamblers also report being more encouraged to bet by this marketing than do lower risk gamblers. Sproston et al. (2015) surveyed a convenience sample of 2,681 Australian adults. Problem gamblers reported higher exposure to sports and race betting marketing in both traditional and digital media, and more positive emotional and cognitive responses to it. Higher proportions of problem (71%), moderate risk (48%) and low risk gamblers (40%) reported being more likely to bet on sports after seeing sports betting marketing, compared to non-problem gamblers (17%). The same pattern was reported for likelihood to bet on races after seeing race betting marketing: 67% problem gambler, 47% moderate risk and 37% low risk, compared to 15% of non-problem gamblers. Schottler Consulting (2012), in a

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weighted sample of 400 New Zealanders, also found that race and sports betting marketing had a greater reported impact on problem/moderate risk gamblers in terms of making unplanned bets. This finding applied to all media channels examined.

Focusing only on sports betting, Hing, Lamont et al. (2015a) specifically investigated gambling marketing during sports broadcasts, including advertisements in commercial breaks and promotional marketing embedded within match broadcasts. In a sample of 1,000 Queensland adults, the audience most likely to be stimulated by this marketing were problem gamblers, who had greatest exposure and a favourable disposition to it, and reported that this marketing had maintained or worsened their problem gambling behaviours. Surveys with 544 Australian sports bettors also indicated that problem gamblers had highest approval of these promotions and reported most encouragement and influence to gamble from these promotions (Hing, Lamont et al., 2015b). Problem gamblers were also more influenced to sports bet by contextual factors, particularly certain bet types including special offers. A comprehensive review of gambling advertising research proposed that marketing for new and relatively risky forms of gambling, such as sports betting, has a larger impact because it accelerates consumer uptake before adaptation processes have started to work (Binde, 2014).

Overall, these studies have found associations between exposure to sports and race betting marketing and problem gambling; however, the causal direction is unclear and confounded by the greater likelihood of high risk gamblers to view more wagering marketing.

2.8.4 Influence of gambling and wagering inducements on gambling problems

A few studies have provided insights into the relationship between non-wagering gambling inducements and problem gambling, although most findings have been limited to self-report data and all have investigated only associations and not causation. Southwell et al. (2008), in their study of 414 older club patrons, found that the self-reported impact of venue promotions on time and money spent on EGMs was significantly greater for moderate risk/problem gamblers than for lower risk gambler groups. In a study of 200 EGM gamblers in Australia (Schottler Consulting, 2010), player promotions and prizes, loyalty points and incentives were predictors of self-reported excitement during EGM gambling, while loyalty points and rewards were significant predictors of self-reported urge to continue gambling beyond self-set limits. The author concluded that players may become more excited or motivated to continue gambling due to these inducements and that their role in posing possible harm to gamblers needs further research consideration.

Stronger evidence of a link between gambling inducements and problem gambling was provided by Narayanan and Manchanda (2012). Their analysis of two years of loyalty data from a US casino found that addicted gamblers (defined as those who increased their gambling amount over time) were twice as responsive to comps received during a gambling session than the average gambler, both in terms of amount bet and the number of gambling sessions during a trip. Further, addicted gamblers receiving these comps were also more likely to bet larger amounts in their next gambling session. Thus, both a direct and indirect effect of comps was found amongst addicted gamblers. The authors concluded that comps do affect gambling behavior, they may increase gambling involvement and the difficulties of controlling gambling, and that casinos focusing on the long-run effects of comps would logically target addicted gamblers.

Detailed insights were collected during a focus group of eight problem gamblers in treatment and an international expert stakeholder forum in Canada (RCG, 2013). All focus group participants had developed a gambling problem before they joined a loyalty program, but subsequently joined as a way

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of recouping some losses. As well as receiving economic benefits such as cash rebates, free play vouchers, free hospitality, entries into prize draws and gifts, participants reported the hedonic benefits of ego-enhancement, pride, attention, recognition and feeling special, important or ‘a big shot’. This ego boost then encouraged them to gamble more to gain higher tier status. Loyalty program members were said to receive about 100 marketing communications from each program each year, and these increased after winning large jackpots and on moving to a higher tier. At least one focus group participant relapsed after receiving these communications, despite having requested that the casino stop sending them. Participants who had self-excluded automatically started to receive these communications as soon as their self-exclusion period ended even though they had not applied for reinstatement.

All of the RGC’s (2013) focus group participants considered that these inducements had impacted on their gambling. Gambling frequency increased for most due to the added incentive to gamble and the guarantee of getting something back. Some conditions placed on rewards encouraged them to stay longer in the venue and to spend more money. For example, some free-play vouchers could only be redeemed several hours later, or after the person had gambled a specified amount of their own money. Another reported effect was staying in the venue to redeem free-play vouchers only valid after midnight, which then allowed access to more cash from ATMs as it was a new banking day. Reminders that they only had to earn a certain amount of more points by a specified date to reach a higher tier encouraged participants to gamble more. Some reported that receiving rewards made them feel as if they had less of a gambling problem, and that it encouraged them to chase losses using the venue’s money. Overall, many participants reported that these inducements made it more difficult to manage their gambling, both by enticing them to attend the gambling venue to receive or redeem rewards, and by encouraging them to gamble once they were there.

The RGC’s (2013) study is also the only one that appears to have collected data on when inducements are considered to have ‘crossed the line’. Study participants (experts and focus group participants) identified the following: when inducements encourage gamblers to over-extend themselves or stay past midnight; when hosts offer incentives to gamblers they suspect may have a problem; when incentives target vulnerable gamblers; when a patron receives incentives after choosing to opt out; and when the venue makes personal calls to offer incentives.

Very few studies can shed light on the influence of wagering inducements on problem gambling. Based on self-report from 544 sports bettors, Hing, Lamont et al. (2015b) found that agreement that promotion of special bets encourages their betting and impulse betting increased significantly as problem gambling severity increased. Amongst 31 treatment-seeking Internet gamblers interviewed (Hing, Cherney et al., 2014b), all participants reported substantial increases in their online gambling since commencement, and nearly one-half at least partially attributed this increase to advertising of, and particularly promotions for, Internet gambling. Promotions had increased these participants’ gambling by making the activity more interesting and attractive, by providing inducements to gamble, and by encouraging chasing losses. Participants who had resolved to control their gambling particularly disliked these inducements because they triggered gambling sessions and relapses through reminders to gamble and attractive bonuses. A small minority of interviewees who had previously suspended their gambling relapsed in response to these promotions. Some explained how the play through conditions of particular promotions and the difficulty of withdrawing winnings increased their gambling time and expenditure. The authors concluded that these findings provide preliminary evidence that promotions for Internet gambling, including sports and race betting inducements, increase overall consumption amongst a sub-group of problem Internet gamblers. By invoking uncontrollable urges to gamble, including amongst those attempting to curtail their gambling, these promotions may maintain and increase problem gambling behaviours and serve to keep problem gamblers in the addicted stage of consumption.

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In another interview study by the same authors (Hing, Cherney, 2014a), but with a sample of 25 moderate risk/problem gamblers recruited from the general population, excessive and irresponsible promotions were identified as one of eight factors considered to particularly contribute to loss of control when gambling online because they were thought to prey on vulnerable people, encourage excessive gambling, and especially target and appeal to problem gamblers. In relation to wagering inducements, some participants recounted specific promotions prompting them to gamble more than intended and to gamble when they otherwise would not have. Online bettors spoke about the huge volume of promotions received once they opened online betting accounts. For some, the offers of ‘free’ bets, matching deposits and ‘risk-free’ bets were particularly enticing and resulted in them gambling more than intended.

In summary, while research is in its infancy, the studies reviewed above all point to an association between gambling/wagering inducements and gambling problems, with qualitative research finding that problem gamblers themselves report that these inducements encourage them to gamble, increase the time and money spent on gambling, increase the difficulty of controlling gambling, and provide triggers for relapse. However, research has not been conducted into causal pathways between gambling inducements and gambling problems, and the relationship between uptake of wagering inducements and problem gambling behaviour has not yet been examined. Both of these remain critical areas for future research.

2.9 Chapter summary

. Advertising and promotions for wagering products have intensified in recent years, targeting young adult males with heavy branding and messages emphasising ease of access, winning, fun, excitement, low risk, male bonding, power, success, wealth, sexual attractiveness, and value for money. . A wide range of wagering inducements is offered at point-of-sale (websites and mobile betting apps) and promoted through other media, including direct electronic marketing. . Wagering inducements aim to increase sales through increasing the number of account holders, retaining existing account holders, prompting brand switching, increasing and intensifying purchasing, encouraging future purchasing, and encouraging betting on specific events, during particular time periods and using particular betting channels. . Gambling and wagering inducements can be classified into loyalty programs, comps and promotions. Loyalty programs and comps reward past betting behavior, while promotions aim to increase future betting activity. . Some wagering inducements are aimed at registering new bettors, while others aim to retain existing bettors. Wagering inducements can also be considered in terms of those that lead to commencement, continuation or intensification of betting. . Examples of wagering inducements include sign up bonuses, refer a friend bonuses, cash back offers, multi bet offers, bonus odds, bonus winnings, happy hours, mobile betting bonuses, click to call bonuses, competitions and loyalty programs. Provision of credit for betting and affiliate referral programs can also be considered to be wagering inducements. . Promotional inducements for alcohol and tobacco are associated with increased product trial, increased purchase volume, impulse purchasing, stronger brand recall, increased purchase intention amongst youth, and heightened urges amongst addicted and ex-users.

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. While far from conclusive, research suggests that wagering inducements do influence betting participation, and may be more effective than other types of wagering marketing in increasing betting behaviour. However, this influence has yet to be quantified and is likely to vary amongst different demographic and gambler risk groups. . While wagering inducements can prompt brand switching, self-reported evidence indicates that they can also increase betting consumption and impulse betting. ‘Risk-free’ bets and bonuses with stringent play through conditions appear to particularly encourage additional betting, although further research is needed to verify this contention. . Wagering inducements that target young adult males, that promote more frequent, more intense and in-play betting, and that appeal to peer rivalry and sports team loyalty, may undermine harm minimisation by targeting at-risk groups and by encouraging risky betting behaviours. . The risk of developing gambling problems linked to race betting is similar to that for EGMs and problems associated with sports betting are increasing, especially amongst young men. . The few studies conducted all point to an association between gambling inducements and gambling problems. Problem gamblers report that gambling inducements encourage them to gamble, increase the time and money they spend on gambling, increase the difficulty of controlling their gambling, and provide triggers for relapse. . However, research has not been conducted into causal pathways between gambling inducements and gambling problems, and the relationship between uptake of wagering inducements and problem gambling behaviour has not yet been examined. Both of these remain critical areas for future research. . The current study provides a useful foundation for further research by identifying and analysing promotional inducements offered by the most popular wagering operators accessed by Australians.

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Chapter Three: Policy Analysis

3.1 Introduction

This chapter reviews Australian and international legislative and self-regulatory approaches to the proliferation of wagering inducements offered by the growing Internet wagering industry.

Inducements are a form of marketing promotion and are closely tied to advertising. The definition of inducements used in this study may be somewhat different to the meaning understood by lawyers. Lawyers tend to view inducements somewhat negatively because of their potential to undermine consumer protection.

Gamblers are consumers, and entitled to the same rights and protections as are available to consumers of other products. The United Nations issued the UN Guidelines for Consumer Protection in 1985. Regulators and the gambling industry generally accept that gambling consumers are entitled to some degree of consumer protection. Protection of vulnerable groups such as minors and problem gamblers is also an important regulatory and consumer protection issue.

Australia developed consumer rights through State and Territory consumer protection law and the Australian Consumer Law 2011(Cth) (that replaced the Trade Practices Act 1974 [Cth]). These general consumer protection laws prohibit commercial practices that are misleading, deceptive or unconscionable. They apply to gambling amongst the range of available services.

This chapter firstly reviews the legal landscape, tracking the development of regulatory responses to the challenges raised by the deregulation of the wagering market and the subsequent proliferation of wagering marketing, including inducements to bet. Relevant court decisions, government reviews and responses, and codes of practice are discussed. International developments are then reviewed across a range of jurisdictions, including the provisions of various initiatives by international industry organisations. Key policy issues are then discussed, before relevant laws and self-regulatory measures are summarised. Finally, a range of viewpoints, considerations and options are outlined that could be considered in any further regulation of wagering inducements.

3.2 The Legal Landscape

3.2.1 Background

The traditional State-based regulation of wagering has been significantly weakened as the industry has grown both nationally and internationally. The Commonwealth has taken limited steps in legislating, leaving most regulatory responsibility with the individual States and Territories. The industry has responded to threats of increased regulation by developing and strengthening voluntary codes of practice. Likewise, broadcasters and advertisers have taken steps to strengthen their voluntary codes.

The development of gambling laws has focused on protection of revenue, eliminating criminal influence and responsible gambling issues, following a different path to mainstream consumer law, with its emphasis on informed choice and consumer protection. However, Blaszczynski, Ladouceur, Nower and Shaffer (2005) assert that the primary responsibility of the gambling industry in responsible

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provision of gambling is to provide information to meet the conditions of informed choice and not to mislead, exploit or take advantage of gamblers.

Mainstream consumer law regulators, such as State and Territory Fair Trading offices and the Australian Competition and Consumer Commission (ACCC), have shown little interest in consumer protection for mainstream gamblers, deferring to the specialist gambling regulators. Nevertheless, consumer affairs agencies have warned consumers against gambling-related products, such as purchasing expensive software that purports to pick the winners, viewing these as scams rather than a genuine gambling issue, e.g. ACCC (2015).

The dramatic change in the gambling industry and its approach to marketing in recent years has brought with it an awareness of the need for informed choice and consumer protection. Developments in this area have been muddled by the need to address the major issue of problem gambling, and the two areas remain tangled. Whilst there is an obvious need to promote informed choice and consumer protection for recreational gamblers, there are also needs in this area for those at risk of developing gambling problems. Some laws and codes of practice describe their responsible gambling strategies as consumer protection, while offering little protection to those who do not have a gambling problem.

Concern about wagering inducements has arisen only very recently, as the Internet wagering industry is very young and competition has only lately become intense. The growth of Internet wagering has been marked by a progressive shift of control away from the populated States to some smaller jurisdictions, such as the Northern Territory. As most customers of operators licensed in these smaller jurisdictions reside elsewhere, the governments of these smaller jurisdictions prefer the self-regulation model. This is similar to the European situation, where remote gambling operators have mostly located in small, low tax, minimal regulation jurisdictions.

The State and Territory governments agreed in principle some time ago on the need for a unified approach to consumer protection issues, but there is still much to be done to put this into practice. The wagering industry has also called for greater uniformity between the States and Territories over consumer protection measures, to simplify the regulatory complexities for national wagering operators that strive to comply with a variety of local laws.

The role of the Commonwealth has grown due to its Constitutional powers over trade and commerce as well as telecommunications, as wagering increasingly has become a national industry reliant on the Internet and telephone. The Commonwealth also has power over financial services, which could be relevant to the control of transfers of money to offshore operators, and over corporations, which could enable it to take a much greater role in wagering industry regulation.

The Internet has enabled a third force to compete for the wagering dollar, that of international wagering operators. These operators are outside the jurisdictional reach of Australia. The Interactive Gambling Act 2001 (IGA) prohibits the provision of gambling services to Australian residents by offshore operators, but allows Australian-licensed Internet wagering operators to operate legally and market their businesses. The IGA prohibits unlicensed offshore operators from accepting certain bets from Australians but does not make it an offence for Australians to place bets offshore. Complaints about illegal offshore gambling operators can be made to the Australian Communications and Media Authority (ACMA), which has the power to refer them to the Australian Federal Police. However, no prosecutions have been instituted under the IGA since its inception.

Interactive wagering services and lotteries can be promoted and advertised by locally licensed operators within Australia (as they are legal forms of gambling under the IGA). Generally these wagering operators offer traditional approaches to race betting and sports betting but some, such as the betting exchange operated by Betfair, offer an entirely new betting model. There are some

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restrictions on local licensed operators, such as a prohibition on in-play betting, that put them at a disadvantage to offshore operators. The growth of the offshore wagering market has fuelled ongoing calls from the Australian wagering industry for a lowering of local restrictions, to enable local wagering operators to compete on a level playing field with the offshore providers.

The Betfair (2008) case was a significant legal development that weakened the ability of individual State and Territory governments to control the forms of wagering available to their residents. The basis of the case was Western Australian law which prohibited betting exchanges, preventing Betfair from marketing its business to Western Australian residents. The High Court held that the law was unconstitutional as it restricted trade and commerce between the States.

3.2.2 The Australian betting market opens

Betting has always been popular in Australia, commencing with local bookmakers and expanding with the introduction of the totalisator in the nineteenth century. Illegal off-course SP betting grew from the 1930s to the 1960s, creating problems of corruption and reducing government revenue. State governments responded by establishing off-course Totalisator Agency Boards (TABs). However, from the 1970s onwards, gaming machine and casino gambling grew rapidly, while bookmaking and the TAB’s share of the market contracted. The 1990s saw the privatisation of the main TAB networks, with Victoria privatising its TAB in 1994. The Northern Territory licensed its first corporate sports bookmaker in 1992 which then began offering Internet betting in 1996 and other States followed (AIGR, 1999).

In response to the changing market, the established States sought to prevent interstate bookmakers from advertising in their State. The NSW Government confidently reported to the Productivity Commission (1999) that there was a general prohibition against advertising, by print and traditional broadcast media, the availability of a bookmaker or totalisator in another jurisdiction. But even then it was apparent that the ban on interstate advertising was under threat from Internet bookmakers who had no ties to the local racing industry in the larger States. The Productivity Commission (1999) noted that the location of the bookmaker was becoming largely irrelevant.

Significant differences existed between the States and Territories in relation to regulatory and revenue issues, and some bookmakers responded by seeking registration in those jurisdictions that offered low rates of tax and minimal regulatory controls. Due to the reduced levels of taxation, Internet bookmakers were able to offer better odds, as well as the certainty of fixed-odds betting. Wagering was only regulated at a State and Territory level until the commencement of the IGA. This Commonwealth law gave a further boost to the business development of Australian Internet bookmakers by greatly restricting offshore licenced competitors. Following the Betfair decision, some States also changed their laws to permit interstate wagering businesses to offer wagers to their residents, such as the Justice Legislation Amendment Act 2009 (Vic). These developments enabled the share of the wagering market held by Australian-based Internet bookmakers to grow rapidly, mostly at the expense of the incumbent State-based totalisators.

However, there are limits to the application of s.92 of the Constitution which establishes that trade within the Commonwealth of Australia is to be free. In Sportsbet v New South Wales (2012), the High Court dismissed a challenge brought by a wagering operator against a State fee imposed on organisations that used race information, on the grounds that both local and interstate wagering operators were treated equally by the fees so that there was no discriminatory burden of a protectionist kind.

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This court decision clarifies the limits on the powers of the individual State and Territory governments to legislate about consumer protection matters affecting their residents. Although there is no definitive High Court decision on the issue of States restricting the offer of inducements to gamble, it seems highly likely that such restrictions or prohibitions do not contravene s.92 unless they discriminate between wagering operators licensed in different Australian jurisdictions.

3.2.3 Reaction to the impacts of change

The rapid growth in the Internet wagering industry was accompanied by a significant increase in the volume of betting advertising in and around live and televised sporting events. As well, there was a move from passive forms of advertising, such as advertisements displayed on playing fields and sportspersons’ clothing, to a vigorous spruiking of the odds of each game by bookmakers, athletes and sports commentators.

Public reaction to these changes was strong and overwhelmingly negative. The Productivity Commission (2010) commented that behaviours by gambling operators, through advertising and promotions, might accentuate consumers’ general vulnerabilities to make impulsive decisions that they later regret. There were also concerns that the incidence of problem gambling would be exacerbated. A number of health organisations, including the Australian Medical Association (AMA) and Australian Psychological Society (APA), called for greater regulation of the marketing of gambling advertising and promotion, as part of a public health approach to problem gambling (AMA, 2012; APS, 2012, 2013).

At the same time as the community developed a strong concern about the extent of sports betting advertising, an increased awareness and growing concern has arisen about the nature and extent of the inducements offered by wagering operators. Often it is the more extreme or novelty inducements that have attracted the most attention. A Sportsbet promotion offering a $90 cosmetic pack to new customers who signed up with Sportsbet and bet at least $5 was criticised by the chair of the Victorian Inter-Church Gambling Taskforce as being aimed at young women who are less likely to gamble, despite the fact that the promotion was unavailable to Victorian residents (Dow, 2014)

3.2.4 Inducements, problem gambling and the courts

In a series of court decisions from 1999 to 2013 the courts have clarified the legal nature of the relationship between gambling providers and gambling consumers, particularly problem gamblers.

A series of court cases defined the common law duty of care. In 1999, a NSW District Court judge held that a hotel was liable under the Commonwealth Trade Practices Act for unconscionable conduct in trade or commerce by providing illegal cash advances to a problem gambler as an inducement to gamble. The sentencing judge noted that the prohibition on unconscionable conduct in trade or commerce was designed to have a broad reach and protect the public from unfair trading (Stefano & Younes, 2001).

However, it is only in the most extreme cases of gross negligence of the operator (or deliberate conduct on the part of the operator with knowledge of the vulnerability of the problem gambler), that there will be any prospect of a successful action (Nettleton, 2012a, 2012b).

In Reynolds v Katoomba RSL All Services Club Ltd (2001), the NSW Court of Appeal held that a gambling operator owed no duty of care regarding the potential losses of a problem gambler other than in extraordinary circumstances.

