Casino-like apps have drained people of millions
nbcnews.com
nbcnews.com
Not just loot boxes and in-game casinos, but cryptocurrency gambling, sports betting, options and stock gambling, and much more. It seems like everywhere I go I enter huge gambling markets, and I see the same patterns of behavior in all of them, and the amount of people that are hurt terribly, sometimes to the point of complete financial ruin or even suicide, is immense. More immense than we believe if you ask me, because it's very shameful to admit this stuff, and I think most of it goes unnoticed.
In theory I like the idea of consumers getting to spend money however they want to, but it's clear that the downsides of letting apps manage their 'virtual item' gambling however they want to is terrible for so many consumers, and it's unfair how addictively-engineered these games are, often using optimization techniques and psychological tricks that the users do not understand, and doing whatever it takes to deceive people about their luck, odds, prospects, and so on.
Just that these companies will do anything they can to retain their whale shows how predatory it can be - they will not just offer free in-game items to keep you, but the true high-spends they will offer free products to like a free iPad or iPhone, and will sometimes dedicate significant employee time to using any trick they can to make sure these people keep spending their money on gambling.
All kinds of people were there from completely different backgrounds. People know that the chances are rigged against them (it is mandatory in my country to write down winning odds directly on devices and tables), but they are all waiting on this one time they will finally win. Some do so, but just continue playing again because they cannot stop anymore.
It is a disease and addiction and people are profiting off it. The coffee might be free as the bank always wins anyway.
-Penny Auction sites. Tons of TV commercials for these. They let you bid on expensive items. For example, bid for a $500 iPad for $4. The trick is that you must pay for each bid, so it's more like a lottery than an auction.[1]
-Omaze is an interesting one, and seems to be growing pretty large. It's a type of lottery, but they seem to give the majority of proceeds to charity.[2]
Of course people should be able to do stupid things with their own money. But when you read the stories of folks involved with this stuff, it does feel sad.
I used to be quite overweight. There were times in my life where I was mentally weak, and I would absolutely have paid money to remove the temptations (fast food) from the streets for my own benefit. Of course, there is no real market way to pay to remove temptation. This really does feel like a true market failure, the same as having these apps in the app stores...
Perhaps legislation to remove temptation is actually what is best for most everyone involved. Anytime there is an industry/company with high percentages of dissatisfied customers, that is not a net positive thing to have.
[1]https://www.consumer.ftc.gov/articles/0037-online-penny-auct... [2]https://www.distractify.com/p/is-omaze-a-scam
The difference, I think, in online casino gaming is that the vast majority of players do not actually spend money at all. Only a small amount of players do, and of those only a fraction are the hardcore people mentioned in this article. Thus it's hard to show it's causing harm in court, because the companies will simply say "it's a free app, microtransactions are not mandatory", and ignore the people who are taking our second mortgages on their houses. It's a scenario where a small fraction of the consumer base spends so much money that they subsidize the free players.
Economically you only needed a single-digit percentage of whales in your player base, simply because the LTV of those users was so incredibly high. Even at $10+ CPI's, you could still make tons of money, and sell in-game coin packages at a straight-faced price of $99 (or even $199!)
Additionally, there is no reason that these games had to be "fair" (unlike a regulated casino). You needed to know your payback percentages, but that was just to avoid destroying your economy. People start playing a new game, and get tons of wins and bonuses, and then it slowly settles down to ~85% RTP and sucks all their cash away.
Not sure how these games work, but what do you mean "destroy your economy"... Are the coins people win used to buy other in game products, so too much winning would lead to in-game inflation? But what would be the problem with that?
Also, any idea who these games pay to get the installs? Mainly Facebook, Google... or others? Trying to think of where the money is flowing from these more nefarious apps... how wide is the economic benefit from these clearly troubled whales?
Installs are regular ads, just like any other mobile game. You pay Google, Apple, Facebook, etc. Facebook Canvas used to be a big source of revenue, but most people have drifted over to mobile. Demographics are female, 35+, so these are not early tech adopters.
CPI = cost per install, needs to be lower than LTV or else you have a failed product
RTP = return to player, which means on average how much a game pays back to the player over time. In Vegas, this is regulated and is generally in the 85-93% range for slots. Unless you stop playing after a lucky winning streak, you will lose money long-term. The house always wins. For a non-regulated online game it can be whatever the devs want.
I occasionally play World of Warships, which is one of those games where you can either grind your way up to a better ship, or pay real currency to accelerate the process. Being a cheap <explicative deleted> I’ve ground my way up to medium high tier ships; it’s fun enough.
Then I looked into the company, and they have 1,750 employees, which is really expensive! It’s unbelievable that a “free” game can float such a massive development budget.
