Each year, Australians lose up to an estimated $400 million betting on illegal offshore gambling websites, although use of offshore sites is difficult to track. Many of these sites are unregulated, and have the potential to defraud customers and put them at risk of harm.
These illegal websites often use Australian slang or native animals in their logos and website designs to appear familiar to Australians, despite operating thousands of miles away. Research suggests that gambling with offshore providers is linked with greater risk of experiencing harm. Offshore sites may not provide the same consumer protection tools that licensed domestic operators are required to provide, such as deposit limits, activity statements, and self-exclusion facilities and may not keep financial and personal information secure or provide honest games and outcomes.
It’s a growing problem that has had the Australian government worried, leading to a ban of more than 260 illegal gambling sites by the Australian Media and Communications Authority (ACMA) after it was granted increased powers of enforcement in 2019.
However, despite the efforts, these illegal gambling operators have not relented. Blocked websites are able to easily rebrand and restart operations under a different domain name within a matter of days.
The problem was highlighted again during 2020, when another study by the University of Sydney Gambling Treatment and Research Clinic found that Australians were experimenting with offshore gambling during the height of the COVID-19 pandemic in Australia.
As the battle against illegal operators can’t be won with regulation alone, researchers are looking into how legitimate websites, regulators and authorities can use behavioural science to steer customers away from illegal operators.
Led by Associate Professor Sally Gainsbury, a team of researchers based at the University of Sydney and the University of Hamburg recently published a paper in International Gambling Studies, which looked at what factors caused a person to pick one gambling website over another.
195 Australian university students took part in the online study, looking at how their choices between gambling websites changed when the websites displayed different sets of information about the regulatory jurisdiction and the types of people using the website.
The study found that students were more likely to choose to play on gambling websites that indicated being regulated in a country with relatively strict licensing conditions (e.g., Australia) compared to a country with less strict conditions (e.g., Cayman Islands). Where the operator was regulated was used by students to make judgments about the legality and trustworthiness of the site.
But the study found that socially relevant information was one of the strongest factors to influence a person’s decision. Students were more likely to choose to play on sites that reported having a higher number of users, who were of a similar age group (e.g., under 30s), and from a similar location (e.g., living in Sydney).
“Publicly displayed user profile pictures, names, and locations are often posted in relation to “big wins.” Likewise, positive product reviews might give consumers an idea of the type of people who play on the site. In the absence of being able to see other consumers (physically), these types of social cues can have a strong influence on decision-making,” wrote the researchers.
“This highlights the persuasive effects of socially relevant information in guiding our decisions. We feel more confident using a website based in a less familiar country if we know other people like us are already using it,” noted researchers.
The researchers noted that illegal gambling operators may try to “drown out” the effect of a lack of regulatory information by building trust with consumers on a social level.
“Gambling operators may try to build trust with customers by telling them that “people like me” use the website. This can drown out the effect of regulatory information if it is not made clear to consumers.”
To combat this, the researchers note that regulators should help customers identify legitimate gambling websites in which operators are bound by strict licensing conditions and codes of conduct. They also need to communicate to consumers the risks of using sites that do not abide by these standards.
Legitimate online gambling websites should also be designed in a way so that regulatory information stands out.
“Regulatory information could be displayed in the form of easily recognized stamps or seals, similar to the warnings and energy-efficiency labels used in other industries that help consumers to identify products that meet standards. Regulators need to communicate to consumers the risks of using sites that do not abide by these standards,” said the researchers.
Associate Professor Sally Gainsbury is Director of the Gambling Treatment and Research Clinic in the School of Psychology at the University of Sydney. Professor Thorsten Teichert, Alexander Graf, and Thomas Swanton were also involved as researchers on this project.
This work was supported by an Australian Research Council Discovery Early Career Research Award received by Dr. Sally Gainsbury, as well as funding from the Gambling Regulation Authority of the Free State of Hamburg (Germany).