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Litigation between the Commonwealth Bank and IASbet, an Internet bookmaker, was reported following the arrest and conviction of a former Commonwealth bank manager, Kim Faithfull, who stole $17 million from the bank and lost it gambling with the bookmaker. The bank sued the bookmaker, arguing that the bookmaker wilfully shut its eyes to Mr Faithfull’s fraud, or consciously refrained from inquiry as to the source of funds. The bank alleged that the bookmaker sent lavish gifts to Faithfull at the branch of the bank where he worked and gave him an invitation to attend the Melbourne Cup as a guest of the managing director of the bookmaker (Hughes, 2004). The litigation was settled on undisclosed terms.

In Preston v Star City Pty Ltd (1999), a NSW Supreme Court judge commented that the common law duty of care would probably extend to a prohibition on providing further liquor to an already intoxicated problem gambler, or the provision of significant credit facilities, or excessive encouragement through incentives to a person who has specifically asked to be barred or go beyond a pre-set expenditure limit.

In Kakavas (2013), a high roller received substantial inducements to gamble at Crown Casino. The High Court unanimously held that the inducements did not amount to unconscionable conduct, because Kakavas was not at a special disadvantage, despite being a problem gambler. The court considered that Kakavas was able to look after himself, and that Crown did not unconscientiously exploit any disadvantage. The court noted that gambling transactions are a rare species of economic activity in which each party sets out openly to inflict harm on the other.

The Productivity Commission (2010) concluded that an important underlying factor explaining why Australian courts have been reticent in finding for a gambling duty of care is the notion of self- responsibility, namely that gamblers are ultimately responsible for their own actions.

In the future, legal action brought by consumers of gambling products will probably be rare, including actions for harm that may arise from the excessive provision of inducements.

3.2.5 Government reviews in Australia

Governments have also been aware of the importance of consumer protection in wagering for some time. At its May 2001 meeting, the Australian Racing Ministers Conference endorsed seven objectives under the National Guidelines for Responsible Wagering Practices to promote the adoption of responsible wagering practices throughout Australia and establish uniform standards for such practices. One objective is to promote informed choice by ensuring that wagering customers are fully aware of how each betting product operates and their realistic prospects of winning. Another objective is to require that advertising and promotion be conducive to responsible wagering patterns and behaviours on the part of the individual bettor (Office of Gaming and Racing, 2006).

Concerns about gambling advertising and promotions have been discussed in several government inquiries and reports. The South Australian Select Committee on Internet and Interactive Home Gambling and Gambling by Other Means of Telecommunication in South Australia (Parliament of South Australia, 2003) noted that there had recently been a focus on addressing some of the potential social harms that flow from wagering by developing responsible gambling codes of practice and that in South Australia the Independent Gambling Authority (IGA) required bookmakers to have codes for responsible gambling and advertising.

In a review of current trends and regulation of interactive gambling commissioned by the Australian Government, the Allen Consulting Group (2009) noted the growth in advertising of Internet wagering services and the extensive advertising by Betfair, which was then a new entrant into the market. They

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commented that the extensive advertising by Betfair was criticised by some community organisations as not protecting underage gamblers from being drawn into sports wagering.

The Productivity Commission inquiry (2010) concluded that online gambling should be legalised to some degree so that it could be regulated, reducing the potential harms of an illegal and therefore unregulated industry. However, it questioned the NSW and Victorian bans on advertising promotions that included inducements to recruit customers saying:

It is not clear why customers attracted by inducements such as free bets are more likely to develop gambling problems than customers attracted by other advertising strategies. Moreover, a large number of the customers accessing free bet promotions are likely to be simply shifting from one wagering provider to another (Productivity Commission, 2010, p.16.58).

The Productivity Commission (2010) suggested that these inducements are partly directed at overcoming ‘switching costs’ between providers and enhanced competition. They also noted that punters in the States that prohibit these inducements are at a financial disadvantage compared with punters in the other States and Territories

The JSCGR inquiry into online gambling and gambling advertising (2011) recommended prohibition of live odds promotions and advertising directed at children and called for the development of a mandatory national code of conduct for advertising by wagering providers. The JSCGR (2011) concluded that inducements to gamble, such offering credit and deposit matching to recruit new customers, encouraged people to gamble for longer and in some cases, beyond their means. The JSCGR (2011) was unconvinced that all inducements should be treated as simply standard advertising practice and recommended that the COAG Select Committee on Gambling Reform, in consultation with the COAG Legislative and Governance Forum on Consumer Affairs, develop a mandatory national code of conduct for advertising by wagering providers, including (among other things) inducements to bet.

The COAG (2011) directive required wagering operators to implement self-regulating strategies within 12 months, warning them that the government would legislate if it was not satisfied with their actions. The requirements were:

. Placement of responsible gambling messages in live sports promotions. . Live odds promotions not be directed at children or be portrayed as a family activity. . Promotions must be socially responsible and not misleading. . Promotions must avoid exaggerated claims, association with alcohol, or with success or achievement. On 29 June 2012, the Commonwealth announced that it had secured the agreement of commercial and subscription broadcasters to reduce and control the promotion of live odds during sports broadcasts. Broadcasters agreed to amend their existing codes of practice to restrict live odds promotion, including by banning sporting commentators from mentioning live odds and banning all live odds promotion during play. There was no mention of the advertising of inducements in the agreement (DBCDE, 2012).

The JSCGR inquiry into the advertising and promotion of gambling in sport (2013) made a number of recommendations for tightening restrictions on the advertising and promotion of gambling, with particular focus on the protection of children. It did not make any specific recommendations regarding the effect of inducements to gamble as a form of promotion of gambling services, and their impact on problem gambling, commenting that this was included in the JSCGR (2011) report.

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In Victoria, a review of sports betting regulation (Gleeson, 2011) recommended improving the level of regulation, greater enforcement of existing legislation, improved integrity assurance and the need for a nationally consistent approach to best protect the integrity of sport. The Victorian Government agreed to implement those recommendations which were within its power to implement and to work with other governments, sporting bodies and the gambling industry to implement the others.

In NSW, the Select Committee on the Impact of Gambling (2014) took evidence regarding ongoing community concerns about the quantity and content of sports betting advertising, and noted that ACMA had undertaken to review and evaluate the changes to broadcasting codes so as to ascertain their effectiveness.

3.2.6 Responses from Australian governments

At the Commonwealth level, a number of bills seeking to regulate or restrict interactive and sports gambling were considered by the JSCGR in the period from 2010 to 2013. However, the final outcome was to use the threat of restrictive legislation to motivate the gambling industry to agree to an enhanced level of regulation, along with tighter restrictions on advertising and promotional rules. The issue of wagering inducements was referred back to COAG to consider further.

Also at a national level, inducements to bet on sporting events have been discussed both through the Australasian Racing Ministers Conference and through the National Wagering Advertising Working Party. At the Australasian Racing Ministers 2008 Conference, State and Territory Ministers indicated their support for a national approach to prohibiting the advertising of inducements to open new wagering accounts. At a meeting of the National Wagering Advertising Working Party in December 2010, participants also raised that the definition of ‘inducement’ could be open to interpretation and suggested a nationally consistent definition be adopted (JSCGR 2011).

At a state level, some States impose a prohibition or restrictions on the provision of inducements to their residents, as outlined below. There are no prohibitions on licensees offering inducements in Queensland, the Northern Territory and Norfolk Island.

Victoria

Sign up offers are prohibited in Victoria. The Gambling Regulation Act 2003 (Vic) s.4.7.10, provides that a wagering service provider must not offer any credit, voucher or reward as an inducement to open a betting account. This law has been used by the Victorian Commission for Gambling Regulation (VCGR) to successfully prosecute a number of bookmakers in recent years (Nettleton, 2011, 2012a, 2012b). Two charges issued by the regulator related to:

. Sportsbet’s offer of ‘Join now get $100 in free bets on the races’ and ‘Up to $200 free bet for first time deposits’, and . IASbet.com’s offer of ‘$1000 free – 15% sign up bonus’. Sportsbet and IASbet defended the charges on the basis that there was ambiguity in the word ‘offer’. However, the sentencing magistrate held that these were firm offers, not invitations to treat, and therefore the law had been broken. The process of accessing or downloading the websites, by the consumer, from information on servers in the Northern Territory where Sportsbet was licensed still amounted to the making of a prohibited offer. The offence was the making of an offer to a person in Victoria, which occurred when the material was downloaded. An offence was still committed, even though the offer was subject to conditions such as the consumer being over the age of 18, providing an address and first making a deposit into a betting account.

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The VCGLR has conducted a small number of prosecutions since then, including Betfair, which was convicted and given a good behaviour bond on 21 May 2013 and Betezy, which was fined $6,000 on 23 May 2014 (VCGLR, 2014).

South Australia

Sign up offers are prohibited in South Australia. In 2012 the South Australian Independent Gambling Authority conducted a review of its codes of practice and issued a detailed mandatory Gambling Code of Practice (2013) prohibiting gambling providers from offering or providing any inducement directed at encouraging patrons to gamble or directed at encouraging people to open gambling accounts. The prohibition does not apply to the offering or provision of an acceptable loyalty program or the offering or provision of an acceptable trade promotion lottery of a complimentary gambling product.

The Authority has also specified detailed requirements for advertising, the provision of responsible gambling information and warnings. The Authority has made it clear that it requires interstate betting operators to apply for a dispensation from the advertising restrictions when advertising in South Australia. Dispensations are provided when the Authority is satisfied that the advertising will not be incompatible with family time or that the dispensation is otherwise in the public interest (Free TV Australia, 2010, 2014a, 2014b).

Queensland

The Policy Direction for Gambling in Queensland (Queensland Government, 2000) envisages a shared commitment by gambling industry providers to the guiding principle of ethical and responsible behaviour that is consistent with the voluntary Queensland Responsible Gambling Code of Practice (Queensland Government, 2015). The code of practice sets out a comprehensive list of requirements including the provision of product information, responsible gambling information, help service contact details, self-exclusion, complaints handling procedures and responsible advertising standards. Provisions relevant to inducements include requirements that advertising and promotions do not give the impression that gambling is a reasonable strategy for financial betterment, do not offend prevailing community standards and do not involve any irresponsible trading practices by the gambling provider.

New South Wales

NSW prohibits inducements. The Racing Administration Regulation 2012 s.12(1)(h), makes it an offence to offer any credit, voucher or reward as an inducement to participate, or to participate frequently, in any gambling activity, including inducing a person to open a betting account.

Norfolk Island

The Norfolk Island Gaming Authority website information (2015) claims that its regulatory and supervisory approach meets the very highest of international standards. However, the Norfolk Island Gaming Act 1998 does not have any consumer protection provisions that would be relevant to the offering of inducements to gamble.

Northern Territory

The provision of inducements is permitted in the Northern Territory. The Code of Practice for Responsible Gambling (Northern Territory Government, 2003) requires gambling operators in the Territory to ensure that any advertising or promotion is delivered in an honest and responsible manner with consideration given to the potential impact on people adversely affected by gambling. Gambling providers must also provide responsible gambling information, self-exclusion and a complaint resolution mechanism.

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Crundall & Boon-Ngork (2005) reviewed compliance with the code in 2004, identifying Internet sports bookmakers as 87% compliant. Major areas identified for improvement were adequate displays of information about the risks of problem gambling, display of a responsible gambling mission statement, ensuring patrons were aware of the passage of time, and having problem gambling warning signs at the point of sale. It was noted that some of the items in the code of practice had little relevance to the online wagering business.

Internet bookmakers are not allowed to verbally urge non-gambling Northern Territory residents to buy gambling products but are able to use telemarketing elsewhere in Australia. A few years ago, Sportsbet was criticised for sending SMS messages to random mobile phone numbers, offering $60 in free bets provided the recipient opened an account. Concerns were raised about the making of these offers to minors and problem gamblers and the general nuisance of cold call selling. The practice was reportedly discontinued (Santow, 2008).

Tasmania

In Tasmania, the Responsible Gambling Mandatory Code of Practice (Tasmanian Gaming Commission [TGC], 2012) prohibits operators from offering inducements that may lead to problem gambling or exacerbate existing gambling problems. This includes persuading people to gamble when they would not gamble normally or to gamble outside of their normal gambling patterns. Inducement- based sponsorships with sporting bodies are also prohibited.

Betfair (2012), in its submission to the TGC, urged the TGC to legislate for a level playing field regarding the ban on inducements, and asked that any restrictions only apply to locally licensed wagering operators in their dealings with Tasmanian customers. It also argued against the prohibition on incentive-based sponsorships, claiming that it was uneconomic for a wagering operator, such as itself, to provide up-front financial support, due to the lack of certainty regarding returns, and that therefore a revenue sharing arrangement was the best model for both the sponsor and club itself.

Western Australia

Western Australia prohibits advertising that offers a benefit, consideration or reward in return for the person participating in gambling; or continuing to gamble; or opening a betting account with the operator (s.43(2)(e) Gaming and Wagering Commission Regulations, 1988).

Australian Capital Territory

The ACT Gambling and Racing Control (Code of Practice) Regulation 2002, reg. 1.30, states that the licensee of a gambling facility must not conduct a promotion that requires or encourages people to gamble at the facility for a minimum period of time to qualify for rewards; or conduct a promotion that requires or encourages people to gamble a minimum amount to qualify for rewards.

3.2.7 Codes of practice and codes of conduct

Codes of practice (expressed in this report as including codes of conduct) may be either mandatory, co-regulatory or self-regulatory. Mandatory codes are legislated and imposed by governments. Co- regulatory codes are intended to develop a shared understanding between government, community and industry. Self-regulatory codes are developed and enforced solely by industry (Fogarty & Young, 2008). Self-regulation through codes of practice benefits industries as they are more flexible than legislation to meet changing needs, they are less intrusive than legislation, participants have a greater sense of ownership and they act as a quality control benchmark for industry (Consumer Affairs Victoria, 2015).

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The Productivity Commission (1999) compared mandatory codes of practice imposed by governments, and voluntary codes of practice. Legal sanctions, such as criminal prosecution, may result when a mandatory code of conduct is breached. Voluntary codes of conduct have more gentle consequences, such as possible expulsion from an industry body. Gambling and sporting organisations often have their own voluntary codes of practice, such as Greyhound Racing Victoria (2015). There are also codes of practice for broadcasting and advertising which are registered with ACMA.

Mandatory codes aim to balance operators’ legitimate use of inducements and other marketing incentives from irresponsible behaviours that are likely to cause harm (such as appealing to minors or encouraging loss chasing). Wagering operators seeking to differentiate themselves from competitors and to attract customers may use forms of advertising inducements that could be considered irresponsible. For example, a promotion that encourages people to gamble by requiring them to spend a minimum amount within a relatively short period of time to qualify for rewards would be of concern (JSCGR, 2011).

There are mandatory codes of practice in the Northern Territory, South Australia, Tasmania and the Australian Capital Territory. Victorian licensed gambling operators are required to have an approved code of conduct, such as the Victorian Bookmakers Association Generic Code of Conduct (2009) and the TABCORP (2012) Wagering Responsible Gambling Code of Conduct. Queensland has a co- regulatory, voluntary code, while the other jurisdictions rely upon legislation and voluntary codes to regulate Internet wagering.

Codes of practice mostly provide a range of commitments that benefit gambling consumers, that typically include:

. A general commitment to the responsible provision of wagering . A detailed list of advertising restrictions . A general commitment to adhere to the principles of responsible conduct of gambling . Self-exclusion . Exclusion of minors from gambling . Complaints mechanism . Compliance with legal requirements . Provision of consumer information . Staff training Some codes of practice state a commitment of relevance to the issue of inducements. For example, the TABCORP Wagering Responsible Gambling Code of Conduct (2012) states that any advertising, marketing or promotion does not offer any rewards, inducements or vouchers that encourage customers to bet more frequently. Greyhound Racing Victoria (2015) says that that it will ensure that there are no inducements or promotions which could encourage irresponsible or excessive wagering by a consumer. All Australian wagering sites have responsible gambling information. Some state limitations on inducements in their responsible gambling webpages and others in their terms and conditions.

Independent evaluation of compliance with a voluntary gambling industry or organisational code of practice may be required or facilitated by a government body and, in rare cases, the organisation may voluntarily commission an evaluation of its code compliance. Perhaps the most important incentive for compliance is the reputation of the industry body or individual operator concerned. The reputation of

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an industry body or individual operator is vital for ongoing governmental support and customer patronage. The recent live-baiting scandal has caused immeasurable damage to the greyhound racing industry and the wagering industry is very conscious of public sensitivities.

3.3 International Developments

3.3.1 Accessing offshore Internet wagering

There is no difficulty for Australians in finding offshore Internet wagering providers, opening accounts and accessing their inducements. The Allen Consulting Group (2009) noted that in 2004 all major search engines (including Google and Yahoo!) introduced a global ban on gambling advertisements on their sites, meaning that no sponsored links to gambling pages would appear on their search pages. This was believed to be in response to warnings from the US Department of Justice. However Google chose to lift this ban in some jurisdictions, beginning with the United Kingdom (UK) in 2008, and now hosts gambling advertisements in many jurisdictions, including Australia.

3.3.2 International directions

Internet gambling is legal to varying degrees in most of the European Union (EU). Some of the smaller EU members, such as Malta and Gibraltar, have taken the initiative to license Internet gambling, taking a light regulatory approach and attracting many operators.

Although online wagering is available in most countries, few governments have considered the impact of promotional activities such as wagering inducements in any detail. Some countries, including the US, New Zealand, China, Japan, Vietnam, Indonesia and Singapore have prohibited online gambling (although some have exemptions) (Moisan. 2015). Europe, particularly the UK, has moved to legalise and regulate online wagering.

The Allen Consulting Group (2009) identified payment blocking, ISP blocking, advertising restrictions, direct enforcement measures, diplomatic pressure and international cooperation as potential measures to limit the unlawful provision of online gambling services. The Allen report grouped international online gambling regulation models to include:

. Monopoly markets in Norway, Sweden and Finland where a broad range of gambling products is offered. . The free market approach to the regulation of online gambling in the UK. . Ringed fenced markets, where a more restrictive approach is adopted through regulating Internet gambling at the point of consumption, taxes are imposed, and players and operators are protected from black market offerings. . Offshore licensing where some of the world’s largest online gambling companies hold licences in one or more of these jurisdictions and target customers and revenues from outside of these jurisdictions. . Fully restricted Internet gambling adopted in Germany and partially restricted gambling in the US.

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3.3.3 Europe

The European Parliament has not passed a uniform law for gambling regulation, due to the wide variation in approaches taken by its member nations. The European Commission (2011, 2011), a government agency, noted that there are two broad models of national regulatory frameworks in Europe for gambling, being licensed operators in a strictly regulated framework and also some strictly controlled monopolies.

In 2011, the Commission sought feedback on consumer issues including inducements, which it described as ‘sales promotions’, saying:

Sales promotions cover discounts of all forms; premium offers, free gifts, promotional contests and promotional games. They are an important multi-faceted tool that can be adjusted to various circumstances: to enter into markets with innovative products; to encourage customer loyalty; to stimulate short-term competitive actions; or to rapidly respond to lost sales. One of the most common type of sales promotions are the use and communication of registration and deposit bonuses, i.e. where on opening a player’s account a sum of money is paid or extra funds are added to deposits made by an already registered customer.

The European Commission’s public consultation identified the protection of consumers of online gambling, including minors, as a priority area (European Commission, 2014).

On 10 September 2013, the European Parliament passed a resolution, calling for common principles for responsible commercial communications in online gambling. It said that commercial communications should be neither excessive nor displayed on content targeting minors.

On 15 July 2014, the European Commission (2014) made a Recommendation to its member States for consumer protection of online gamblers, stating that commercial communication, including advertising and sponsorship, should be carried out in a responsible way. The Commission noted that ‘misinformed choices can be made where information is not sufficiently clear or transparent. In addition, online players look for competing gambling opportunities whenever they perceive a lack of attractive offers’ (Recital 10). The Commission noted that general EU law already provided some consumer protection for online gamblers, including the Unfair Commercial Practices Directive and the Unfair Contract Terms Directive.

The Recommendation was intended to assist EU member states work towards uniformity of regulation. Online gambling operators established in the EU increasingly hold multiple licenses across several member states which have chosen license-based systems for gambling regulation. The multiplication of compliance requirements unnecessarily increases the administrative burden on regulators. A uniform regulatory approach would also benefit the licensed operators and improve their competitiveness against unregulated online gambling sites (European Commission 2014).

Also of relevance is that the Audiovisual Media Services Directive (2013) states that the law of the country where the transmission of audiovisual media originates (within the EU) is the applicable law. Additionally, the Unfair Commercial Practices Directive (UCPD, 2005) encompasses gambling activities in its regulation of advertising and marketing practices. Gambling advertising will contravene the UCPD if it is contrary to the requirements of professional diligence or it is distorting the economic behaviour of the average customer or a clearly identifiable group with an underlying vulnerability, such as young persons, where the gambling provider can reasonably expect such a distortion. Misleading and aggressive commercial practices are also prohibited.

It is up to the individual member countries of the EU to decide whether to adopt these measures into their national regulatory frameworks.

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3.3.4 United Kingdom

The UK has legalised online wagering, subject to licence conditions, regulations and codes of practice. The UK Gambling Commission (the Commission) is responsible for regulating online gambling pursuant to the Gambling Act 2005, which commenced in 2007. It licenses gambling operators, sets licence conditions, establishes gambling codes of practice and conducts enforcement of gambling law.

The Advertising Standards Authority (ASA) investigates complaints about advertisements, which are alleged to be in breach of the Committee of Advertising Practice (CAP) and Broadcast Committee of Advertising Practice (BCAP) codes (2014. Where complaints are upheld, the ASA requires advertisements to be amended or removed. The advertising codes apply to all gambling operators, including remote operators and advertisers permitted to advertise in Great Britain. The aim of the codes is to ensure that gambling advertising is socially responsible. Guidance for operators as to what is socially responsible behaviour can be found in the Gambling Industry Code for Socially Responsible Advertising (UK Gambling Commission, 2007).

