Social gaming: Enticing opportunities, mounting concerns

Published in: Latest Intelligence By Dr Sally Gainsbury*
The social gaming market is triple the size of the online gambling market, with revenues growing at a healthy 34 percent clip from 2013 to 2014, creating an enticing opportunity for operators, but also raising concern about the implications for problem gambling.
Gambling operators are increasingly active on social media platforms, most notably Facebook and Twitter. Australia is likely to prove fertile ground with one of the most Internet connected populations worldwide.
It is estimated that 89 percent of the population have a social network account and spend an average of two hours per day on social media platforms. Over 12 million Australians use Facebook and YouTube and there are 2.5 million active Twitter users.
In addition to hosting communities and creating content, gambling operators can display promoted content on social media and target advertisements to a specific population. Social media can be used to portray a brand’s personality to engage and create excitement in their communities.
One popular activity on social media platforms is social gaming, and social casino games are one of the most profitable genres of this activity. Social casino games refer to games based on, or interacting with, a social media platform that replicate a gambling activity, but do not award real money prizes. These games are free to play, but users can choose to pay real money to access additional content.
As well as the rise in social gaming revenue over the past year, monthly active users have also risen, up 12 percent, mainly due to the increased use of mobiles, similar to the impact of this device on the gambling market. 
Recognising the popularity of social casino games, several operators have launched or partnered with social casino game sites in an effort to engage with customers and diversify their product offerings.
Social casino games owned by Caesars Interactive Entertainment, a division of the U.S. gambling company, represented over one-fifth of the total social casino revenue from March to June 2014, followed by DoubleDown Casino, owned by International Game Technology. In addition to brand recognition, player analytics provide valuable insights into the popularity of games and user play patterns and preferences.
The explicit connection between social casino games and gambling operators is important in jurisdictions such as the U.S. and Australia, where real money gaming (i.e., casinos, slots, poker, etc.) is mostly prohibited. Online games offer a way to increase brand awareness among consumers and provide a preview of gambling experiences.
For example, MGM Resorts International launched a standalone social gaming website that offers social casino games and allows users to construct casinos on a virtual Vegas strip.
All games are free to play, but users can win loyalty points and rewards that can be redeemed for real prizes such as complimentary hotel rooms, restaurant meals, and show tickets, linking the games to gambling venues.
There is a theory that users who are interested in social casino games may also be interested in gambling and that users may be prompted to migrate from these games to real money gambling sites. The attraction is that if even a small proportion of the social casino game players migrate to gambling, the expense will be worthwhile. Furthermore, the cost of migrating customers from social casino games to gambling is expected to be significantly lower than the costs of acquiring new customers.
There is some evidence that social casino game players are interested in gambling. A recent study conducted by the Centre for Gambling Education & Research (CGER) found that approximately 13 percent of Australian gamblers also play social casino games and these people were more likely to be younger and gamble on the Internet than non-social gamers.
However, the relatively low conversion rate of social casino gamers to real money gambling (estimated at approximately 2 percent) has raised the question of whether these games cater for different consumer groups.
Behavioural economist, Dan Ariely, has argued that social casino games are actually undermining gambling by encouraging potential customers to prefer a free version, rather than pay for the experience.
If social casino game players are motivated to play for the enjoyment of the game, according to behavioural economic theory, these players should be resistant to paying a higher price to gamble, as they have learnt to enjoy the free version.
Over the long term, users, particularly younger users, may become accustomed to the online environment and be less likely to visit gambling venues. This is a potential concern for the land-based gambling industry in Australia, where participation and expenditure on electronic gaming machines has declined in recent years.
The concomitant increase in popularity of social casino games and the convergence with gambling operators has led to concerns that social casino games may be harmful if consumers have difficulties distinguishing gaming from gambling.
The widespread popularity of social casino games may increase normalization and favourable impressions of gambling, which may lead to increased gambling participation and the subsequent development of gambling disorders.
The impact of social media and social casino games on children and adolescents is of particular concern given the lack of age restrictions on these platforms. Many social casino games may be particularly attractive to young people as they feature themes such as cartoon animals from popular movies and shows.
The extent to which social media use and social casino games should be regulated has been debated internationally, including in Australia. A number of studies have shown a correlation between the use of social casino games and online gambling and gambling problems among young people.
However, these correlational studies do not allow causal inferences to be drawn. Currently, there is insufficient evidence as no research has been conducted to determine the impact of these new technologies on gambling and vulnerable populations.
Despite this, further efforts are needed to ensure that social casino games are not inadvertently marketing gambling to young people or adversely impacting this vulnerable population.
Social casino gaming has proven its value as a source of revenue in its own right.
Whether synergies will emerge between gambling and gaming is yet to be seen. To further the understanding of the impact of new technologies, including social media and social casino games on gambling and related problems, an online survey is being conducted by CGER at Southern Cross University.
The survey aims to recruit Australian social media users, including those who play social casino games and/or gamble. The results will determine the crossover and impact between these activities, and any impact on gambling problems.
For the study to be successful, a large number of Australian social media users, social gamers and gamblers must be recruited. The CGER is looking for organizations that are willing to host recruitment notices and links to the survey on relevant websites, or send notices to customers to encourage participation in the survey. The link is http://cger.scu.edu.au/.
Support for the recruitment process by relevant organizations is critical to ensure the results are meaningful and informative.
If you are interested in supporting this research by hosting a recruitment notice or finding out more about this research please contact Dr. Sally Gainsbury at [email protected].
* Dr. Sally Gainsbury is Senior Lecturer, Centre for Gambling Education & Research, Southern Cross University