In 2010, the ASA’s Gambling Advertising Survey (2010) found that the majority of advertisements in breach of standards offered free bets unfairly. Typical problems include not letting customers know that they might have to deposit their own money, or failing to inform customers that if they won, their ‘free’ stake would not be returned to them. A recent review by the ASA (2014) found that the number of complaints about gambling advertising was rising, both general complaints about gambling advertising, and complaints about specific ads, particularly those advertising ‘free bets’ and other promotional offers. Regular gamblers were critical of ‘free bet’ offers, believing they were likely to appeal to younger people and prompt them to gamble, a view broadly supported by both qualitative and quantitative data.

The gambling industry also has its own voluntary code, the Gambling Industry Code for Socially Responsible Advertising (UK Gambling Commission, 2007), which prevents gambling products (except bingo advertising) from being advertised on television before 9 pm, but with an exemption for the advertising of sports betting around televised sporting events. From 1 October 2014, four leading gambling companies, William Hill, Ladbrokes, Coral and Paddy Power, committed to a voluntary ban on advertising sign up offers (free bets and free money) on TV before 9 pm (ASA, 2014).

In March 2015, the UK Gambling Commission (2015) announced that it would take active steps to require all remote gambling operators that operate in the UK to apply for an operating licence, and provide a detailed application with information about the business, finances, integrity, ownership, compliance, and more. Lack of compliance may result in financial penalties or suspension of the licence.

3.3.5 Denmark

Online gambling, including wagering, casino games and poker, was legalised in Denmark on 1 January 2012, and is regulated by the Danish Gambling Authority. Denmark permits the advertising of gambling inducements, described as ‘bonus offers’, but subject to highly detailed requirements. Essential conditions, such as benefits and restrictions, must be included in the first presentation or mention of the inducement, and not simply located elsewhere among the fine print conditions (Danish Gambling Authority, 2015a). These are examples of essential conditions:

. The bonus only applies to a limited group, such as a bonus which only applies to new customers. . Deposit requirements apply to receive the bonus.

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. Play through requirements apply to receive the bonus, including information about which bets count in the play through. . Time limits in order to receive the bonus, such as the expiry of the bonus, or requirements of play through within a specified period. The Danish Gambling Authority (2015a) prescribes model wording for advertisements on TV, radio, text messaging, banner ads, email, websites and print media. The directions require the inclusion of as much of the essential conditions with the advertisement as is practicable, with easy access, such as a direct Internet link to the full terms of the inducement. Gambling operators have the opportunity to ask the Danish Consumer Ombudsman for an advance opinion as to the lawfulness of a contemplated marketing campaign.

On 18 May 2015, the Danish Gambling Authority (2015b) announced that it would apply the EU Unfair Commercial Practices directive (2005/29/EC) to sales promotion measures for gambling products. This change was the result of the number of complaints that the Danish Gambling Authority had received about gambling license holders’ sales promotion measures, specifically competitions with a purchase condition.

3.3.6 Germany

The global law firm DLA Piper (2013) reports that the Interstate Treaty on Gambling, which commenced at the beginning of 2012 heavily regulates gambling advertising in Germany. Advertisements must be consistent with the Treaty requirements, including combatting gambling addiction, preventing fraud and protecting minors. Gambling operators face a fine line between promoting their own product and not making their product look excessively attractive. Advertising guidelines specify what and when gambling advertisements are acceptable. Pre-approval of advertising material from the regulator is required.

3.3.7 Italy

DLA Piper (2013) reports that Italian advertising regulations prohibit gambling advertising via press, TV, radio and the Internet that can create an incentive to the gambling activity or to exalt games. The very broad wording might include any type of gambling advertisement, which concerns gambling operators as the maximum fine for violation is €500,000.

3.3.8 Small jurisdictions

Many offshore Internet wagering operators seek licensing in small jurisdictions such as Kahnawake, Malta, Gibraltar, and Vanuatu which offer low rates of taxation and minimal regulation.

The Mohawk Territory of Kahnawake is located in Canada and the Kahnawake Gaming Commission licenses Internet wagering operators. Its Regulations Concerning Interactive Gaming (1999) set out the consumer protection matters. The Regulations empower the Commission to determine if an advertisement or form of marketing is based on fact, and is not false, deceptive or misleading in a material way.

In Malta, wagering is regulated by the Malta Gaming Authority that has a basic level of regulation. There are restrictions on advertising in the Remote Gaming Regulations (Malta Gaming Authority,

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2004) but little that would be applicable to inducements. The Authority will receive and process complaints against licenced operators.

Gibraltar is a leading remote gambling licensing jurisdiction. The Generic Code (Gibraltar Gambling Commissioner, 2012) sets out the basic licence conditions, including basic advertising restrictions, a requirement that the rules be readily accessible to customers, and that a complaint-handling process be made available.

Vanuatu is an island nation located 1,750 kilometres east of northern Australia in the Pacific Ocean. Online gambling in Vanuatu started in 1999 and attracted a number of online casinos in 2003 as some Australian based Internet gambling companies moved offshore to avoid the impact of the Interactive Gambling Act (Gamble Worldwide.net, 2015). Betjack is licensed in Vanuatu, which appears to have a minimal regulatory regime. A recent media report claims that police raided Australian properties connected to Betjack, seizing computers and financial records. The report says that Betjack is suspected of links with organised crime (Bucci, Bartley McKenzie, 2015).

No small jurisdiction imposes a rigorous consumer protection regime. The small jurisdictions mostly leave it to the Internet wagering operators to self-regulate.

3.3.9 International industry and organisational initiatives

Many international Internet wagering operators, particularly those based in Europe, subscribe to codes of practice or other consumer protection frameworks.

The CEN Workshop Agreement (2011) incorporates a set of 134 consumer protection measures for remote gambling operators in the EU. It was developed by a workshop of experts and representatives from government and the gambling industry. The Agreement is an unofficial document available for voluntary adoption by remote gambling operators. The responsible gambling measures include responsible marketing, fair gaming, prevention of underage gambling and protection of vulnerable customers. The provisions include:

. Advertisements should contain factually correct information and should not be false or misleading, particularly with regard to customer winnings. . Advertisements should not entice underage individuals to gamble, and should not be displayed in media that is clearly targeted at underage individuals. . Customers should not be encouraged to chase their losses or re-invest their winnings and at no time should it be suggested that gambling is a means of solving financial difficulties. . Advertisements and promotional content should be within the spirit of responsible gambling. . Terms and conditions applicable to promotional activities should be clearly displayed, date and time stamped, and should not be unreasonably altered subsequent to the wagering activity. . Direct advertisements and promotional communication should carry an age restriction warning where practical. . Email, SMS and bonus advertisements should have an unsubscribe, or opt out, facility. . Operators should ensure that an affiliate and/or third party performing advertisements on their behalf is aware of and is willing to take appropriate steps to abide by the same measures. . An independent third party should be available for mediation or resolution of disputes.

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The European Gaming and Betting Association (EGBA) (2015) is an organisation of gambling operators licensed in the EU. It seeks to promote a safe and reliable European online gambling market with a high level of consumer protection. All EGBA members are audited on their compliance with the CEN Workshop Agreement.

The Remote Gambling Association (2015), another industry organisation which is focused on the UK, has adopted the CEN Workshop Agreement and also has its own Social Responsibility Code.

A number of remote wagering operators arrange for auditing and accreditation by eCOGRA, a London-based online gambling compliance and certification organisation. Display of its Safe and Fair Seal on a website provides assurance to consumers that the operator has passed its annual onsite compliance review. eCOGRA’s Generally Accepted Practices (eGAP) (2014) are designed to achieve player protection, fair gambling and responsible conduct without unnecessarily placing constraints on business operations. There are no specific constraints on inducements, although one compliance item requires advertising and promotional content to be within the spirit of responsible gambling.

The Interactive Gaming Council (IGC; 2005) is a non-profit trade association based in Canada, and claims to champion initiatives that address the multi-various challenges and opportunities facing the Internet gambling industry, in order to ensure an environment of fair and responsible gambling. The IGC Advertising Code of Practice states that a Member’s website must contain clear information about the requirements for any promotional campaign, including a link to the applicable terms established for each specific promotion. The IGC will also accept and investigate complaints about members.

The Global Gambling Guidance Group’s (G4; 2014) e-Betting Code of Practice contains general requirements about responsible gambling aspects of advertising but no specific references to promotions or inducements.

The International Association of Gaming Regulators (IAGR), an organisation of regulators from a number of countries and states, issued model eGambling guidelines (2008) for adoption by jurisdictions that licence Internet wagering. The eGambling guidelines state that terms and conditions and general information provided to the customer must be easily accessible and stated in a clear and intelligible manner. Where it is not possible to present the full terms and conditions to the customer at the point of registration, for example, for telephone betting, customers must be provided with easy access to the operator’s terms and conditions. The IAGR also considered that normally customers must be able to withdraw deposits from their account at any time. There must be an effective complaints system. Socially responsible measures should apply to advertising and marketing.

3.4 Policy Issues

3.4.1 Terms and conditions of inducements

The JSCGR (2011) observed the importance of reading the fine print terms and conditions to understand inducement offers, as the details are not usually presented in the advertisements. Few jurisdictions or codes of practice include specific requirements regarding the provision of the terms and conditions of inducements in a readily accessible and easily read form. Denmark has the most prescriptive approach in requiring essential conditions to be displayed with the advertisement when possible, or with direct links when space is limited. Although some of the codes of practice state that terms and conditions are to be clear and accessible to consumers, the reality is that essential terms and conditions are rarely provided in full with the inducement advertising.

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The audit of inducements (Chapter Four) found that the majority of inducements displayed a number of associated terms and conditions or provided a hyperlink to the terms and conditions. However, many others did not provide easy access to the terms and conditions, with the worst group simply referring to the company’s general terms and conditions. General terms and conditions often ran into hundreds of pages, expressed in legal terminology. The complications multiplied when the incentives involved the provision of bonus bets, which were themselves subject to a separate raft of terms and conditions.

It is not surprising that some wagering consumers feel misled by inducements when the conditions are not easily accessible. There is a clear need to develop a minimum standard for the acceptable presentation of the terms of inducements.

3.4.2 Broadcasting and advertising

Broadcasters have self-regulated for many years, with governmental support. In response to government pressure, the broadcasting and advertising organisations in Australia strengthened their voluntary codes of practice to limit the proliferation of gambling promotions during and around sporting events. These included amendments to the Commercial Television Code of Practice, Commercial Radio Australia Codes of Practice and Guidelines, and Code of Ethics of the Australian Association of National Advertisers.

The revised version of the Commercial Television Code of Practice incorporates provisions relating to gambling advertising that were strengthened in response to community concerns about gambling advertising. The old version of the code simply provided that gambling advertising must not be broadcast in G classification periods Monday to Friday, nor on weekends between 6.00 am and 8.30 am, and 4.00 pm and 7.30 pm. However, gambling advertising was permitted during news, current affairs and sports programs, and lottery and keno advertisements are exempt. In 2013, a new section was inserted into the code imposing detailed new restrictions on the promotion of odds and broadcasting of betting advertising before, during and after live sporting events. Clause 8.10 of the code requires betting advertising to be socially responsible and to not mislead or deceive the audience. A responsible gambling message is required to be included with the advertisement.

The Australian Association of National Advertisers (AANA) brought in a new Code of Ethics at the beginning of 2012 that requires its members to comply with the Prevailing Community Standards as determined by the Advertising Standards Board. The Advertising Standards Board membership reflects a wide range of community interests.

In December 2012, a Sportsbet advertisement was held to be in breach of section 2.6 of the AANA Code of Ethics (Advertising Standards Board case no. 0476/2012). Section 2.6 of the AANA Code of Ethics provides that advertising or marketing communications should not depict material contrary to prevailing community standards on health and safety. The advertisement featured a mobile banner ad with the text ‘Bet on every race, every day, from your mobile’. The Board noted that there is a genuine community concern around gambling and any portrayal that encourages excessive gambling. The Board agreed that the availability of a mobile phone app for the purposes of gambling is not of itself encouraging excessive gambling. However, a majority of the Board considered that the phrase was suggestive of frequent and continual betting and encouraged excessive gambling. Sportsbet voluntarily withdrew the advertisement.

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3.4.3 Complaint resolution

An accessible, convenient and fair complaints resolution mechanism is an important consumer protection measure. Stakeholders generally acknowledge the importance of consumer protection, and many of the governmental and self-regulatory regimes provide for a specific complaint resolution process. The availability of a complaints resolution process should be advertised on the operator’s website.

Typically complaints are first made to the operator, which will investigate and determine the complaint internally. In some cases, a dissatisfied complainant can then apply to a third party to have the complaint considered, such as a government regulator, industry body or independent arbitrator. The availability of a complaints resolution process is relevant to the issue of inducements, as terms and conditions are often complex, and consumers may become dissatisfied.

The IAGR (2008) recommends that operators provide information on their website about their complaints procedure, including how to make a complaint against the operator and provision for adjudication of complaints by the regulator or an approved third party.

The Independent Betting Adjudication Service (2015) is an independent organisation based in London that is used by a large number of offshore wagering operators including 10Bet, Betfair.com and Stan James. It will determine consumer complaints made against member organisations when customers are dissatisfied with outcomes from internal dispute resolution. The service is free to applicants and offers procedural fairness, objective standards and confidentiality.

3.4.4 Credit

The provision of credit or delayed payment of betting accounts may be considered an inducement to gamble. The JSCGR (2011) was unconvinced that all inducements should be treated as simply standard advertising practice, referring to the case of a Melbourne man with a mental illness who ran up $80,000 in debts with Sportsbet. The JSCGR noted that the case demonstrated the danger of a combination of free bets and credit.

The provision of credit by bookmakers was established in the on-course bookmaking era, when the presence of pickpockets at racecourses made it hazardous to carry large amounts of cash. There are now many quick and safe methods of transferring funds to an Internet wagering operator anywhere in Australia or the rest of the world. The provision of credit or delayed payment of betting accounts is sometimes justified by the industry on the grounds that, if it was prohibited in Australia, the local industry would be at a disadvantage to international operators. However, the availability of credit to gamble is clearly an inducement that encourages some people to gamble more than they would if they had to actually transfer funds into the wagering operator’s account first. Problem gamblers are also greatly influenced by the availability of credit.

3.4.5 Loyalty programs

Loyalty programs have not been considered by regulators or specifically addressed in industry codes of conduct. However, it is generally accepted that they are an inducement and need to be treated similarly. For example, Betfair (2012) advised the TGC that it had recently implemented a player loyalty program called ‘Betfair Black’ which provided a variety of rewards to key customers. Betfair assured the TGC that it would take all necessary steps to ensure that the loyalty program complied with the Responsible Gambling Mandatory Code of Practice (TGC, 2012).

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Although loyalty programs are clearly a form of inducement to gamble, they are not considered in any detail in this study. Loyalty programs are not easily comparable with other types of inducement, as they have little influence on the initial decision to sign up to a business and have greater significance over a longer period of time.

3.4.6 Affiliates

Affiliates receive a payment or commission for referring punters to wagering operators and facilitating the betting process. Typically, affiliates operate independent websites with a click-through process to direct customers to the wagering operator. Most Internet wagering operators use affiliates. An example is Bet365 (2015), which will accept referrals from affiliates and track their transactions, providing a report of the customer’s transactions to the affiliate, and paying a referral commission of 30% of the net profit earned. Affiliates are required to use the wagering operator’s approved advertising creative material. Affiliates are identified in some codes of conduct, such as the CEN Workshop Agreement (2011), where operators are required to ensure that their affiliates abide by the same standards as the operator.

Another form of affiliate arrangement involves the placement of a designated computer terminal that directly links up to the wagering provider. In 2009, VenueNet Pty Ltd announced an intention to install hundreds of touch-screen betting kiosks, also called ‘betboxes’ in hotels across Australia (Oakes, 2009). The company argued that the VenueNet kiosk was simply a computer with Internet access that put the customer in touch with Sportsbet in the Northern Territory. The VCGR seized a VenueNet kiosk from a Melbourne hotel and prosecuted VenueNet. The company was convicted in the Melbourne Magistrates Court of assisting the hotel in conducting the business of an illegal betting house and possessing unauthorised instruments of betting. The question of whether Victoria’s action against betting kiosks was unconstitutional as being in restraint of trade and commerce was considered by the Full Federal Court in The State of Victoria v Sportsbet Pty Ltd (2012). The court held that the provisions were not discriminatory nor were they protectionist because the law applied equally to Victorian bookmakers and interstate bookmakers.

3.5 Laws and self-regulatory measures

3.5.1 Types of measures In Australia, the advertising and provision of inducements is restricted by: . Commonwealth laws, including the Interactive Gambling Act 2001 and the Broadcasting Services Act 1992. . State laws, such as the Gambling Regulation Act 2003 (Vic). . Mandatory codes of practice, such as the Northern Territory Code of Practice for Responsible Gambling. . Voluntary codes of practice, such as the Queensland Responsible Gambling Code of Practice. . Individual operators’ codes, such as the TABCORP Wagering Responsible Gambling Code of Conduct. . Broadcasting and advertising codes of practice.

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3.5.2 Commonwealth

In Australia, the limited legislative role taken by the Commonwealth reflects the revenue arrangements where most gambling tax flows to the States and Territories. The IGA stands as the entry point of Commonwealth activity in gambling regulation, and recognises that the growth of Internet gambling is eroding the ability of States and Territories to effectively regulate the industry. The growing role of the Commonwealth is further evidenced by the two Productivity Commission inquiries and the work of the Parliamentary Joint Select Committee on Gambling Reform. The Commonwealth was forced to respond to widespread public reaction to the growth in television sports betting advertising, and would have legislated for restrictions had the industry failed to self-regulate to a satisfactory degree.

The Commonwealth could act to force the development of a uniform national approach to Internet wagering generally, as well as the specific regulation of inducements, creating a level playing field. However, such an approach would remove the ability of the individual States and Territories to regulate in ways that best suit the wishes of their particular constituencies.

3.5.3 States and Territories

The State and Territory governments in Australia have taken a wide variety of approaches to the regulation of inducements, ranging from no restrictions to absolute prohibition. Legislation lacks flexibility, but enables governments to prosecute and fine operators that fail to comply with restrictions and prohibitions. However, it appears that only Victoria has actually prosecuted operators for breaching its prohibition on inducements to open wagering accounts. It is possible that other States have also issued fines or warnings to operators.

Mandatory codes of practice, such as exist in South Australia, the ACT and the Northern Territory, provide more flexibility. Whilst the South Australian and ACT codes of practice have clear and precise requirements that could lead to prosecution, it is difficult to imagine that a prosecution could ever occur in the Northern Territory, due to the general wording of its Code of Practice for Responsible Gambling, which is based on the voluntary Queensland code. In South Australia, the code specifically states that a gambling provider must not offer or provide any inducement directed at encouraging patrons to gamble or directed at encouraging people to open gambling accounts. The provision is very clear. By contrast, the Queensland and Northern Territory Codes make the general statement that advertising and promotions are to be delivered in an honest and responsible manner with consideration given to the potential impact on people adversely affected by gambling.

The Queensland Responsible Gambling Code of Practice is voluntary, and relies upon the shared commitment of gambling industry providers to the guiding principle of ethical and responsible behaviour. The Queensland code does not prohibit or restrict inducements, in contrast with most other states. Perhaps Queenslanders are content with this state of affairs, as they can access the full range of inducements offered by Internet wagering operators, giving them a financial advantage over residents of prohibitionist States.

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3.6 Identifying options

Stakeholders have presented a range of views on if and how wagering inducements should be further regulated and other issues for consideration. Six general options are considered in this section, ranging from total prohibition, to improved self-regulation. These options could be implemented in a variety of ways, including combining elements of more than one option.

3.6.1 Elements of laws

The current laws relating to inducements vary considerably between jurisdictions. The way in which the elements of those laws apply to actual inducements is often unclear, leading to a grey area in which wagering operators may venture with some hesitation. It would be better to set out the exact boundaries of what is legal and what is not.

Changes to some elements of laws applying to wagering marketing have been suggested. The Australian Gambling Research Centre (AGRC) (Hing, 2014) said that exemptions for sport-integrated gambling marketing during general TV viewing times, and the quantity and types of advertisements and promotions allowed during live and televised sport could be reviewed. The AGRC (Hing, 2014) also suggested that the types of sports betting advertising allowed could be reviewed, with particular attention to bonus promotions such as money-back guarantees and ‘free’ bets requiring matching deposits.

3.6.2 Determining the objectives of the regulatory approach

The objectives of regulatory and self-regulatory approaches need to be clearly articulated by policymakers at the commencement. Existing measures rarely specify exactly what outcomes are intended, and these vary amongst stakeholders. Regulators want precision in regulatory measures, with clear rules about what can be followed. Gambling operators prefer vaguely expressed intentions of responsible marketing, avoiding having their hands tied by details. Gambling operator codes of conduct mostly have strength in responding to problem gambling, for example by providing warnings, self-exclusion and links to help services. Broadcasters’ and advertisers’ codes consider the effect on viewers’ sensitivities, referring to ‘prevailing community standards’. They have little focus on problem gambling.

The wider community feels there is simply too much gambling advertising. DLA Piper (2013) argues that the UK and Australia are now experiencing a media focus on the ‘normalisation’ of gambling, with the main concern being that some children will grow up thinking gambling is an integral part of sport. This is reflected in three key concerns that emerged during the inquiry by the JSCGR (2013):

. Indirect marketing and its possible effects on children and vulnerable people from a high level of exposure. . The pervasive nature of the promotion of sports betting. . The integration of sports betting into sporting commentary.

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3.6.3 Industry view

The Australian Wagering Council (2012) makes the following arguments against the prohibition of inducements:

. Wagering operators, like other legal businesses, have the right to advertise their services responsibly. . A prohibition on all inducements could prevent operators from lowering prices to respond to competitive pressures or pass on operating cost savings. . Inducements enhance the customer experience. . They may reduce the switching costs between incumbent wagering operators, and new entrants, enhancing competition. . Inducements have facilitated the growth in the market share of Internet wagering operators at the expense of traditional forms of wagering so that the real dollar per capita spend on wagering in Australia has shown only minimal growth over the last decade. . There is no evidence that indicates that the availability of inducements to customers encourages or has increased the prevalence of problem gambling. . Prohibition on the offering of inducements to establish a betting account favours retail based operators and distorts a competitive wagering market. . Limitations on Australian wagering operators to use inducements puts them at a commercial disadvantage in competing against illegal offshore wagering operators.

The Australian Wagering Council (2012) points out that a customer may seek recourse against a wagering operator that unlawfully misleads consumers by making a complaint to the operator’s licensing regulator, or through State Fair Trading offices or the Australian Competition and Consumer Commission.

However, wagering, like other forms of commercial gambling, is a product that has the potential to cause significant financial harm to consumers. As the High Court noted in its Kakavas (2013) judgment, gambling transactions are a rare species of economic activity in which each party sets out openly to inflict harm on the other. The extent to which the potential for harm is minimised is a matter of concern for all stakeholders. Research indicates that the prevalence of problem gambling among those who gamble on the Internet is higher than for conventional land-based forms. At particular risk are young men who are subject to growing peer pressure to bet online, children who grow up in a world where sports betting is normalised, problem gamblers and other vulnerable groups.

The Australian Internet Bookmakers Association (AIBA) submitted to the JSCGR (2011) that inducements are such a standard and unremarkable feature of the marketing of the global Internet gambling industry that they are the subject of specialist websites and services that compare the bonuses on offer. As this is global practice, with various forms of bonuses being offered by all major operators, a ban on Australian operators matching these modest offers has had the effect of making the Australian industry less competitive in the global market, but at the same time making overseas operators more attractive to Australian punters (JSCGR, 2011). In attempting to avoid this loss of competitiveness, Betfair in its submission to the TGC urged the TGC to legislate for a level playing field regarding the ban on inducements, and asked that any restrictions only apply to locally licensed wagering operators in their dealings with Tasmanian customers. An offshore operator such as Betjack, with reputed links to the criminal underworld and accused of failing to pay winnings to its customers, provides another good reason to support the Australian industry.

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3.6.4 Option 1: Prohibition of all inducements

The extent to which operators actually comply with existing prohibitions on inducements is unknown. There is no evidence available to this study of any prosecution for failure to comply with the prohibition on inducements in any jurisdiction other than Victoria.

Reasons for the prohibition of all inducements include:

 That gambling is not to be encouraged, even though it is a lawful activity. Sign up inducements appear to offer a significant financial benefit or something for nothing. Many in the community are concerned that sign up inducements unnecessarily encourage people to commence gambling which may result in significant cost to them later.

 That the offers motivate problem gamblers and other vulnerable persons to open more accounts and to gamble more money and more frequently.

 Inducements unnecessarily favour the internet gambling industry over land-based operators.

A blanket ban would put local operators at a disadvantage, as there is little to prevent consumers opening accounts with offshore Internet operators. Also, there would be difficulties in deciding where to draw the line between illegal inducements and promotional activity that was still permitted. If wagering operators are not permitted to compete for business by one method of promotion, they will inevitably look for alternatives.

Consideration should be given to the existing, and possible future, responses of wagering operators to a blanket prohibition and the social value of alternative forms of promotion should be compared with the social value of inducements.

No evaluation has been undertaken of the costs and benefits of the ban on inducements. Future research could make a comparison between the outcome for consumers in jurisdictions where inducements are banned, and those in jurisdictions where they are permitted.

3.6.5 Option 2: Prohibition of some inducements

A second option is to only prohibit those inducements that are considered to be the most harmful. Research would be needed to identify those inducements that cause the most harm and then an evaluation would be needed of whether prohibition is the most effective response, or whether alternative responses could suffice to reduce the harm while maintaining the benefits.

As with total prohibition, the response from wagering operators to a partial prohibition should be considered, as well as the loss of competitiveness with offshore operators.

3.6.6 Option 3: Restrictions on the type and terms of inducements

Restrictions could be placed on the type of inducements, such as allowing only some types of sign-up inducements while prohibiting others.

Limits could be set on terms of the permitted inducements, such as a cap on the amount of bonus offers or a limit on the number of times which a bonus amount needs to be turned over.

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These restrictions and limits could enable operators to offer a modest level of inducement to encourage switching to new market entrants or brand loyalty, without putting pressure on consumers to bet excessively or stimulating problem gamblers.

3.6.7 Option 4: Restrictions on the type and form of advertising

Commercial decisions are often made by gambling operators as they weigh up legal risks against the benefits derived from advertising. These decisions have given rise to a commonly held perception that betting operators are pushing the envelope when it comes to advertising (Nettleton 2013).

The detail of the restraints on advertising inducements is important. At present, most regulations and codes of practice refer to inducements in general terms, such as requiring advertising to reflect prevailing community standards and inducements to be socially responsible.

A strong case can be made for greater precision in defining the boundaries of acceptable advertising and imposing clear limits on inducements. This will give certainty to the industry, and ameliorate the public perception that the industry is pushing the boundaries of acceptable standards.

Concerns about the conditioning of inducements on minors could be addressed by limiting the times when inducements can be advertised on broadcast media. The recent commitment by UK wagering operators to refrain from advertising inducements on television before 9 pm is an example. Age gates on social and digital media could also be strengthened. Restrictions on the form of advertisements are relevant to the impact such advertising may have on problem gamblers and other vulnerable people. The means of communication could also be targeted, or limits put on the number of communications sent to each customer each week.

3.6.8 Option 5: Requirements for additional features – terms and conditions, independent dispute resolution

The terms and conditions of inducements can be difficult to access and understand, leading to consumer dissatisfaction. A prescriptive approach to advertising, setting out exactly how the terms and conditions of inducements must be conveyed, offers the potential of empowering consumers to make informed choices, thus reducing consumer dissatisfaction, whilst enabling Australian llicensed wagering operators to compete on a level field. Because inducements can have detailed and onerous conditions, a simplified, standardised summary could be mandated. The summaries that apply to energy efficiency on appliances, fuel economy on motor vehicles, or comparison rates for credit are examples. A comparison box could be mandated for advertisements for inducements, setting out key information, such as the number of times the inducement must be turned over.

Generally, the amounts in disputes about inducements are too small to warrant court action and are not of interest to general government consumer protection agencies. The availability of an independent third party dispute resolution process enables dissatisfied consumers to have their grievances determined when the operator’s internal dispute resolution process has failed to deliver an outcome to the consumer’s satisfaction. Such a dispute resolution process should be easy to access, quick, and able to make determinations that are binding on the operator but leave the way open for a dissatisfied consumer to access any legal remedies that may be available.

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3.6.9 Option 6: Improved self-regulation

Improved self-regulation would reduce the need for government intervention. The Australian wagering industry has the ability to raise the standard of its voluntary codes of practice, by ensuring that they provide a detailed suite of clearly expressed and effective consumer protection features. Inducements are just one area where self-regulation could be strengthened. Because of the wide differences in approaches currently taken by governments, there would be benefits of uniformity, flexibility and cost effectiveness if the industry were to take voluntary steps in this area.

3.7 Chapter summary

The policy analysis found that the regulatory environment for wagering inducements currently lacks clarity on what constitutes an inducement, provides little specificity about which aspects of inducements are acceptable or not, and lacks consistency across Australian jurisdictions. While a variety of relevant legislation, regulations and codes of practice exist for gambling, advertising and broadcasting, and which might inform the provision and promotion of wagering inducements, their provisions are typically vague and often provide little specific direction to ensure that these inducements minimise gambling harm and provide adequate protection for consumers. International jurisdictions have responded in a variety of ways, but their responses have also been fragmented and inconsistent.

More specifically:

. The issue of inducements has attracted significant attention in recent years. Governments and industry have made some progress in providing consumer protection measures; however, it appears that more should be done. . The current situation where each jurisdiction has a different approach is clearly unsatisfactory and confusing for both the wagering industry and consumers. . The fact that most wagering operators are licensed in smaller jurisdictions with a low level of regulation is also problematic. . The Commonwealth has the potential to take a more active role in relation to inducements. . Developments in Europe offer some additional options in managing wagering inducements. . Terms and conditions of inducements should be made accessible and easily understood so they can be compared. . Broadcasting and advertising codes of practice could be expanded to cover the advertising of inducements in more detail. . Complaints resolution processes are important. . The availability of credit or delayed payment of betting accounts is an inducement that has the potential to cause significant harm. . Affiliates and loyalty programs of wagering operators are rarely mentioned in regulation or codes of practice. . There are a number of regulatory options available to better manage the provision of wagering inducements.

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Chapter Four: The audit of inducements

4.1 Introduction

This chapter presents the results of the audit of wagering inducements found on operator websites. The methods used to conduct the audit are firstly explained, before each type of inducement is described. Summary statistics are then presented for each of the key attributes of the inducements. The main terms and conditions of the inducements are examined, as well as their inclusion of responsible gambling messages.

4.2 Method

The audit was conducted in May 2015 and covered the inducements offered by 30 gambling operator brands during the audit period. The list of brands (Table 4.1) included 18 operators licensed in Australia and 12 of the most popular offshore operators that accept bets from Australians in AU$ (sourced from casinocity.com on 28 April 2015).5 6

Table 4.1 Brands included in the inducements audit, onshore/offshore operators

Onshore Offshore 1 Crownbet 19 Pinnacle Sports 2 Bet365 20 SBOBET 3 Betfair 21 10Bets Sports 4 Betstar 22 BetVictor Sports 5 Topbetta 23 Stan James Sportsbook 6 Bookmaker 24 BetDSI 7 Palmerbet 25 TonyBet 8 William Hill 26 Mansion 88 9 Centrebet 27 Intertops Sportsbook 10 Ladbrokes 28 Betjack/ Marathon Bet 11 Luxbet 29 Betplay 12 Sportsbetting 30 Betadonis 13 Sportsbet 14 Tattsbet 15 TABtouch 16 ACTTAB 17 Tom Waterhouse 18 TAB.com.au

The websites of these 30 operators were accessed on two separate occasions. Count 1 took place between the 8th and 13th May, and Count 2 between the 22nd and 28th May. Since there is a good deal of variation between inducements offered by wagering brands at the start of the week, and those

5 Twelve of the most popular 13 brands were selected to give a broader range of licensing jurisdictions than if just the top 12 were selected. 6 Three of these brands (Tattsbet, TABtouch and ACTTAB) did not advertise any inducements during the audit period.

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offered towards the end of the week, each brand was audited once at the start of the week and once at the end of the week (over Counts 1 and 2) to ensure that we captured the widest range of inducements possible within the project timeframe.

Betjack was included in the audit at Count 1 (with two inducements on its website on 12 May 2015). At the time of Count 2, its website was undergoing maintenance and was unavailable, so a replacement offshore brand, Marathon Bet, was selected for inclusion in Count 2. This ensured that 30 brands were audited in each count. Marathon Bet had no inducements advertised during Count 2. For this reason, this report refers to 30 brands being included in the audit and only Betjack appears in any of the inducement audit data.

All in-scope inducements (see Section 1.3 for the project definition of inducements) were identified on the websites. Inducements were generally found in areas of the website labelled ‘promotions’, or ‘specials’ or ‘novelty’. Their prominence varied, with some websites opening up directly to a full page ‘sign up offer’, which needed to be circumnavigated in order to access the generic homepage. Most websites displayed their inducements on their home page, as static and/or scrolling advertisements. For a small minority of websites, the promotions page needed to be proactively searched for. The majority of operators advertised only current promotions, with a small minority ‘archiving’ historical offers (in one case, going back several years). Most inducements are assigned a promotional code, which the bettor is required to type in during the process of taking up the offer.

Key attributes of the inducements, along with an inducement image taken from the website, were recorded into a bespoke ACCESS database. A total of 223 inducements were recorded across the two counts (165 for Count 1 and an additional 58 for Count 2). The attributes recorded in the database were as follows:

. Brand . Whether onshore or offshore . Inducement label and brief description . Type of inducement . Incentive provided . Whether it applies to sports and/or racing . Sporting code or racing type and geography (whether Australian or overseas) . Detail on whether limited to a particular sporting/racing round or event . Type of bets eligible (and ineligible) for the inducement . Minimum and maximum bet . Maximum payout . Terms and conditions of the inducement (these are described in detail in Section 4.5) . Whether a responsible gambling message is visible as part of the inducement advertisement itself, and/or on the host website . The browser used to access the inducement was also recorded (since that affected what could be viewed in some instances) as was the date it was accessed

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4.3 Inducement types

The audit covered 15 types of inducement, listed below. A number of inducements could be classified in more than one of the categories; for example a multi bet offer might involve a refund of the stake if one of the bet elements did not win. Therefore, we established a ‘priority coding’ order; in other words, if an inducement fitted into more than one category, it was classified as the first category in the list below. The hierarchy was designed to reflect the diversity of inducements; so, for example, if an inducement was distinguished by encouraging ‘mobile betting’, and the incentive provided was a refund, it was coded as a ‘mobile betting offer’, rather than a ‘refund/stake back offer’. It is important to note that changing the priority order of this coding list would, of course, affect the number and distribution of inducement types.

. Sign up offer . Refer a friend offer . Happy hour or similar offer . Mobile betting offer . Multi bet offer . Refund/stake back offer . Match (or partially match) your stake/deposit (with bonus bets) . Winnings paid even if you don't win (e.g. protest payouts, in extra time) . Bonus or better odds (not including happy hour type inducements included above) . Bonus or better winnings . Competitions (where payout is bonus bets) . Reduced commission . Free bets (selected punters) . Other free bets (e.g. predict the outcome of a match) . Cash rebate (no play through required) The main features of each wagering inducement type are described, in turn, below; and the results of the audit are detailed in Section 4.4. All of the inducements offered some kind of financial incentive, which were predominantly (53% of inducements) paid out as ‘bonus’ or ‘free bets’ or, less commonly, provided as cash or credited to an account. The defining feature of bonus bets is that they are required to be bet or ‘played through’ before they can be withdrawn; in other words the bettor must make additional bets in order to take advantage of the financial incentive. These play through requirements may apply to the bonus amount itself, to the bonus amount plus the stake required to attract the bonus, to the winnings obtained through using the bonus amount, or to a combination of these amounts. Play through requirements among onshore brands tend to require that the bonus amount be bet through at least once; whereas offshore brands tend to stipulate multiple play through requirements. As described in Chapter Two, this requirement, invariably attached to bonus bets, is aimed at encouraging intensification of betting. The audit findings for play through requirements are detailed in Section 4.5.2.

It is also worth noting that winning bets placed with bonus bets do not reimburse the stake, in contrast with bets placed with cash. So, if a bettor placed a standard bet of $100, with odds of 2 to 1, s/he would win $200, and the original stake would be returned (a net gain of $200). However, if a bettor staked the same amount using bonus bets, s/he would only pocket the $200 winnings (a net gain of

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$100). Thus, bonus bets only yield a financial advantage to the bettor if they win. Play through conditions nearly always require the bettor to risk some of their own money to have a chance to win by using a bonus bet (see box below related to sign up offers).

4.3.1 Sign up offer

Sign up offers accounted for 13% of inducements captured in the audit. Sign up offers tend to be displayed prominently on the brand’s home page and, in some cases, as previously described, clicking on the web page link opened up a sign up offer advertisement which covered the whole screen, and needed to be circumnavigated in order to access the home page (Figure 4.1).

Figure 4.1 Example sign up offer

Sign up offers provide incentives to new customers in the form of bonus bets, with an average (mean) maximum value of $2007 and values ranging from $14 to $1,000 (among the wagering inducements captured in the audit). These offers generally match, or partially match, an outlay from the customer in the form of a deposit or first bet. In a small number of cases, the bonus bets exceeded the investment amount required from the customer. The amount offered appeared to be subject to variation, for some brands, with the amount changing, or more than one offer amount being displayed at once, during the audit period.

Sign up offers are associated with a number of conditions including being restricted to one offer per household and/or account, a time limit on when the new customer is required to deposit and or bet money (between 30 and 90 days, although one operator had a 7 day time limit), and play through requirements. These stipulate that the bonus bet incentive amount and/or matching deposit and/or

7 All monetary values are reported in AUD, unless otherwise stated. For this analysis, maximum values provided on the websites in other currencies were converted to AUD at the rates published by the Reserve Bank of Australia on 29 May 2015.

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winnings obtained from the bonus bet must be played through (usually at least once) before withdrawals can be made from the account. The bonus bets themselves are subject to an additional layer of restrictions, including the type of bets and the minimum odds. Sign up offers are deliberately ‘open’ in terms of the activities on which bets can be placed. As described in Chapter Two, sign up offers are prohibited in Victoria, New South Wales, South Australia and Western Australia. The box on the next page provides some examples of play through conditions on sign up offers. Similar play through conditions apply to bonus bets provided for other inducements.

4.3.2 Refer a friend offer

Refer a friend offers were far less common than the sign up offers described above, accounting for only 3% of inducements, although they share many of their characteristics. Refer a friend offers tend to provide incentives, in the form of bonus bets, to both the referring account holder and the friend. The average maximum value of the bonus bets was $69, ranging from $26 to $100.

For these inducements, the requirements on betting and playing through rest with the referred individual. The same four jurisdictions (Victoria, New South Wales, South Australia and Western Australia) are excluded from these offers but, unlike the sign up offers, there were no limitations on the number of times the offer could be claimed by referrers, with operators actively encouraging account holders to refer multiple individuals.

Figure 4.2 Example refer a friend offer

4.3.3 Happy hour (or similar) offer

These inducements accounted for 4% of the total. They were characterised by offering a regular, repeated, short term incentive to bet; for example, the ‘best industry price, every Saturday between 11 and 12’, or ‘in the two hours leading up to the match’. The incentive tended to be better odds, or better winnings, but inducements were coded in the ‘happy hour’ category if the promotion was marketed as being restricted to a particular time period, constituting a day or less. The maximum average payout associated with happy hour offers was $58, with a range from $50 to $65. The maximum bet threshold for this inducement ranged from $20 to $3,126.

Figure 4.3 Example happy hour offer

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Risks and potential returns from some sign up offers The following examples of sign up bonuses illustrate what the bettor needs to risk in order to have a chance to benefit from the associated bonus bets. Please note that these summaries are based on the research team’s interpretation of much longer terms and conditions associated with each offer. While we have made our best efforts to interpret these correctly, their complexity means we cannot be 100% sure, suggesting that consumers would have similar difficulties. The following examples are based on the maximum amount of each offer. Bet365 Open Account Offer ($200 maximum) The bettor deposits and bets $200, then receives the bonus bet of $200. The bettor must bet the deposit amount + bonus amount 3 times ($400x3 = $1,200) at odds of 1.5 or more within 90 days before withdrawing the bonus bet or any winnings made from the bonus bet. In this case, the turnover requirement of $1,400 = $1,200 of bettor’s own money + $200 bonus bet. Because only the winnings from bonus bets are paid (not the original stake), the bonus bet only has a financial benefit if it wins. In this case, the bettor is required to risk $1,200 of his/her own money at odds of 1.50 or more for a chance to win from a $200 bonus bet. Sportsbet 1st Bet Bonus Sign Up Offer ($100 maximum) The bettor deposits and bets $100, then receives the bonus bet of $100. The bettor must bet the bonus bet of $100 within 30 days. Any winnings from the bonus bet must then be turned over once (5 times for international bettors) before being able to make any withdrawal from the account. Because only the winnings from bonus bets are paid (not the original stake), the bonus bet only has a financial benefit if it wins. In this case, the bettor is required to risk $100 of his/her own money and all winnings from the bonus bet for a chance to win from the $100 bonus bet. The bonus bet therefore has a financial benefit only if it yields winnings twice. William Hill Up to $200 First Bet Offer ($200 maximum) The bettor deposits and bets $200, then receives the bonus bet of $200. The bettor must bet the bonus bet of $200 within 7 days. The bettor must then bet the deposit amount ($200) + any winnings from the bonus bet once at odds of 1.5 or more before being able to make any withdrawal from the account. Because only the winnings from bonus bets are paid (not the original stake), the bonus bet only has a financial benefit if it wins. In this case, the bettor is required to risk $400 of his/her own money and all winnings from the bonus bet at odds of 1.5 or more for a chance to win from the $200 bonus bet. The bonus bet therefore has a financial benefit only if it yields winnings twice. Crownbet First Deposit Offer (3 x $50 = $150 maximum) The bettor deposits $50 (or more), then receives 3 x $50 bonus bets. The bettor must bet the bonus bets within 30 days and on different markets (thus requiring 3 bets). Any winnings from the bonus bets must be turned over once (5 times for international bettors) at odds of 1.5 or greater before withdrawal of those winnings is allowed. Because only the winnings from bonus bets are paid (not the original stake), the bonus bet only has a financial benefit if it wins. In this case, the bettor is required to risk $50 of his/her own money and all winnings from the 3 bonus bets at odds of 1.5 or more for a chance to win from the $150 worth of bonus bets. Each bonus bet therefore has a financial benefit only if it yields winnings twice. Sportsbetting 100%Deposit Bonus ($50 maximum) The bettor deposits $50 (or more), then receives a $50 bonus bet. The bettor must bet the bonus bet within 30 days. The amount of the original deposit ($50) must be turned over twice at odds of 1.8 or greater before withdrawals are permitted. Because only the winnings from bonus bets are paid (not the original stake), the bonus bet only has a financial benefit if it wins. In this case, the bettor is required to risk $100 of his/her own money at odds of 1.8 or more for a chance to win from the $50 bonus bet. Intertop Sportsbook: Sign-Up Special - $20 Bet Token The bettor deposits US$20 (or more), then receives a US$20 bonus bet. The bettor must bet the bonus bet within 30 days. The bonus bet must be turned over 16 times at odds of 1.5 or greater “in order to request the right to make a withdrawal”. No information could be found about whether any payouts from the bonus bet include the original stake or not. In this case, the punter is required to risk US$340 of their own money at odds of 1.50 or more for a chance to win from the US$20 bonus bet.

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4.3.4 Mobile betting offer

These inducements accounted for only 1% of the total. Their aim is clearly to encourage use of smart phones and tablets for betting, and they tended to relate to only the first bet placed via this medium. These inducements were usually ‘open’, i.e. they were not linked to particular codes or events. The incentive tended to be provided in the form of bonus bets, the average maximum value of which was $75 (range $49 to $100).

Figure 4.4 Example mobile betting offer

4.3.5 Multi bet offer

These inducements accounted for around one in ten (9%) of wagering inducements. They stipulate that a multi bet (also known as an accumulator, or a parlay) must be placed, generally on a particular sporting code or racing carnival. The incentive provided usually comprises a refund/stake back offer or increased winnings; both of which might be paid either in the form of bonus bets or cash. As such, the multi bet offer usually incorporated one of the other inducement types, for example the offer stipulated a multi bet via a mobile phone, or a multi bet involving a refund, or attracting bonus winnings. In such cases, the priority coding order was used (as outlined above). Multi bet offers tended to have a maximum bet limit, which ranged from $50 to $100. The average maximum monetary payout associated was $101, with a range from $50 to $200. Bonus bets were not eligible for this offer.

Figure 4.5 Example multi bet offer

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4.3.6 Refund/stake back offer

Refund/stake back offers were the most prevalent form of wagering inducement, constituting 27% of the total. These inducements aim to reduce the perceived risk of betting by offering to refund the stake (or part of it) if the bet does not win. These offers covered a wide variety of racing events and sporting codes and tended to be linked to a particular race or match and/or associated with particular conditions, such as ‘if your team is winning at half time’, or ‘if your team scores xx points but loses’, or ‘if your selected first try scorer scores at some point during the game’. Refunds are typically (68% of cases) paid out as bonus bets, which need to be played through; but in some cases (32%) the refunds are paid out as ‘cash’ (i.e. without play through requirements). The average maximum value of the incentive (in the audit) was $85, and ranged from $25 to $357.

Figure 4.6 Example refund/stake back offer

4.3.7 Match (or partially match) your stake/deposit (with bonus bets)

This inducement type is very similar to the refund/stake back offer, in that the customer’s stake is refunded (either in the form of cash or bonus bets). The differentiating factor is that, while refund/stake back offers are provided for losing bets, and provided after the event, the ‘match your stake’ inducement type is provided either at the point of placing the bet (i.e. in advance of the event) or for a winning bet. These offers were sometimes conditional on ‘reloading your account’ i.e. putting more money into a betting account. All other characteristics are similar between the two types. These ‘match your stake’ inducements constituted 4% of the total. The average maximum value was $58, with a range of $14 to $100.

Figure 4.7 Example match your stake/deposit offer

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4.3.8 Winnings paid even if you don’t win

These inducements accounted for 7% of the total and, as with refund offers, were marketed as reducing risk; in this case the risk of a ‘near win’. As such, these offers tend to be linked to ‘close calls’ such as protest judgements in horse racing, or video referee decisions disallowing a first try scorer’s try. These offers were usually restricted with a maximum cut-off on the bet value, which ranged from $100 to $250. Thresholds on the value of winnings that could be claimed through this offer were high, ranging up to $100,000. Winnings tend to be paid out as ‘cash’ rather than bonus bets, although bets placed with bonus bets were invariably ineligible for this offer type.

Figure 4.8 Example winnings paid even if you don’t win offer

4.3.9 Bonus or better odds

Inducements offering ‘promotional odds’ incorporated both temporary offers, usually related to a particular season or a specific race or match; and also a more generic and continuous promotion, with the operator guaranteeing the ‘best tote odds all day, every day’. These inducements accounted for 13% of wagering inducements. The incentive related to this inducement type was characterised as being paid out as ‘cash’ rather than bonus bets. These offers were usually restricted with a maximum cut-off on the bet value, ranging from with $50 to $200. Again, the cap on winnings under this offer tended to be very high, up to $20,000.

Figure 4.9 Example bonus or better odds offer

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4.3.10 Bonus or better winnings

This inducement type was similar to the previous offer (bonus or better odds) but was expressed in different terms, for example as ‘double your winnings’ or ‘25% extra’ on your winnings. The additional winnings were paid out as either cash (46% of this inducement type, and with a cap of $10,000) or as bonus bets (54% of this inducement type). These inducements accounted for 12% of the total. These offers were restricted with a maximum cut-off on the bet value, ranging from $100 to $250.

Figure 4.10 Example bonus or better winnings offer

4.3.11 Competitions (where payout is in bonus bets)

This inducement type was very rare (<1% of records). Most competitions involved prizes that were not designed to directly encourage betting behaviour (for example a trip to America or a ticket to a sporting event); and these were deemed out of scope for the audit (see Chapter One). There were rare cases, however, where a competition was paid out in the form of bonus bets, and therefore offered a direct inducement to intensify gambling behaviour; these cases were recorded in the audit. The example below is awarded to the ‘customer who makes the highest net profit from a single parlay bet in each calendar month’, providing $1,000 in bonus bets.

Figure 4.11 Example competition

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4.3.12 Reduced commission

This inducement type was also very rare, constituting just 1% of the total. In the two records that were captured in the audit, the inducement related to reduced rates of commission during a particular racing carnival and ‘forgetting the 5p rule 4’ (for a UK based provider).

Figure 4.12 Example reduced commission offer

4.3.13 Free bets (selected punters)

This category covered a small minority of wagering inducements (2%) which were not explicitly conditional on a specific betting behaviour (although they are only available to active bettors). These promotions were deemed inducements to gamble in that their incentive was in the form of free or bonus bets. The defining example is free bets to ‘selected punters’.

Figure 4.13 Example free bets offer

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4.3.14 Other free bets (e.g. predict the outcome of a match)

This inducement category was very rare (2% of the total) and comprised ‘all other free bet’ inducements which did not fit into the other categories, for example, the inducement below providing a bonus bet to bettors who predict the finalists of the English Champions League.

Figure 4.14 Example other free bets offer

4.3.15 Cash rebate (no play through required)

The final inducement type found in the audit constituted 4% of the total, and was found only in offshore providers. This inducement was characterised by providing cash back on betting expenditure, with no play through requirements, as a specified percentage of outlay. In some cases there were specifications (for example horse racing) and/or around the type of bet, with differing percentage amounts depending on whether it was an ‘exotic wager’ or a ‘win, place and show wager’.

Figure 4.15 Example cash rebate offer

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4.3.16 Click to call bonus

At the time of writing, williamhill.com.au and tomwaterhouse.com.au were offering matched bonuses for the first click to call bet made on any live market. However, these bonuses commenced after the audit period so were not included in the counts. They are mentioned here for interest. ‘Click to call’ technology has been introduced only very recently and allows bettors to place in-play bets through their computer or mobile phone (Figure 4.16). Because in-play bets can only be placed with Australian licensed operators in person or by telephone, this technology aims to circumvent the prohibition on placing in-play bets via the Internet. Bettors select their bets online, use the click to call button to connect to a telephone operator, and confirm their bet with another click. They do not need to speak to the telephone operator at all during this process.

Figure 4.16 Example click to call bonus offer

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4.4 Summary statistics

4.4.1 Number of inducements, by brand

The audit captured 165 inducements at Count 1 and 176 inducements at Count 2. Many of the inducements were long-running enough to be present during both counts (118 inducements). Table 4.2 shows the breakdown of inducements by brand, across the two counts and in total. Four of the brands covered in the audit (Tattsbet, TABtouch, ACTAB and Marathon Bet) did not advertise any inducements during the audit period, and therefore are not included in the table below.

Table 4.2 Total inducements by brand, by count

Count 1 Count 2 Total Brand N % N % N % 10Bets Sports 4 2% 4 2% 8 2% Bet365.com.au 17 10% 17 10% 34 10% Betadonis 2 1% 2 1% 4 1% BetDSI 4 2% 4 2% 8 2% Betfair.com.au 3 2% 1 1% 5 1% Betjack 2 1% 0% 2 1% Betplay 4 2% 4 2% 8 2% Betstar.com.au 5 3% 3 2% 9 3% BetVictor Sports 1 1% 2 1% 3 1% Bookmaker.com.au 5 3% 3 2% 8 2% Centrebet.com.au 7 4% 5 3% 12 3% Crownbet.com.au 16 10% 18 10% 35 10% Intertops Sportsbook 6 4% 7 4% 13 4% Ladbrokes 11 7% 21 12% 34 10% Luxbet.com.au 4 2% 10 6% 14 4% Mansion88 6 4% 5 3% 11 3% Palmerbet.com.au 8 5% 13 7% 21 6% Pinnacle Sports 2 1% 3 2% 5 1% SBOBET 1 1% 1 1% 2 1% Sportsbet.com.au 14 8% 14 8% 28 8% Sportsbetting.com.au 2 1% 2 1% 4 1% Stan James Sportsbook 9 5% 10 6% 19 5% TAB.com.au 5 3% 5 3% 10 3% Tom Waterhouse.com 8 5% 10 6% 20 6% TonyBet 2 1% 2 1% 4 1% Topbetta.com.au 4 2% 3 2% 7 2% Williamhill.com.au 13 8% 7 4% 20 6% Grand Total 165 100% 176 100% 348 100%

To prevent double-counting of inducements that were captured during both counts, the two counts were combined to produce a total sample of 223 distinctive inducements for analysis (165 from count 1 and an additional 58 new inducements from count 2). All remaining tables and graphs in this section are based on the aggregate count (223 inducements), unless otherwise specified. The chart below depicts the share of the total by brand. It shows that the top five brands, in terms of the share of inducements, were Ladbrokes, Crownbet, Sportsbet, Bet365, and William Hill (all onshore brands).

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Figure 4.17 Inducements by brand

Inducements by brand 12%

10%

8%

6%

4%

2%

0%

The majority of inducements covered in the audit were offered by onshore providers (78%); not surprisingly, since more onshore brands were covered (18 vs 12). On average, onshore operators had 11.6 inducements, while offshore operators offered an average of 4.1 inducements.

4.4.2 Inducement types

As described in the previous section, the most common inducement type overall was the refund or stake back offer (27% of all inducements), followed by the sign up offer (13%), bonus or better odds(13%) and bonus or better winnings (12%) (Table 4.3 and Figure 4.18).

Table 4.3 Inducements by type

Count 1 Inducement type N % Refund/stake back (or partial) offer 60 27% Sign up offer 30 13% Bonus or better odds (not including Happy Hour type inducements) 28 13% Bonus or better winnings 26 12% Multi bet offer 21 9% Winnings paid even if you don't win/or there is a protest/or you win in extra time 16 7% Match (or partially match) your stake/deposit (with bonus bets) 9 4% Happy hour or similar offer 8 4% Refer a friend offer 6 3% Free bets (randomly selected punters) 5 2% Cash rebate (no playthrough required) 4 2% Other free bets (e.g. predict the outcome of a match) 4 2% Mobile betting offer 3 1% Reduced commission 2 1% Competitions (where payout is in bonus bets) 1 0.4% Grand Total 223 100%

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Figure 4.18 Inducements by type

Inducement types, all inducements

Refund/stake back (or partial) offer

Sign up offer

Bonus or better odds (not including Happy Hour type inducements)

Bonus or better winnings

Multi bet offer

Winnings paid even if you don't win/or there is a protest/or you win in extra time

Match (or partially match) your stake/deposit (with bonus bets)

Happy hour or similar offer

Refer a friend offer

Free bets (randomly selected punters)

Other free bets (e.g. predict the outcome of a match)

Cash rebate (no playthrough required)

Mobile betting offer

Reduced commission

Competitions (where payout is in bonus bets)

0% 5% 10% 15% 20% 25% 30% Percentage of inducements

There were some clear differences between onshore and offshore brands in marketing strategies, as reflected in the prevalence of the different types of inducement. While the most common inducement for onshore brands was refund offers, offshore brands promoted a higher proportion of sign up offers (Figure 4.19).

Figure 4.19 Inducement types by onshore/offshore

Inducement types, onshore/ offshore

Refund/stake back (or partial) offer Sign up offer Bonus or better odds (not including Happy Hour type inducements) Bonus or better winnings Multi bet offer Winnings paid even if you don't win/or there is a protest/or you win in extra time Match (or partially match) your stake/deposit (with bonus bets) Happy hour or similar offer Refer a friend offer Free bets (randomly selected punters) Other free bets (e.g. predict the outcome of a match) Cash rebate (no playthrough required) Mobile betting offer Reduced commission Competitions (where payout is in bonus bets)

0% 5% 10% 15% 20% 25% 30% 35% Percentage of inducements

Onshore Offshore

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Figures 4.20 and 4.21 show the top two inducement types (refund and sign up offer) as a percentage of each brand’s total inducements. It is important to note that these percentages tend to be based on very small denominators (i.e. the number of inducements offered by an individual brand).

Whilst refund offers constituted 31% of onshore brand’s inducements overall, this figure varied considerably between brands. Nearly three fifths (57%) of Crownbet’s inducements were marketed as refund offers, half of TAB’s (50%) and Palmerbet’s (47%) and two fifths of Sportsbet and Betstar promotions (both 40%). This compared with only 6% of inducements promoted by Bet365.

As previously stated, refund offers were less common, overall, among offshore brands (12%), and again this varied between brands. Refunds constituted one in two (50%) of the offers promoted by Betadonis and a quarter of those offered by Betplay. For the other three offshore brands that marketed refund offers on their website, this offer type constituted no more than a fifth of their total (Stan James Sportsbook 20%; Mansion 88 17% and Intertop Sportsbook 14%).

Sign up offers were more commonly promoted by offshore brands (24% compared with 10% of onshore inducements). Among onshore brands, Sportsbetting.com.au and Bookmaker.com were the most likely to promote sign up offers (33%), followed by Centrebet and Topbetta (both 25%). Among offshore brands, sign up offers were the only type of inducement promoted by SBOBET, and made up half of inducements offered by Tonybet, BetVictor Sports, Betjack and Betadonis.

Figure 4.20 Top two inducement types by brand - onshore

Top two inducement types, by brand - onshore brands 60%

50%

40%

30%

20%

10%

0% Percentage Percentage ofeach individual brand's inducements

Refund/stake back (or partial) offer Sign up offer

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Figure 4.21 Top two inducement types by brand - offshore

Top two inducement types, by brand - offshore brands 100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% Percentage Percentage ofeach individual brand's inducements

Refund/stake back (or partial) offer Sign up offer

4.4.3 Incentive provided

This category focused on the characteristics of the incentive provided by the inducement. For some inducement types (e.g. ‘match your stake with bonus bets’), this was the same as the inducement type itself, but for others (e.g. ‘multi bet offer’) it provided an additional descriptive feature.

The five most common forms of incentive overall were the refund of the stake as bonus bets (21%), followed by better odds (15%), matching the stake/deposit with bonus bets (14%), refund provided as cash (12%) and all other free/bonus bets (10%) (Figure 4.22).

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Figure 4.22 Incentive types

Incentive types, all inducements

Stake back or partial refund (in the form of bonus bets/credit)

Better odds

Match your deposit/stake (or partial) with bonus bets

Stake back or partial refund (NOT in the form of bonus bets/credits)

All other credit/bonus/free bets

Bonus/better winnings paid (NOT in the form of bonus bets)

Bonus/better winnings paid (in the form of bonus bets/credit)

Winnings paid out even if you don't win (in the form of cash/credit that can be withdrawn)

All other financial incentives (i.e. cash or credit can be withdrawn without betting through)

Reduced commission

Match your stake/deposit with cash or credit

Winnings paid out even if you don't win (in the form of bonus bets/credit)

0% 5% 10% 15% 20% 25% Percentage of inducements

As the pattern of inducement types differed between onshore and offshore brands, not surprisingly, so did the provision of different types of incentive (Figure.4.23). Offshore brands tended to favour more matching deposit incentives (27% of offshore brand inducements, compared with 11% of onshore) and other free bets (20% compared with 7% of onshore brands).

Figure 4.23 Incentive types by onshore/offshore

Incentive types, onshore/ offshore

Stake back or partial refund (in the form of bonus bets/credit)

Better odds

Match your deposit/stake (or partial) with bonus bets

Stake back or partial refund (NOT in the form of bonus bets/credits)

All other credit/bonus/free bets

Bonus/better winnings paid (NOT in the form of bonus bets)

Bonus/better winnings paid (in the form of bonus bets/credit)

Winnings paid out even if you don't win (in the form of cash/credit that can be withdrawn)

All other financial incentives (i.e. cash or credit can be withdrawn without betting through)

Reduced commission

Match your stake/deposit with cash or credit

Winnings paid out even if you don't win (in the form of bonus bets/credit)

0% 5% 10% 15% 20% 25% 30% Percentage of inducements Onshore Offshore

Analysis of differences between onshore brands showed that inducements offering refunds in the form of bonus bets were most commonly promoted by Crownbet (38% of their promotions), followed by Palmerbet (18%), and Luxbet (13%); this compared with 21% overall. Inducements promoting better odds were most favoured by Palmerbet (47%), Ladbrokes (35%), and TAB.com (33%). Turning to offshore brands, refunds in the form of bonus bets constituted 50% of inducements offered by Betadonis, and 25% of those offered by Betplay; this compared with 14% overall. All of Pinnacle Sports’ inducements included better odds incentives.

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Figure 4.24 Top two incentive types by brand - onshore

Top two incentive types, by brand - onshore brands 50%

45%

40%

35%

30%

25%

20%

15%

10%

Percentage Percentage ofeach individual brand's inducements 5%

0%

Stake back or partial refund (in the form of bonus bets/credit) Better odds

Figure 4.25 Top two incentive types by brand - offshore

Top two incentive types, by brand - offshore brands 100%

90%

80%

70%

60%

50%

40%

30%

20% Percentage of each individual Percentage of each brand's individual inducements 10%

0% 10Bets Sports Betadonis Betplay BetVictor Sports Intertops Stan James Pinnacle Sports Stan James Sportsbook Sportsbook Sportsbook

Stake back or partial refund (in the form of bonus bets/credit) Better odds

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4.4.4 Monetary value of incentives

Of all inducements, 63% explicitly stipulated a maximum monetary value on the incentive provided. For some inducements, this stipulation related to the maximum amount that could be won through the offer, and had a very high threshold. So, for example, one inducement offered 50% better winnings against multi bets, and the maximum payout was $100,000. A distinction was apparent between limits on the value of winnings paid out, versus the more ‘direct’ cost to the operator of incentives such as a refund or sign up offer (which tended to have a much lower threshold). A decision was taken to exclude those high maximum value inducements where the threshold related to winnings paid out. This resulted in the exclusion of nine inducements, with values ranging from $500 to $100,000.

Among the remaining (n=131) inducements, the average maximum value was $137 (median $100) with a mean range from $49 (Stan James Sportsbook) to $550 (Topbetta). Table 4.4 shows the average maximum monetary value for each of the brands (where a maximum value was specified).

Table 4.4 Average maximum monetary value, by brand

Brand Mean value Topbetta.com.au $ 550.00 Betplay $ 535.87 BetDSI $ 375.00 Betstar.com.au $ 362.50 Intertops Sportsbook $ 275.49 SBOBET $ 253.00 Bookmaker.com.au $ 200.00 Bet365.com.au $ 150.00 Centrebet.com.au $ 150.00 TonyBet $ 141.00 Ladbrokes $ 138.89 Tom Waterhouse.com $ 125.00 Williamhill.com.au $ 123.15 Luxbet.com.au $ 105.77 Sportsbet.com.au $ 105.26 Palmerbet.com.au $ 91.67 Mansion88 $ 86.00 10Bets Sports $ 84.00 Betfair.com.au $ 75.00 BetVictor Sports $ 74.50 Crownbet.com.au $ 55.56 Sportsbetting.com.au $ 50.00 TAB.com.au $ 50.00 Stan James Sportsbook $ 49.00

The average maximum monetary value of the incentive was higher among offshore brands ($197 compared with $124) (Table 4.5).

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Table 4.5 Average maximum monetary value, by onshore vs offshore

Onshore Offshore Total Max value N % N % N % Less than $50 5 5% 9 41% 14 11% $50 to less than $100 25 23% 2 9% 27 21% $100 to less than $500 77 71% 9 41% 86 66% $500 to less than $1,000 0% 1 5% 1 1% $1,000 to less than $1,500 2 2% 1 5% 3 2% Grand Total 109 100% 22 100% 131 100% Mean value $124.32 $196.94 $136.52 Median value $100.00 $85.00 $100.00

The average incentive amount differed between inducement types (Table 4.6). For example, the average maximum value of sign up offers was $200, whereas refer a friend offers had an average threshold of $69. Wagering inducements which offered to match a bettor’s stake had an average mean cap of $58, and those that offered to refund a losing bet had a mean cap of $85. The inducements with the highest payouts were competitions ($1,305) and free bets for randomly selected punters ($857).

Table 4.6 Average maximum monetary value, by type of inducement

Inducement type Mean value Competitions (where payout is in bonus bets) $ 1,304.97 Free bets (randomly selected punters) $ 857.24 Sign up offer $ 199.65 Bonus or better odds (not including Happy Hour type inducements) $ 150.50 Bonus or better winnings $ 142.86 Cash rebate (no play through required) $ 125.00 Multi bet offer $ 101.33 Refund/stake back (or partial) offer $ 84.84 Mobile betting offer $ 74.50 Refer a friend offer $ 69.02 Match (or partially match) your stake/deposit (with bonus bets) $ 58.00 Happy hour or similar offer $ 57.62

4.4.5 Sporting or racing

A third (32%) of inducements were related to racing, 50% to sports and 18% had no restrictions. Onshore and offshore brands provided a nearly equal proportion of sports betting inducements, while offshore brands tended to provide more inducements that applied to either code Table 4.7).

Table 4.7 Type of activity, by whether onshore or offshore

Onshore Offshore Total Max value N % N % N % No restrictions 25 14% 15 31% 40 18% Racing 62 36% 9 18% 71 32% Sports 87 50% 25 51% 112 50% Grand Total 174 100% 49 100% 223 100%

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Table 4.8 shows how the different brands allocated their inducements to sports versus racing activities, versus no restrictions.

Table 4.8 Type of activity, by brand

Racing Sports No restriction Type of inducement N % N % N % 10Bets Sports 1 20% 3 60% 1 20% Bet365.com.au 7 41% 8 47% 2 12% Betadonis 0% 1 50% 1 50% BetDSI 1 25% 0% 3 75% Betfair.com.au 2 67% 0% 1 33% Betjack/Marathon Bet 0% 0% 2 100% Betplay 1 25% 3 75% 0% Betstar.com.au 3 60% 1 20% 1 20% BetVictor Sports 0% 1 50% 1 50% Bookmaker.com.au 4 67% 0% 2 33% Centrebet.com.au 1 13% 4 50% 3 38% Crownbet.com.au 6 29% 13 62% 2 10% Intertops Sportsbook 0% 4 57% 3 43% Ladbrokes 10 43% 10 43% 3 13% Luxbet.com.au 5 36% 7 50% 2 14% Mansion88 0% 5 83% 1 17% Palmerbet.com.au 3 20% 10 67% 2 13% Pinnacle Sports 0% 4 100% 0% SBOBET 0% 0% 1 100% Sportsbet.com.au 4 20% 14 70% 2 10% Sportsbetting.com.au 2 67% 0% 1 33% Stan James Sportsbook 6 60% 3 30% 1 10% TAB.com.au 0% 6 100% 0% Tom Waterhouse.com 5 38% 6 46% 2 15% TonyBet 0% 1 50% 1 50% Topbetta.com.au 2 50% 1 25% 1 25% Williamhill.com.au 8 50% 7 44% 1 6% Grand Total 71 32% 112 50% 40 18%

As Table 4.9 shows, multi bet offers were almost exclusively targeted at sporting events (95%), whereas the payment of winnings on losing bets was more commonly associated with racing events (75%) – because of the high number of ‘protest payout’ inducements in this category. Refund offers were more commonly restricted to sporting events (70%) whereas offers which matched the stake were equally split between racing, sports and no restrictions (33% in each).

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Table 4.9 Type of inducement, by activity

Racing Sports No restriction Type of inducement N % N % N % Sign up offer 1 3% 3 10% 26 87% Refer a friend offer 6 100% Happy hour or similar offer 3 38% 4 50% 1 13% Mobile betting offer 1 33% 1 33% 1 33% Multi bet offer 20 95% 1 5% Refund/stake back (or partial) offer 17 28% 42 70% 1 2% Match (or partially match) your stake/deposit 3 33% 3 33% 3 33% (with bonus bets) Winnings paid even if you don't win/or there is a 12 75% 4 25% protest/or you win in extra time Bonus or better odds (not including Happy Hour 11 39% 17 61% type inducements) Bonus or better winnings 15 58% 11 42% Competitions (where payout is in bonus bets) 1 100% Reduced commission 2 100% Free bets (randomly selected punters) 5 100% Other free bets (e.g. predict the outcome of a 3 75% 1 25% match) Cash rebate (no play through required) 1 25% 3 75% Grand Total 71 32% 112 50% 40 18%

4.5 Terms and conditions associated with inducements

4.5.1 Overview

The majority of inducement advertisements displayed a number of associated terms and conditions. Some also (or instead) displayed a hyperlink, within the advertisement, that linked to a number of terms and conditions that placed restrictions on the take up of that offer. These terms and conditions, associated directly with the inducement, covered a range of generic restrictions; such as being limited to one offer per household or account, being restricted to recreational gamblers, and maximum monetary value of the bet and the payout. These generic conditions were captured in the audit. In addition, some inducements included restrictions that were highly specific to that offer (e.g. ‘bet must be placed on race 8 at Sandown’, or ‘the try must be converted within normal time’). These highly specific criteria were not recorded in the audit due to their sheer volume and variety.

Many wagering inducements also stated that ‘general terms and conditions apply’; in some cases a hyperlink was provided, but in many cases it was necessary to search the website to locate them. The general terms and conditions were invariably lengthy documents, relating to general betting rules, company policy and other offers, as well as (in some cases) providing further details on the inducement itself. It was not feasible, within the scope of the audit, to also cover these terms and conditions, particularly since these documents tended to be written in ‘legalese’, in many cases requiring a legal background to interpret. However, the audit database includes a hyperlink, where applicable, to these terms and conditions as well as an ‘open text’ field to record more ‘qualitative’ information about the status of the terms and conditions for that brand.

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Whilst this approach was determined by the constraints of the project scope, we would argue that it exceeds, or at least represents the upper limits of, the likely level of examination of wagering inducement terms and conditions by an everyday bettor.

Brands differed in the extent to which the inducement terms were directly accessible from the inducement advert itself (and therefore covered in the audit), versus being consigned to the general terms document/link (and therefore not covered in the audit). It is important to note, therefore, that just because a restriction was not recorded against a particular inducement, it does not necessarily follow that the condition does not apply (as stipulated in the operator’s general terms, somewhere on their website). The audit is, therefore, likely to underestimate the prevalence of the terms and conditions captured. It is particularly worth noting that one of the conditions, stipulating whether the bettor must be a registered account holder, was not always explicit in the terms directly associated with the inducement. It is likely that this condition would be made clear once the bettor has initiated the process of taking up the inducement (e.g. through entering their details along with the promotional code attached to that inducement).

Table 4.9 below shows the prevalence of each of the terms and conditions captured in the audit. It is important to note that these terms and conditions refer to the bet relating to the inducement itself. So, for example, a refund/stake back offer applying to a particular horse race might stipulate that it cannot be used with any other offer, that the minimum odds for that bet must be 1.5, and that it must be used by a recreational gambler. Similarly, for a sign up offer, restrictions are likely in terms of the number of days in which the deposit/bet must be placed, the fact that it is restricted to one offer per household, etc.

As described earlier, a large proportion (53%) of incentives involved the provision of bonus bets. These bonus bets are themselves associated with a separate raft of terms and conditions (in addition to the restrictions directed at the inducement itself). It was beyond the scope of this project to capture these terms and conditions since they relate to future wagering activity, rather than the wagering activity influenced directly by the marketing of the inducement. However, some examples of the terms and conditions placed on the use of bonus bets associated with sign up offers were provided earlier.

The table below shows the proportion of all wagering inducements that specified each of the conditions, both for the overall dataset, and separately for onshore versus offshore brands. As previously stated, inducements were not always explicit about whether a restriction applied (sometimes consigning this information to lengthy general terms and conditions documents elsewhere on the website); therefore, the audit is likely to underestimate the prevalence of these terms and conditions.

The most common stipulation, applicable to three quarters (76%) of audited inducements, is the exemption of bonus bets (i.e. a bonus bet cannot be used to obtain the inducement); and this was particularly true for onshore inducements (82%) compared with those offered by offshore brands (55%).

The next most common limitation related to the maximum payout available through the inducement (the values of which are discussed in Section 4.4.4). Two fifths (60%) of all wagering inducements covered by the audit specified a maximum threshold on payout (either in the form of bonus bets or cash). Again, this condition was more common among onshore wagering inducements (64%) than offshore (45%).

Around half of the audit inducements were limited to recreational gamblers (55% overall; 67% onshore; 14% offshore); were exclusive to registered members (52% overall; 48% onshore; 67% offshore); and were subject to a time restriction (48% overall; 49% onshore; 43% offshore).

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Two fifths (42%) of wagering inducements stipulated a limit of one per person/account or household, around twice as many onshore (47%) as offshore (24%) offers.

Around a third of inducements were associated with the following conditions: limited to one per event (39% overall; 45% onshore and 18% offshore); has a play through requirement (35% overall, 30% onshore; 53% offshore); and specified a particular betting medium (predominantly online) (36% overall; 41% onshore; 18% offshore).

A quarter (25%) of audit inducements stated that they could not be used with any other offers (26% onshore; 22% offshore) and a similar proportion (24%) placed minimum and/or maximum value limits on the associated bet (18% onshore; 45% offshore). Just over a quarter of onshore inducements (27%) were limited to particular jurisdictions; this information was not collected for offshore brands (see Section 4.5.3 for more details on jurisdictional restrictions).

Finally, the least prevalent of the recorded terms and conditions, was the explicit requirement for a minimum odds threshold with the associated bet, and this accounted for 13% of the total (9% onshore and 24% offshore).

Table 4.10 Overview of restrictions, by whether onshore or offshore

Onshore Offshore Total Restrictions N % N % N % Must be registered member 83 48% 33 67% 116 52% Has a limit of one per person/household 82 47% 12 24% 94 42% Has a limit of one per event 79 45% 9 18% 88 39% Has a minimum odds limit 16 9% 12 24% 28 13% Is only available for a specified period 27 16% 13 27% 40 18% Has a time restriction on when bet/deposit must 85 49% 21 43% 106 48% be placed Cannot be used with any other offers 45 26% 11 22% 56 25% For recreational gamblers only 116 67% 7 14% 123 55% Has jurisdictional restrictions (within Australia) 47 27% 47 21% Has a play through requirement 53 30% 26 53% 79 35% Must be placed via a particular medium 72 41% 9 18% 81 36% Bonus bets not eligible for use with inducement 143 82% 27 55% 170 76% Has a minimum/ maximum bet/ deposit limit 31 18% 22 45% 53 24% Has a maximum payout 112 64% 22 45% 134 60%

Some of these terms and conditions – play through restrictions, jurisdictional restrictions, and betting medium – are examined in further detail in the remainder of this section.

4.5.2 Play through restrictions

As previously discussed, just over a third (35%) of all inducements had a play through restriction specified. As noted earlier, play through requirements may apply to the bonus amount itself, to the bonus amount plus the stake required to attract the bonus, to the winnings obtained through using the bonus amount, or to a combination of these amounts. The mean number of times the bet (and/or stake, and/or winnings) needed to be played through (among those inducements with a play through restriction) was 2.7. This figure was substantially higher among offshore brands (5.8) than onshore brands (1.1). The vast majority of onshore inducements stipulated that the amount needed to be played through once. Two onshore inducements had to be played through twice, but there were no

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higher play-through requirements than this imposed by onshore brands. The highest individual play through requirement was associated with a sign up offer from (offshore) Intertops Sportsbook, for a US$20 bet token (AU$26.10 worth of bonus bets), which had to be played through 16 times. This amounts to AU$417.60 worth of wagering, in addition to the customer’s own, self-initiated first bet.8 Table 4.11 shows the average play through requirements by brand, for those brands which specified inducements with play through requirements.

Table 4.11 Average play through requirements, by brand

Brand Mean value TonyBet 12.0 SBOBET 10.0 Betadonis 9.5 Intertops Sportsbook 9.0 BetDSI 6.0 Mansion88 4.8 Betplay 4.3 BetVictor Sports 4.0 10Bets Sports 3.0 Betjack 3.0 Sportsbetting.com.au 2.0 Palmerbet.com.au 1.6 Crownbet.com.au 1.1 Bet365.com.au 1.0 Betfair.com.au 1.0 Betstar.com.au 1.0 Bookmaker.com.au 1.0 Centrebet.com.au 1.0 Ladbrokes 1.0 Luxbet.com.au 1.0 Sportsbet.com.au 1.0 Tom Waterhouse.com 1.0 Topbetta.com.au 1.0 Williamhill.com.au 1.0 Grand Total 2.7

As Table 4.12 shows, mobile betting offers were associated with the highest play through requirements overall (5), followed by sign up offers (4.8) and happy hour offers (3.3). When onshore and offshore inducement types were analysed separately, offshore sign up offers had the highest play through requirements, with an average of 8.4 times. Similarly, offshore happy hour offers had notably higher play through requirements (5.5) when analysed separately from onshore inducements of the same type.

8 Among other conditions, to obtain this bonus bet, customers must sign up, make a deposit and a first wager of at least AU$26.10.

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Table 4.12 Average play through requirements, by type of inducement

Mean value Inducement type Onshore Offshore Total Mobile betting offer 5 5 Sign up offer 1.1 8.4 4.8 Happy hour or similar offer 1 5.5 3.3 Cash rebate (no playthrough required) 3 3 Refer a friend offer 1.3 4.5 2.6 Match (or partially match) your stake/deposit (with bonus bets) 1 3.3 2 Refund/stake back (or partial) offer 1.2 3.7 1.5 Bonus or better winnings 1 1 Free bets (randomly selected punters) 1 1 Multi bet offer 1 1 1 Other free bets (e.g. predict the outcome of a match) 1 1 1 Grand Total 1.1 5.8 2.7

4.5.3 Jurisdictional restrictions

For onshore inducements, the audit recorded whether there were jurisdictional exclusions. This information was not recorded for offshore brands.

Just over a quarter (27%) of Australian inducements were subject to jurisdictional restrictions. No jurisdictional restrictions were placed on bettors from the Australian Capital Territory, the Northern Territory, Queensland or Tasmania; however, 24% of Australian inducements excluded bettors from New South Wales, 24% excluded bettors from South Australia, 21% excluded bettors from Western Australia, and 14% excluded bettors from Victoria.

William Hill was the brand most likely to promote inducements with jurisdictional restrictions (75%), followed by Centrebet (63%), and Tom Waterhouse (62%). Crownbet (5%) and Sportsbet (10%) were the least likely. These details are shown in Table 4.13. Five onshore brands did not specify jurisdictional restrictions, and are therefore not included in the table .

Table 4.13 Jurisdictional restrictions, by brand

Within restrictions Brand N % Williamhill.com.au 12 75% Centrebet.com.au 5 63% Tom Waterhouse.com 8 62% Palmerbet.com.au 7 47% Bookmaker.com.au 2 33% Sportsbetting.com.au 1 33% Topbetta.com.au 1 25% Betstar.com.au 1 20% Luxbet.com.au 2 14% Ladbrokes 3 13% Bet365.com.au 2 12% Sportsbet.com.au 2 10% Crownbet.com.au 1 5% Grand Total 47

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Exclusions on Australian jurisdictions were most common among (but not restricted to) sign up and refer a friend offers. Table 4.14 shows the proportion of each type of inducement where a jurisdictional restriction was stated in the associated terms and conditions.

Table 4.14 Jurisdictional restrictions, by type of inducement

With restrictions Type of inducement N % Mobile betting offer 1 100% Sign up offer 17 94% Refer a friend offer 3 75% Happy hour or similar offer 2 40% Bonus or better winnings 9 31% Refund/stake back (or partial) offer 12 22% Multi bet offer 3 16% Winnings paid even if you don't win/or there is a protest/or you win in extra time 0% Bonus or better odds (not including Happy Hour type inducements) 0% Match (or partially match) your stake/deposit (with bonus bets) 0% Reduced commission 0% Free bets (randomly selected punters) 0% Other free bets (e.g. predict the outcome of a match) 0% Grand Total 47 27%

4.5.4 Restrictions on betting medium

Just over a third (36%) of inducements were subject to a stated restriction on the medium to be used in placing the bet. As well as recording whether a restriction was in place, the relevant medium or media were also recorded. Note that more than one medium could be coded, and so the percentages in Table 4.15 sum to more than 100.

The vast majority of inducements with medium restrictions (96%) stipulated that the bet must be placed online (97% onshore and 89% offshore); 46% via a smartphone or tablet, and 5% through calling a landline.

Table 4.15 Restrictions on medium, by whether onshore or offshore (% of inducements with a medium restriction)9

Onshore Offshore Total Max value N % N % N % Online 70 97% 8 89% 78 96% Smartphone or tablet 34 47% 4 33% 38 46% Phone (call a number) 2 3% 2 22% 4 5% Base 72 10 82

9 Note that more than one type of medium was sometimes specified, so the sum of inducements which specified each medium is greater than the total number which specified medium requirements.

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Table 4.16 shows the percentage of each brand’s inducements stipulating that the bet must be placed through a particular medium (or media). It shows that the prevalence of medium restrictions varied by brand, ranging from no restrictions through to 86% of offers promoted by Crownbet. Table 4.17 shows, for those with a restriction, the medium specified (by brand).

Table 4.16 Has a restriction on medium, by brand (% of brand’s inducements)

Brand % with a medium restriction Sportsbet.com.au 90% Crownbet.com.au 86% 10Bets Sports 80% Williamhill.com.au 75% Tom Waterhouse.com 69% Centrebet.com.au 50% TonyBet 50% Palmerbet.com.au 40% Stan James Sportsbook 40% Betplay 25% Luxbet.com.au 21% Bet365.com.au 6% Ladbrokes 4%

Table 4.17 Restrictions on medium, by brand (% of inducements with a medium restriction)

Online Smartphone or Phone (call a Total with tablet number) a medium restriction Brand N % N % N % N Crownbet.com.au 17 94% 4 22% 1 6% 18 Sportsbet.com.au 18 100% 5 28% 1 6% 18 Williamhill.com.au 12 100% 12 100% 12 Tom Waterhouse.com 9 100% 5 56% 9 Palmerbet.com.au 6 100% 4 67% 6 10Bets Sports 4 100% 4 Centrebet.com.au 4 100% 1 25% 4 Stan James Sportsbook 3 75% 3 75% 2 50% 4 Luxbet.com.au 3 100% 1 33% 3 Bet365.com.au 1 100% 1 Betplay 1 100% 1 Ladbrokes 1 100% 1 100% 1 TonyBet 1 100% 1 Grand Total 78 96% 38 46% 4 5% 82

Apart from mobile betting offers, which overtly set the use of a mobile medium as a prerequisite for eligibility (100%), multi bet and refund/stake back (or partial) offers were the inducement types that most frequently specified that a particular medium must be used (62% and 52% respectively), as shown in Table 4.18.

Table 4.19 indicates that inducements which had medium restrictions usually required online access generally, although many were also specifically limited to mobile online access. Besides mobile betting

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offers (100%), bonus or better winnings and bonus or better odds were the inducement types that most often stated that a smartphone (or tablet) must be used (78% and 75% respectively).

Table 4.18 Has a restriction on medium, by inducement type (% of type’s inducements)

Inducement type % with a medium restriction Sign up offer 23% Refer a friend offer 17% Happy hour or similar offer 50% Mobile betting offer 100% Multi bet offer 62% Refund/stake back (or partial) offer 52% Match (or partially match) your stake/deposit (with bonus bets) 33% Winnings paid even if you don't win/or there is a protest/or you win in extra time 38% Bonus or better odds (not including Happy Hour type inducements) 16% Bonus or better winnings 31% Other free bets (e.g. predict the outcome of a match) 25%

Table 4.19 Restrictions on medium, by type of inducement (% of inducements with a medium restriction)

Online Smartphone or Phone (call a Total with a tablet number) medium restriction Inducement type N % N % N % N Sign up offer 7 100% 2 29% 7 Refer a friend offer 1 100% 1 Happy hour or similar offer 4 100% 1 25% 1 25% 4 Mobile betting offer 3 100% 3 Multi bet offer 13 100% 5 38% 13 Refund/stake back (or partial) offer 31 100% 15 48% 31 Match (or partially match) your 3 100% 1 33% 3 stake/deposit (with bonus bets) Winnings paid even if you don't win/or 6 100% 2 33% 6 there is a protest/or you win in extra time Bonus or better odds (not including 4 100% 3 75% 1 25% 4 Happy Hour type inducements) Bonus or better winnings 9 100% 7 78% 9 Other free bets (e.g. predict the 1 100% 1 outcome of a match)

4.6 Responsible gambling messaging

Recording the features of the websites’ messaging around responsible gambling was challenging in that the description/assessment of important factors such as the prominence and comprehensiveness of such information is both subjective and difficult to reduce down to quantitative measures. The audit aimed to capture characteristics that could easily be quantified and, therefore, the following factors were recorded (where present):

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. A responsible gambling message is directly linked to, or embedded within, the inducement advertisement: (If yes) that message provides a hyperlink to further information in a new tab or webpage.

. A responsible gambling message is visible, for example, if you scroll down to the bottom of the home page: (If yes) that message provides a hyperlink to further information in a new tab or webpage.

Figure 4.26 Example of a responsible gambling message embedded within the inducement (not hyperlinked)

Figure 4.27 Example of a responsible gambling message when scrolled to the bottom of the promotions page (contains hyperlink)

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In addition to these four quantitative fields, an ‘open text’ field was included in the database in order to record more ‘qualitative’ information, describing the perceived prominence, and comprehensiveness, of the messaging. The remainder of this chapter focuses on the four quantitative variables.

The majority (88%) of inducements did not have any reference to responsible gambling embedded or attached to them. However, most (95%) of the websites had a responsible gambling message on the home page, which could be scrolled down to while the inducement advertisement was still open.

Of those with a responsible gambling message, 99% included a hyperlink to another page or site related to responsible gambling. This constituted 94% overall.

Onshore brands were more likely than offshore brands to promote responsible gambling messages on their home page (100% compared with 78%).

Table 4.20 summarises these results.

Table 4.20 Responsible gambling messaging, by whether onshore or offshore

Onshore Offshore Total Max value N % N % N % Embedded in inducement 22 13% 4 8% 26 12% At bottom of page 174 100% 38 78% 212 95% Link to another page/site 174 100% 36 73% 210 94% No message 0 0% 11 22% 11 5% Base 174 49 223

Table 4.21 shows a tick against each brand to indicate whether its inducements had a message embedded/directly linked to the advertisement, and/or whether there was a responsible gambling message at the bottom of the home page (or neither).

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Table 4.21 Responsible gambling messaging, by brand

Brand Embedded in At bottom of Link to another No message inducement page page/site N % True True True 10Bets Sports    Bet365.com.au    Betadonis    BetDSI    Betfair.com.au 3 100%    Marathon Bet    Betplay    Betstar.com.au    BetVictor Sports    Bookmaker.com.au    Centrebet.com.au 2 25%    Crownbet.com.au    Intertops Sportsbook    Ladbrokes 3 13%    Luxbet.com.au    Mansion88    Palmerbet.com.au    Pinnacle Sports    SBOBET    Sportsbet.com.au    Sportsbetting.com.au 1 33%    Stan James Sportsbook 4 40%    TAB.com.au 6 100%    Tom Waterhouse.com 3 23%    TonyBet    Topbetta.com.au 4 100%    Williamhill.com.au    Grand Total 26 12%   

4.7 Chapter summary

The audit recorded the features of 223 wagering inducements, advertised on the websites of 30 brands (18 onshore and 12 offshore). A higher ratio of wagering inducements encouraged betting on sports (50%) than racing (32%). The remaining 18% did not stipulate a particular code (most of these were sign up offers).

Fifteen types of wagering inducement were classified; the most common of which were refund/stake back offers for unsuccessful bets (27% of inducements), sign up offers for new customers (13%), bonus or better odds (13%) and bonus or better winnings (12%). Onshore and offshore brands differed in their marketing strategies, with onshore brands favouring refund offers (31% of onshore wagering inducements) and offshore brands being more likely to promote sign up offers (24% of offshore inducements).

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Wagering inducements offered a variety of incentives, including refunding the stake in the form of bonus bets (21%), improved odds (15%), matching the stake/deposit with bonus bets (14%), and refunding the stake in cash (12%).

Bonus bets were invariably associated with ‘play through’ conditions, requiring the bettor to bet through the bonus amount and/or initial stake and/or winnings at least once, before the bonus bet (and sometimes the initial deposit and/or winnings) could be withdrawn/accessed.

The average maximum monetary value of incentives (where this could be established) was $137 (median $100). The average maximum financial incentive varied substantially between brands, from $49 for Stan James Sportsbook through to $550 for Topbetta.com. Offshore brands tended to offer higher value incentives (mean $197) than onshore brands (mean $124); but their play through requirements were also higher (5.8 times on average, compared with an average of 1.1 among onshore brands).

The two wagering inducement types offering the highest financial incentive were competitions offering a prize of bonus bets ($1,305) and free bets for randomly selected punters ($857); these comprised only a very small proportion of inducements (<2% combined). The strategic importance of attracting new customers (sign up offers comprised 13% of inducements) was reflected in the associated financial incentive ($200 overall; $226 onshore and $146 offshore); whereas promotions involving the refund of non-winning stakes, which were more prevalent (27%), had a lower average maximum value ($85; $80 onshore and $169 offshore).

Wagering inducements were associated with a variety of terms and conditions (in addition to the play through requirements discussed above) restricting their use. It is important to note that the audit captured only a subset of these restrictions – those that were explicitly stated within, or directly attached to, the inducement advertisement (due to the sheer volume and variety of terms and conditions). These are summarised below:

. Three quarters (76%) of inducements stipulated that bonus bets were exempt, and this was particularly true of onshore inducements (82%) compared with those offered by offshore brands (55%). . Two fifths (60%) of wagering inducements specified a maximum payout (64% onshore vs 45% offshore). . Just over a quarter (27%) of Australian inducements were limited to particular jurisdictions; mainly reflecting the fact that sign up and refer a friend promotions are prohibited in NSW, SA, WA and Victoria. . Around half of the audit inducements (55%) explicitly stated that they were limited to ‘recreational gamblers’ (67% onshore vs 14% offshore) and a similar proportion (52% overall) were exclusive to registered members (48% onshore and 67% offshore). . Two fifths (42%) of wagering inducements were limited to one offer per person/account/household, around twice as many onshore (47%) as offshore (24%) promotions. . Around a third of inducements were limited to one per event (39%), had a play through requirement (35%), and specified a particular betting medium (36%). . A quarter (25%) stated that they could not be used with any other offer, and 24% placed minimum and/or maximum value limits on the associated bet. . Finally, just over one in ten (13%) of audit inducements placed a minimum odds threshold on the associated bet.

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Chapter Five: Discussion

5.1 Introduction

This chapter analyses the results of the study to discuss the main characteristics of wagering inducements, their features that potentially encourage the commencement, continuation and intensification of betting, and key considerations for harm minimisation and consumer protection.

5.2 Main characteristics of inducements

5.2.1 Prominence of inducements

Inducements were generally prominently displayed on operator websites, most often as colourful, eye- catching static or scrolling displays. While some inducements were confined to a specific promotions or specials page that linked to the homepage, inducements were also frequently present on the homepage, and were sometimes launched as full-page displays on opening the website (which then had to be navigated past to get to the home page). Due to the prominence and placement of inducements, customers would not be able to avoid seeing at least some of those on offer when visiting most operator websites.

It was not within the project scope to examine the promotion of inducements on betting apps and in other media. However, previous research indicates that wagering inducements are widely promoted in a range of traditional and digital media, and through mass media, social media and personalised communications sent directly to customers (Gainsbury, Delfabbro et al., 2015; Sproston et al., 2015). Inducements are also heavily promoted on television when sporting and racing events are broadcast (Milner et al., 2013; Sproston et al., 2015; Thomas et al., 2012a). Thus, the promotion of inducements is a frequent feature of wagering marketing in Australia and this study has documented their prominent and ongoing promotion through operator websites.

5.2.2 Most inducements change frequently, but some are perennial

Continual changes to the inducements offered during the audit period reflected the specific nature of the bets/events to which they applied, although the audit’s classification of inducements into 15 overall categories indicates that most are variations on a limited range of generic types. Not only did the details of inducements change frequently, they also increased towards the end of the week in the lead-up to weekend sports and racing events. This frequent refreshment of many inducements provides a steady and continual stream of new short-term offers which may help to keep the betting product interesting for customers and encourage frequent visitation to wagering sites to stay informed about the latest offers. Previous research has also shown distinct seasonal variations in wagering marketing, with increases prior to major events (Gainsbury, Delfabbro et al., 2015; Sproston et al., 2015); however, this was not able to be measured in the short time frame of the current study.

Inducements that largely remained unchanged throughout the audit period were those specifically targeting new customers: sign up bonuses and refer a friend offers. Attracting new customers is clearly of high priority for wagering operators, with one company reporting in February 2014 that it was

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spending an average of AU$561 to sign up each new customer to one of its three Australian sites (William Hill, 2014). Because these recruitment inducements were not tied to specific bets or events, they did not need to be continually updated, although it is interesting to note that some brands did alter the value of their sign up bonus during the audit period. The reason for this is unknown.

5.2.3 All inducements are price promotions

All inducements identified in the audit were price promotions offering temporary price cuts, monetary savings, bonus bets or refunds. The incentive in each was some kind of financial bonus, mainly in the form of bonus or ‘free bets’ (although with conditions on use and redemption). Previous research has found that, amongst different types of sales promotions, price promotions are most effective in inducing purchase acceleration and more spending (Shi et al., 2005) and substantially increase short- term sales, sales of complementary items and store traffic (Blattberg et al., 1995). Thus, wagering inducements offering price promotions may be likely to increase visits to operator websites, sales of the incentivised bets, and sales of additional bets.

However, continual price discounting risks lowering consumers’ reference point, and can result in a ‘race to the bottom’ amongst brands in a highly competitive price war. This encourages bettors to search for the best deals amongst operators, which has been facilitated by the emergence of websites dedicated to comparing wagering inducements. This shopping around is a common practice reported by bettors (Hing, Cherney et al., 2014a, 2014b; Thomas et al., 2012b), thus undermining rather than boosting brand loyalty. Lower prices across the industry offer savings for customers on individual bets, but are also likely to result in increased product usage, betting with multiple wagering operators, and increased exposure to a plethora of marketing communications received as each additional betting account is opened.

Both alcohol and tobacco pricing has been found to have public health effects. A systematic review (Brennan, O’Reilly, Purshouse & Taylor, 2008) found that increases in the price of alcohol reduce alcohol consumption, hazardous and harmful alcohol consumption, alcohol dependence, the harm done by alcohol, and the harm done by alcohol to others than the drinker. Similarly, research has found strong support for an inverse relationship between price and cigarette smoking (Gallus, Schiaffino, La Vecchia, Townsend, & Fernandez, 2006; Scollo, Younie, Wakefield, Freeman & Icasiano, 2003). Thus, lowering the price of betting is likely to increase overall betting consumption, although the differential effects on non-problem, at-risk and problem gamblers has yet to be ascertained.

5.2.4 Wide range of inducements and incentives

The inducements identified in the audit were classified into 15 different types, reflecting the wide array on offer, especially when the continual changes to specific bets and events they applied to are also considered. These inducements include diverse incentives to overcome consumer inertia related to purchasing and appear to have variable aims.

Refund/stake back offers and winnings paid for losing bets are aimed at lowering perceived risk, while inducements for multi bets might be considered a means of increasing the volume of bets, as are some free bet offers (e.g. qualify for $1,000 in free bets if a bet is placed on every race that day at a particular race meeting). Mobile betting inducements are clearly attempting to convert customers to betting via smartphones and tablets so that future betting is more easily accessible, anywhere and at any time. The payment of incentives in bonus bets or deposits with play through conditions before any

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winnings can be withdrawn locks customers into future betting with the operator. Provision of better odds is a competitive strategy to attract bettors away from rival operators and build market share. Offering better odds and winnings, matching stakes and reduced commissions for specific events appear to be mostly aimed at stimulating sales through triggering more betting.

A few inducements focused on rewarding past behaviour, such as awards for the most successful multi bet. However, this had the dual purpose of also encouraging continuation of betting by paying the award in bonus bets. Thus, while all inducements aimed to increase sales, they presented customers with a wide array of incentives to overcome psychological, risk or competitive barriers to their purchasing and their future purchasing.

5.2.5 Many inducements are for complex bet types and combined contingencies

Bet types range from simple win bets placed on match outcomes to highly specific bets on particular in-match events and contingencies (Newall, 2015). Many wagering inducements are for complex bets, which present difficulties for customers in working out the probabilities of winning. For example, estimating the probability of a particular player scoring the first try is a highly complex calculation which would require knowledge of the form of all players on the team and their relative competitiveness against the opposing team. Some wagering inducements involve combinations of contingencies, such as: if your team leads at half time but then loses; if your team achieves a minimum specified score but then loses; if you pick the first try-scorer and he goes on to score another try; and if your team wins and your selected player scores. These bets combine two outcomes, which adds further complexity to understanding the true odds of winning and being able to search for the best deal (Newall, 2015). Under conditions of complex probabilities such as these, people tend to rely on heuristics (mental shortcuts) when making decisions and these can be subject to cognitive biases which overestimate the probabilities of winning (Tversky & Kahneman, 1974).

The audit showed that incentivised bets were frequently for complex and combined bets. While these bet types may add excitement and entertainment value for customers, associated inducements can encourage customers towards bets that have higher expected losses. This trend has been found in other research; an analysis of special bets offered by UK bookmakers during the 2014 soccer World Cup found that they almost exclusively advertised complex bet types with high expected losses (Newall, 2015). Further, people tend to overestimate the probability of finely partitioned bets, suggesting that operators may be able to offer worse odds than the actual probability would suggest and still attract customers (Newall, 2015). Bet types for which inducements were provided in the audit may have a similar tendency.

It was outside the scope of the present study to calculate and compare expected operator margins on different bet types for which inducements were offered, but this would be a useful exercise for future research to see whether incentivised bets have higher, lower or equivalent expected losses compared to non-incentivised bets. Examination of wagering operator data would also be insightful. Gainsbury and Russell (2015) examined a year’s betting data from one Australian wagering operator. Highest losses were for multi bets and exotic bets, where 88.8% and 86.6% of those bets, respectively, were losses compared to 60.4% of place bets and 79.5% of win bets. The authors concluded that exotic bets and multi bets are relatively risky, as they require several predictions to be fulfilled, although, as a result they generally give a larger return if successful. This return may be even higher if accompanied by a monetary incentive; nevertheless, many wagering inducements appear to be for the types of bets that have a comparatively low probability of winning.

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5.2.6 Most common types of inducements

Four types of inducements made up nearly two-thirds (64%) of all inducements in the audit. The most prominent were refunds/stake back offers which comprised 27% of all inducements. As noted above, these help to lower perceived risk but also encourage future betting as the refund/stake back is nearly always provided as bonus bets or deposits with play through conditions. This predominance of refunds/stake back offers appears to align with customer preferences. A quasi-experimental study comparing sports bettors’ responses to different marketing message elements (Hing, Vitartas et al., 2014a) found that, of all bet types examined, a bet with a ‘risk-free’ offer elicited most interest, temptation and likelihood of placing the promoted bet. This result was consistent amongst the 200 regular sports bettors, 207 non-regular sports bettors, and 204 non-sports bettors in the study, as well as amongst all PGSI groups.

The three other most common inducement types found in the audit were sign up offers (13% of all inducements), bonus or better odds (13%), and bonus or better winnings (12%). The latter two types of inducement were very similar and the associated bonus was sometimes paid in cash. However, the cash payout or bonus was usually tied to very specific and complex bets which often had combined contingencies, such as picking the first try scorer and that try then being converted. As discussed above, complex and combined contingencies in bets typically have high expected losses (Newall, 2015). Thus, the most prominent inducements in the audit lowered perceived risk, encouraged future betting, aimed to attract new customers, and offered cash and other bonuses on bets with low probabilities of winning. The most prominent inducement also aligned with customer preferences for ‘risk-free’ bets.

5.2.7 Inducements used by new entrants

It is of interest to note that the highest number of inducements in the audit was provided by the newest entrant to the Australian wagering market, Crownbet. This finding suggests that new operators perceive that inducements are needed to build brand awareness and market share, and that the licensing of additional wagering operators is likely to increase the volume of incentives marketed to bettors. Crownbet’s main type of inducement was the refund/stake back offer which constituted nearly 60% of its inducements offered during the audit period. However, it provided the lowest number of sign up offers amongst all brands, which may reflect its business base in the state of Victoria where these inducements are prohibited. Crownbet was also the most likely amongst all brands to provide incentives in the form of bonus bets, but the least likely to provide incentives in the form of better odds. As noted above, bonus bets typically have play through conditions, while bonus odds typically increase the cash payout. Thus, providing incentives that prompt future betting with the operator appears to be considered highly important by a new entrant.

5.2.8 Differences between onshore and offshore inducements

Several differences were observed in the inducements provided by the onshore and offshore operators. Inducements were more common amongst onshore brands, and the five brands providing the highest share of inducements were all Australian licensed operators. On average, onshore operators had 11.6 inducements, while offshore operators offered an average of 4.1 inducements. This may reflect the highly competitive nature of the industry in Australia, as discussed in Chapter Two, as well as tighter restrictions for other types of advertising. Just as the prohibition of live betting odds promotions during televised sports broadcasts prompted higher expenditure by gambling operators on paid advertising (Schetzer, 2014), this prohibition may have similarly increased the

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promotion of wagering inducements on websites and in other digital media, due to the comparatively liberal regulatory environment applying to wagering inducements.

The most common inducements provided by onshore brands were refund/stake back offers which, as noted above, appear to be particularly appealing to Australian sports bettors (Hing, Vitartas et al., 2014a). In contrast, offshore brands promoted a higher proportion of sign up offers, which may reflect the prohibition of these inducements in several Australian jurisdictions. These differences were also reflected in the incentives most commonly offered, with onshore brands most often providing bonus bets/credit, while offshore brands most often provided matching deposits. The average maximum monetary value of the incentive was also higher among offshore brands ($197) compared to onshore brands ($124), which may reflect the more generous and widespread sign up offers being promoted by offshore operators.

Some terms and conditions were more common amongst onshore brands. These included exemption of bonus bets, a specified maximum threshold on the payout, a limit of one incentivised bet per person/account or household, a limit of one incentivised bet per event, and limited to a particular betting medium (predominantly online). Offshore brands were more likely to have a play through requirement and to stipulate multiple play throughs (average 5.8 times), compared to onshore brands that required bonuses to be played through an average of 1.1 times. Thus, onshore operators had more modest and reasonable play through requirements, on average, compared to offshore operators.

5.2.9 Sports betting inducements vs race betting inducements

The majority of inducements in the audit for were for sports betting(50%), while 32% were for race betting, and the remaining 18% applied to both. This pattern was the same for onshore and offshore operators and reflects the global growth potential in the sports betting market, compared to the more mature market for race betting. As discussed in Chapter Two, sports betting represents a lucrative market showing both increased numbers of participants and increased per capita expenditure in recent years (Queensland Government, 2014) with substantial future growth predicted (Morgan Stanley, 2014). Its target market of young adult males of higher socio-economic status, employed full time, better educated and with access to the Internet (Palmer, 2014) is one with disposable income, and operators would be keen to attract and retain them through offering a wide range of attractive inducements to bet. As only about 13% of Australian adults bet on sports, compared to 22% who participate in race betting (Gainsbury, Russell et al., 2015a), significant growth potential remains in the sports betting market.

Some differences were apparent between the types of inducements offered for sports and race betting. Multi bet offers were almost exclusively targeted at sporting events (95%), as were the majority of refund/stake back offers (70%). As noted earlier, these two types of bets appear to be aimed, respectively, at increasing the volume of bets, and lowering perceived risk while encouraging future betting. Multi bets have also been found to have high expected losses (Gainsbury & Russell, 2015). In contrast, payment of winnings on losing bets was more commonly associated with racing events (75%), because of the high number of ‘protest payout’ inducements in this category. The offering of protest payouts also lowers perceived risk of betting for customers.

5.2.10 Complex terms and conditions

All inducements were subject to certain terms and conditions, and their complexity and lack of transparency were key characteristics of the inducements audited. Terms and conditions were often

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not contained in the display advertisement itself, but required the customer to click on a link to access them. Inducements were also typically subject to a raft of general terms and conditions which were located elsewhere on the operator’s website. In many cases, it was up to the customer to locate these general terms and conditions, with no direct link provided. The sheer volume of these general terms and conditions (450 pages for one Australian operator) and their legalistic language meant that it was not always obvious, and in some cases exceedingly difficult, to know what restrictions applied to a particular inducement. This hinders transparency and informed choice for customers, as discussed later.

The most commonly applied terms and conditions, applicable to more than half the inducements audited, were restrictions on the use of bonus bets (76% of all inducements), restrictions on the maximum value of the incentive/payout/bonus (60%), limited to recreational gamblers (55%), exclusive to registered members (52%), and subject to a time restriction (48%). Terms and conditions applying to more than one-third (but less than half) of the inducements audited were a limit of one per person/account or household (40%), limited to one per event (39%), a play through requirement (35%), and limited to a particular betting medium (predominantly online) (35%). Those found in fewer inducements were that they could not be used with any other offers (26%), had minimum and/or maximum value limits on the associated bet (18%), were limited to particular jurisdictions (27%, onshore only audited), and had an explicit requirement for a minimum odds threshold with the associated bet (13%).

Naturally, terms and conditions varied according to inducement type. Of interest is that play through requirements were highest for mobile betting offers (5 times), followed by sign up offers (4.8) and happy hour offers (3.3), although these figures are inflated by the much more stringent play through requirements of the offshore brands compared to the onshore brands audited. The highest average play through requirements for onshore brands were for refer a friend offers (1.3 times), refund/stake back offers (1.2 times) and sign up offers (1.1 times) The potential of play through requirements to intensify betting is discussed later.

5.2.11 Minimal embedded responsible gambling messages

Very few display advertisements for the inducements audited contained an embedded responsible gambling message. The majority (88%) did not have any reference to responsible gambling included or directly attached, although this was slightly higher amongst onshore (13%) compared to offshore (8%) brands. However, all Australian operators, and 78% of offshore operators, had a responsible gambling message on their homepage which, in nearly all cases where this was provided, also linked to another page or site containing responsible gambling information.

However, responsible gambling messages and links were invariably in very small font and often in non-contrasting colours (e.g. grey writing on a light grey background), making them highly unlikely to be noticed, difficult to find, and hard to read. This finding is consistent with other research that has found that the ‘gamble responsibly’ message lacks prominence in wagering marketing (Gainsbury, Delfabbro et al., 2015; Hing, Vitartas et al., 2014a; Milner et al., 2013; Sproston et al., 2015). Research has found that this message is overwhelmingly considered ineffective due to low prominence, poor legibility, lack of resonance, and competition from pervasive wagering marketing, and therefore tends to be viewed cynically by the Australian public (Lamont et al., in press; Sproston et al., 2015). Results from the current audit suggest that these messages are highly likely to go unnoticed when customers view advertisements for wagering inducements on operator websites.

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5.3 Considerations for harm minimisation

Wagering problems have been found to increase with greater frequency and volume of betting (Billi et al., 2014; LaBrie & Shaffer, 2011; LaPlante et al., 2014; Xuan & Shaffer, 2009), and wagering inducements aim to encourage these responses amongst bettors. Thus, it is instructive to consider how wagering inducements may influence the commencement, continuation and intensification of betting, and the maintenance of problem gambling, in order to assess how they might influence the consumption and harmful consumption of wagering products. Given that no data were gathered from bettors for this study, the discussion that follows is based on reason, theory and previous research. Naturally, empirical research is needed to provide definitive findings, and the issues raised below should be viewed as considerations rather than conclusions.

5.3.1 Wagering inducements and the commencement of betting

Uptake of betting is specifically encouraged through sign up bonuses that reward the opening of a betting account with bonus bets. The audit found that the value of these bonus bets ranged from $14 to $1,000, with an average of $200. In the vast majority of cases, the customer needs to first deposit or bet the equivalent amount to be eligible for the bonus bet. The bonus bet itself and/or the initial stake and/or any winnings from the bonus bet must then be played through a stipulated number of times before any winnings can be withdrawn, usually at least once, but for an average of 4.9 times over all brands covered in the audit (1.1 times onshore vs 8.4 times offshore). Use of the bonus bet is also time limited, and typically must be used within 30 to 90 days, or forfeited (although one onshore operator had a seven day time limit). Thus, sign up bonuses incentivise opening an account and making a deposit or first bet, then making a bet with the bonus bet, and then making at least one further bet within one or a few months.

Refer a friend offers also aim to encourage commencement of betting by rewarding both the referrer and the new customer with bonus bets, although the audit found that these inducements are less commonly offered and less generous in value than sign up bonuses. As with the sign up bonus, bonus bets for the new recruit are subject to play through conditions, although the mean number of times was less than for sign up bonuses amongst the brands audited (2.6 times for refer a friend offers vs 4.9 times for sign up bonuses) and less for onshore brands (1.3 times) compared to offshore brands (4.5 times). No restrictions are applied to the use of bonus bets by the referrer, who can take up this inducement any number of times. No research has examined the influence of refer a friend offers, but they clearly capitalise on the power of word-of-mouth and the greater credibility given to friends’ recommendations over paid advertising messages. Being referred to betting by a friend may also help to normalise the activity and encourage product trial. Affiliate referrals, as explained in Chapter Two, are another mechanism by which referrals for new recruits are made by third parties, with the referral incentivised by receiving either an ongoing commission of the recruit’s betting losses or a fixed referral fee.

It is not known what proportion of customers recruited through sign up, refer a friend and affiliate offers are new to betting, are existing bettors who are new to online betting, or are existing online bettors opening additional accounts. Thus, the effects of these recruitment offers on brand switching versus increased consumption is not known. However, this is a critical issue, as brand switching alone does not necessarily increase an individual’s betting activity and may result in the individual receiving lower prices, better services or other benefits which they value. Similarly, existing bettors migrating from cash betting in retail outlets to account-based betting via the Internet may not necessarily alter the frequency or volume of their betting activity. However, where these inducements recruit new users, they necessarily increase those individuals’ consumption of wagering products. The total consumption

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model, predicting that more consumption causes more harm at all levels, is supported in some previous research (Currie, Hodgins, Wang, el-Guebaly, Wynne & Chen 2006; Currie, Hodgins, Wang, el-Guebaly, Wynne & Miller, 2008; Rockloff, 2012). However, Binde (2014) argues that the consumption model may be limited because consumption and problem gambling are not always linearly related, and different gambling activities and individuals carry different levels of risk. However, the recruitment of new bettors to the market clearly increases the number of individuals who are exposed to the risks of betting, and some of these may proceed to develop gambling problems and experience betting-related harm (Binde, 2014).

Previous research has found that sign up bonuses do encourage some bettors to open accounts (Hing, Cherney et al., 2014a, 2014b; Sproston et al., 2015; Thomas et al., 2012b). Further, sign up and refer a friend offers encourage bettors to open multiple accounts. For example, some interviewees in Hing, Cherney et al.’s studies of Internet gamblers (2014a, 2014b) described how wagering promotions had prompted them to open accounts and bet with multiple gambling operators. This had three main reported effects. One was to extend the time spent gambling as these individuals used the multiple bonus bets received. Where these bonus bets required matching bets or deposits, this also increased these individuals’ gambling expenditure. A second effect was that some bettors found it more tempting to place further bets once they had an active account. A third outcome was that each account opened triggered a plethora of additional inducements conveyed through emails and other direct marketing channels encouraging additional betting. For some, the offers of free bets, matching deposits and ‘risk-free’ bets resulted in them gambling more than intended. (Hing, Cherney et al., 2014a, 2014b). Further, research with 3,178 Australian Internet gamblers found that multiple account holders are more involved gamblers, gambling on more activities and more frequently, and with higher rates of gambling problems than single account holders (Gainsbury, Russell, Blaszczynski & Hing, 2015b). Multiple account holders selected online gambling sites based on price, betting options, payout rates and game experience, whereas single account holders prioritised legality of sites and consumer protection features. Thus, although causal directions are unclear, having multiple active gambling accounts is a risk factor for problem gambling.

Overall, the main potential risks arising from wagering inducements aimed at commencement of betting are that they can 1) increase the overall number of bettors, 2) increase overall betting consumption and the risk of possible harm, 3) increase the use of multiple wagering accounts which can extend time and money spent through using bonus bets requiring matched amounts, and 4) expose bettors to a raft of additional marketing that encourages further betting.

5.3.2 Wagering inducements and the continuation of betting

Inducements do not necessarily increase an individual’s overall consumption of wagering products if they serve to simply attract customers away from competitors to a particular operator or retain customers in the face of competition. However, they do increase consumption if they result in additional betting to what individuals would otherwise have done.

Naturally, research undertaken for this study is insufficient to establish whether the inducements examined increase the frequency or volume of betting beyond what would have occurred in their absence. However, the few studies that have investigated wagering inducements (reviewed in Chapter Two) have found evidence that some inducements can result in additional betting. Hing, Cherney et al. (2014b) found that increased consumption was reported amongst both treatment-seeking gamblers and those recruited from the general population in response to offers such as ‘free’ bets and bonus deposits. Hing, Lamont, Vitartas and Fink (2015b) found that one-quarter of sports bettors surveyed agreed that the promotion of special bet offers increased their likelihood of betting on them, while

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about one-quarter agreed that it increases the likelihood of them placing impulse bets. As noted earlier, Hing, Vitartas et al. (2014) concluded from their quasi-experimental research that a ‘risk-free’ offer is a strong enticement to sports bettors. Some participants in Sproston et al.’s study (2015) also reported that these ‘risk-free’ bets were highly influential in encouraging them to bet. While evidence is thin, research results to date all suggest some influence of wagering inducements on the continuation of gambling.

Logic also indicates that some types of inducements inherently encourage continued betting. Specifically, inducements with incentives in the form of bonus bets and deposits that are received after an incentivised bet (or received as a reward/comp or through redemption of loyalty points) require continued betting if the customer is to benefit from the incentive. These include most of the more common types of inducements identified in the audit. Mobile betting offers, multi bet offers, refund/stake back offers, some competitions, free bets to selected punters, and other free bets all exclusively or mainly provided the incentive in the form of bonus bets or deposits. Clearly, further betting is required to use these bonuses, with play through conditions ensuring that they cannot be immediately withdrawn from bettors’ accounts. In contrast, inducements which provide the incentive in cash or offer better odds/winnings (e.g. happy hours, match your stake offers, winnings paid on losing bets, bonus odds, bonus winnings, reduced commissions, cash rebates) do not necessitate continued betting to benefit from the offer. They may, however, enhance the appeal of these bets and thus encourage additional consumption; alternatively, they may provide other benefits to customers that serve to build brand loyalty. Thus, it is the type of incentive offered which appears to have more influence on continued betting, with bonus bets and deposits that require subsequent bets clearly having most influence.

5.3.3 Wagering inducements and the intensification of betting

Because wagering is a potentially addictive behaviour, promotions that increase the frequency and volume of betting can encourage transition to near-addictive or addictive use (Martin et al., 2013). Inducements that result in intensification of betting can therefore contribute to the development of new cases of at-risk and problem gambling. Some types of inducements stand out as having strongest potential for intensifying an individual’s betting activity, although empirical research is needed to verify their actual effect.

Inducements with stringent play through conditions necessarily intensify betting. For example, one inducement from an offshore operator required that a US$20 bonus bet be played through 16 times. This extreme example is provided to illustrate what can be required, with the average play through required being 5.8 times for offshore brands and 1.1 times for onshore brands in the audit (overall average was 2.7 times). Making redemption of an incentive conditional on placing numerous subsequent bets clearly increases the volume of an individual’s betting activity. Many bonus bets also require a matching bet, thus intensifying betting expenditure. Further, play through conditions increase the amount of time spent gambling and therefore increase exposure to a potentially addictive activity. The Pathways Model would predict that the strengthened behavioural conditioning that occurs through this extended betting increases the likelihood of later developing gambling problems (Blaszczynski & Nower, 2002).

Increased volume of betting may also be encouraged by inducements for multi bets as these reward heavier product use by requiring bettors to wager on multiple legs. Further, multi bets and exotic bets have comparatively high expected loss rates (Gainsbury & Russell, 2015), which mean that they may increase betting-related harm and chasing behaviour as more bettors experience losses. While returns might be high when these bets are won, multi bets and exotic bets represent particularly risky types of

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bets, yet these are the bet types that are most often accompanied by inducements. Responsible gambling information typically encourages people to understand the odds when gambling and to avoid risky betting behaviours; yet these inducements incentivise bets with probabilities that are extremely difficult to calculate and for which loss rates are high. Thus, some inducement types appear to discourage responsible gambling behaviour and incentivise risky gambling decisions. Of further concern are inducements that reward a large volume of bets. For example, one inducement offered $1,000 in free bets for punters who placed a bet on every race at a particular race meeting.

Happy hours are another inducement type that might intensify betting by encouraging the concentration of betting into short time periods, often between 1-2 hours. Happy hours for alcohol consumption have been recognised as potentially promoting rapid and excessive consumption of alcohol, prompting regulations restricting their availability and related guidelines for responsible liquor advertising and promotions (e.g. Victorian Commission for Gambling and Liquor Regulation [VCGLR], 2015). This is because offers of free drinks and extreme discounting have been recognised as resulting in an environment of irresponsible consumption by creating incentives for patrons to purchase and drink more than they normally would (VCGLR, 2015). It is not known whether discounted happy hours for betting have a similar effect, and this is an area for future research.

A further consideration is that inducements to bet on wagering websites and betting apps occur at the point-of-sale and can therefore encourage impulse betting which increases consumption. As discussed in Chapter Two, alcohol and tobacco research has found that point-of-sale promotions result in increased impulse purchasing and increased purchase quantities amongst some consumers (Gilpin et al., 1997; Jones et al., 2012; Slater et al., 2007). Further, inducements communicated directly to the consumer, such as through direct email or SMS, may be particularly salient as they are difficult to avoid (Martin et al., 2013). Thus, the manner in which wagering inducements are marketed may be an important influence on the effect that they have on betting behaviour, and this also requires research.

A final consideration here is the provision of credit to bet. As discussed in Chapter Two, provision of credit for gambling is prohibited on other forms due to its known risks for increasing gambling-related harm, as demonstrated in some legal cases discussed in Chapter Three. There appears to be little doubt that betting on credit has the potential to greatly intensify betting as some individuals become caught in a cycle of wagering losses, followed by betting on credit, leading to likely further losses and an inability to meet the debt.

Overall, the aspects of wagering inducements with most potential to intensify betting appear to be those with stringent play through conditions, multi bets that increase volume purchasing, bonuses for large volume betting, bets with high expected loss rates, those such as happy hours that can concentrate betting into short time periods, the promotion of inducements at point-of-sale and through direct marketing that can encourage impulse betting and increase consumption, and the provision of credit for betting.

5.3.4 Wagering inducements and problem gambling

One reason that wagering inducements have been the subject of concern is their potential to maintain and exacerbate problem gambling. While research has been limited, studies of wagering marketing, as reviewed in Chapter Two, have consistently found that positive self-reported responses to this marketing increase with problem gambling severity, including more positive emotional and cognitive responses, greater approval of this marketing, and higher self-reported impact on betting behaviour (Hing, Lamont et al., 2015a, 2015b; Schottler Consulting, 2012; Sproston et al., 2015).

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Studies of gambling inducements provided by land-based gambling venues, including loyalty programs, comps and promotions, have also found that they are associated with increased urges to gamble beyond self-set limits, more time and money spent gambling, increased gambling involvement, chasing losses, increased difficulties in controlling gambling, and gambling relapses (Narayanan & Manchanda, 2012; RGC, 2013; Schottler Consulting, 2010; Southwell et al. 2008). However, this body of research into gambling inducements has not investigated causal relationships, has relied on self- report data, and has not specifically investigated wagering inducements. Nevertheless, results to date are consistent with findings from gambling advertising research more generally that gambling advertising impacts most on problem gamblers. Indeed, a comprehensive review of this literature (Binde, 2014) concluded that the only effect of gambling advertising for which there is direct research evidence is that it maintains or exacerbates existing gambling problems. This can occur by 1) arousing more frequent impulses to gamble, 2) hampering efforts to limit gambling, and 3) triggering relapse amongst former problem gamblers (Binde, 2014).

All three of these effects were reported in the only studies to date to provide insights into responses by problem gamblers to wagering inducements such as bonus bets and deposits. Hing, Cherney et al. (2014a, 2014b) interviewed 31 treatment-seeking Internet gamblers and 25 moderate risk/problem Internet gamblers from the general population, some of whom were sports and race bettors. As discussed in Chapter Two, amongst the treatment-seeking gamblers in particular, wagering inducements were reported to have increased some participants’ betting because the inducements made the activity more interesting and attractive, offered incentives to bet, provided triggers and reminders to bet, and encouraged bettors to chase their losses. These inducements also extended gambling time because of play through conditions and difficulties sometimes encountered in withdrawing winnings from betting accounts. Some interviewees attempting to curtail their betting reported relapsing in response to these promotions. Amongst the non-treatment-seeking moderate risk/problem gamblers, some recalled specific wagering promotions that had prompted them to gamble more than intended and to gamble when they otherwise would not have. While these small isolated studies do not provide conclusive evidence that wagering inducements impact negatively on problem gamblers, their results are consistent with prior research into gambling advertising, wagering marketing, and gambling inducements.

Overall, the weight of evidence, although scant, suggests that wagering inducements are more likely to maintain or exacerbate harmful betting amongst existing problem gamblers than to have no effects or benign effects on them. There is no obvious reason to suggest that wagering inducements are exempt from the heightened negative impacts on problem gamblers found in research into gambling advertising in general (Binde, 2014). Their heavy promotion at point-of-sale, in mass media, social media and in direct communications to bettors means that this advertising cannot be avoided, exposing problem gamblers to an ongoing plethora of betting cues as inducements are continually refreshed. Further, these cues are highly incentivised through offers of ‘free’ bets, deposits, money- back guarantees, and provision of credit for betting. Problem gamblers themselves have reported harmful effects, but further empirical research is needed with larger samples and to determine any differential effects for different types of wagering inducements.

5.4 Considerations for consumer protection

In addition to the potential harms raised from the sheer volume and diversity of wagering inducements that encourage the commencement, continuation and intensification of betting, and their likely detrimental effects on problem gamblers, other key issues undermining consumer protection are: complex terms and conditions, minimal provision of responsible gambling messages, and frequent exposure of minors to the promotion of wagering inducements.

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5.4.1 Complex terms and conditions

As discussed earlier in this chapter, the terms and conditions associated with many wagering inducements are characterised as being complex, not always explicit in the display ad for inducements, difficult to find, sometimes embedded in a raft of general terms and conditions, and difficult to interpret because of the legalistic language used. Lack of easily accessible and transparent information on the restrictions applied to inducements hinders informed choice, which is a cornerstone of consumer protection and responsible provision of gambling (Blaszczynski, Ladouceur, Nower & Shaffer, 2008; Parke, Harris, Parke, Rigbye & Blaszczysnki, 2014).

Central to informed choice in gambling is the provision of adequate, reliable and comprehensive information to assist consumers to make optimal decisions that are not based on faulty information or mistaken beliefs and to make responsible gambling decisions (Blaszczynski et al., 2008). This includes information that outlines to gamblers how the gambling activity operates, including the probabilities of winning (Parke et al., 2014). Blaszczynski et al. (2008) contend that the informational basis for informed decision-making must be relevant, accurate, not misleading or deceitful, accessible to all potential participants, provided in an understandable way, provided in full, and delivered in a timely manner. The terms and conditions examined in this study indicate that many fail to meet these basic requirements for informed choice.

In the United Kingdom, the Committee for Advertising Practice (2014, p. 47) also noted that advertisements for wagering inducements can be misleading, and provided the following example and actions taken:

Advertisements for promotional offers based on often complex mechanics have a significant potential to mislead, if information is not properly presented. For instance, a ‘free’ bet offer might have a variety of exclusions, such as, the requirement for consumers to stake a certain amount to qualify or the need to play through any winnings before they can be withdrawn. As outlined in its review of enforcement, the ASA has adjudicated on a variety of advertisements that have breached the Codes because significant terms and conditions were not given adequate prominence or the offers were structured in a manner that contradicted the headline claim.

5.4.2 Minimal provision of responsible gambling messages

Responsible gambling messages were provided in only a minority (12%) of display ads for wagering inducements examined in this study, although the majority of websites contained a responsible gambling message on the homepage and a link to further information. However, these messages were highly unlikely to be noticed, difficult to find, and hard to read. Thus, the vast majority of wagering inducements were displayed without any responsible gambling message, contrary to requirements for other forms of gambling advertising in Australia. While the most effective way to deliver responsible gambling information is still open to debate, and the generic, static and non-personalised ‘gamble responsibly’ message is unlikely to gain attention, prompt self-evaluation or motivate a behavioural response (Parke et al., 2014), the lack of any message on most wagering inducements is contrary to the responsible provision of gambling services.

5.4.3 Exposure of minors to promotions for wagering inducements

A further consideration for consumer protection is the exposure of children and adolescents to a plethora of marketing for wagering inducements through channels including social media, the Internet and during live and televised sporting events. Of most concern is the potential effects on their future

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attitudes, intentions and behaviours in relation to gambling and gambling problems (JSCGR, 2011, 2013), given that youth lack capacity to properly evaluate this information and may be unable to distinguish its promotional intent (Hing, Vitartas et al., 2014b). While gambling advertising regulations and codes of conduct prohibit the targeting of minors by gambling advertising, they do not prevent their exposure to this advertising. As discussed in Chapter Three, some jurisdictions have taken steps to limit exposure of minors to gambling advertising. However, there are few restrictions that limit the exposure of Australian youth to the widespread promotion of wagering inducements.

5.5 Limitations of the study

The main limitation of this study is its reliance on secondary data. While use of secondary data was adequate and appropriate to meeting the project requirements, lack of available data on the effects of wagering inducements on betting behaviours limits the implications that can be drawn from this study’s results. Other limitations of this study relate to the short time period available for the policy analysis and audit. While the policy analysis was highly inclusive of numerous jurisdictions and of legislation, regulation, codes and cases relevant to the provision and promotion of wagering inducements, a longer timeframe may have allowed a more detailed analysis. The one month time period for the audit precluded the capturing of any seasonal variations and a truly representative approach. While the results of the audit are accurate for the time period covered, it is not known whether the same results would be obtained in an audit over a longer time period. The rapidly changing nature of inducements offered suggests they may be highly variable over time. The short time frame also did not allow the audit to include any terms and conditions relating to wagering inducements that were contained in the vast volume of general terms and conditions on operator websites. Nevertheless, the audit captured the key attributes of the inducements and enabled an analysis of the main features that have potential to impact on betting behaviour.

5.6 Conclusion

This study is the first known comprehensive examination of wagering inducements in Australia. A literature review, policy analysis and audit were the main stages of research that yielded information on the types of wagering inducements offered to Australians, conditions on their uptake, and their regulation.

The findings confirmed that a wide range of wagering inducements are available to Australians that are continually refreshed and heavily promoted. These inducements offer a variety of financial incentives to bet, including bonus bets, money-back guarantees, cash rebates and matched deposits. Some inducements specifically encourage the commencement of betting through sign up, refer a friend and affiliate referral bonuses. Many inducements encourage the continuation of betting through structuring the incentive as bonus bets and deposits that require further betting. Play through requirements, multi bets, happy hours, provision of credit for betting, and promotion of inducements through direct marketing and at point-of-sale may encourage intensification of betting. Most inducements were for complex bets and combined contingencies which have high expected loss rates, thus encouraging bettors to make risky gambling decisions.

These factors raise issues for harm minimisation in betting, given that increased frequency and volume of betting is associated with increased risk of gambling problems. There is no obvious reason to suggest that wagering inducements are exempt from the heightened negative impacts on problem

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gamblers found for gambling advertising in general, and previous research indicates that this is likely to be the case. Consumer protection deficiencies were also identified in this study, specifically the complexity and lack of transparency of terms and conditions on the uptake of inducements which hinders informed choice, lack of responsible gambling messages embedded in advertisements for inducements, and the likely widespread and frequent exposure of children and adolescents to the promotion of wagering inducements.

The policy analysis found that the regulatory environment for wagering inducements currently lacks clarity on what constitutes an inducement, provides little specificity about which aspects of inducements are acceptable or not, and lacks consistency across Australian jurisdictions. While a variety of relevant legislation, regulations and codes of practice exist for gambling, advertising and broadcasting, and which might inform the provision and promotion of wagering inducements, their provisions are typically vague and often provide little specific direction to ensure that these inducements minimise gambling harm and provide adequate protection for consumers. International jurisdictions have responded in a variety of ways, but their responses have also been fragmented and inconsistent.

Therefore, the challenge remains to regulate the prolific supply and promotion of wagering inducements in ways that best promote responsible gambling, consumer protection and harm minimisation for bettors. This study has contributed foundational information to assist these efforts. However, the lack of research into wagering inducements currently precludes an evidence-based approach to policy. Empirical research is needed to draw firm conclusions about the actual influence of wagering inducements on the commencement, continuation and intensification of betting, on the maintenance of problem gambling, and on consumer protection when betting. Research that identifies bettors’ responses to different types of inducements and incentives, and for bettors at different levels of risk for gambling problems, is also urgently needed.

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