I think the positive spin is that the great thing about free2play is that you get to “try before you buy”. If I tried World of Warships and loved it, spending $10 on more slots for ships makes sense. But the cynical part of my brain suspects that a small number of whales are draining their personal accounts in order to support development and subsidize the free play of people like me.
That is astonishing given how little development they seem to do! Even allowing for the small army of CSRs required to run any PvP game. I don't mind a few dollars a month for the ongoing exp bonus, but the people spending £50 on a single ship are clearly in a different zone.
On the other hand, compared to other sorts of collector hobby, that's cheap. I could buy every ship in the fleet with what some people spend on a camera lens.
I've had a insight as to what you're suspecting (for another similar game), and I can say that it is definitely something like the top 1% that generate most of the revenue, and the rest of the 99% serve as kind of an AI for them to dominate.
https://en.wikipedia.org/wiki/Loot_box#Regulation_and_legisl...
The only real difference is how you use your winnings. One lets you spin again, the other lets you show off your prestige. In this respect, Overwatch et.al. dominates the categories of 'getting more people to pay to spin the wheel', and the long term feeling of "it was worth it".
The author draws a distinction between two types of gambling addiction. One kind of addicted gambler is what you would typically think of -- they are motivated by some kind of perverse desire for a thrill, they may try to bet big to make back their losses. They tend to play table games or bet on sports. This is a stereotypically masculine group.
She describes the gamblers who play slot machines (stereotypically feminine) as having a very different psychology. They're not really trying to win big and don't imagine what they will -- they're in it to keep playing, to stay in what she calls the "zone".
So for this group of gamblers, it kind of makes sense that it's possible to reproduce the same mental state without the possibility of actually winning money. Winning more tokens really is rewarding, because it increases the amount of time they can continue playing.
An interesting thing is that lot of techniques recognizable to the tech industry were done first as early as the 90s by slot machine companies and casinos. Very sophisticated A/B and UX testing of both the slot machines and the casino environment with a focus on optimizing time on device.
Also, an incredibly sad story I remember from that book: Schull describes a gambler who got to the point where she could not compel herself to get up from the slot machine, yet was exhausted and wanted to go home. She began to mentally treat each loss as a win and each win as a loss, because she knew she wouldn't be able to leave until she had lost all her money.
The trick with online, free-to-play versions is to forcibly stop the player when they've run out of coins, and say "come back tomorrow to collect your small refill, or pay us $2.99 right now to keep the fun going". And then throw every pricy psychology trick in the book at them to try to get them to break the seal of that initial purchase (because then the rest come much easier).
This wasn't $5-10 here or there or on weekends... this was a daily pattern and with some of the larger in-app purchases. I had to sift through email receipts to get the exact amount, the Google play store also does a fine job of obscuring the spend.
“Unlike in a real casino, there is no way to win money back or earn a payout on coins.”
These apps apparently have no monetary payout. So it seems that people are simply paying to play a casino simulator. Clearly they have an addiction to real world gambling to some degree, but I find it really curious that they still find some sort of satisfaction in playing a completely fake gambling game.
Definitely in need of some regulation, no doubt this kind of gambling and others (I.e. loot boxes / skins) would only reinforce that addiction.
And if you do win... can cashing out for boring dollars ever compare to the excitement of being allowed to spin the wheel again - for the chance of an even bigger prize?
Similar to the "give drugs to drug addicts" approach. Give them something of minimal harm they can use to satisfy their addiction until they can find a way out.
It's not like these would be particularly difficult apps to make, just need some good UX to make feel satisfying.
Put Moe addiction together with gatcha and you will get some Otakings to spend $70k or more on the game.
The apps discussed in the article are more like the video slots/poker/etc. that I've seen in bars around here. Real video gambling machines aren't legal so they make them for "entertainment only". Some (many?) bars let you cash out under the table as a way to keep people playing, but if someone managed to win a lot of "credits", the bar would be under no obligation to pay out since technically they aren't allowed to anyway.
And the precedent has been set when it comes to these kinds of monetization strategies. It has been normalized by FIFA, Overwatch, Clash of Clans, and every other game that has MTX of some sort.
We can even point blame at the XBox game store for this, for being early to the "abstracting the currency you're spending from real currency" race.
All these casino games are doing is sliding down the slippery slope already carved by these other industry giants.
“It’s like living in Los Vegas”
Hmm now here is an idea. It’s not quite like living in Las Vegas because people that do that are regularly converting to physical goods for life essentials, they’re eating and getting a roof etc. Maybe these guys should build a town where you can redeem for lodging and food etc, then I’m in.
I posit that they'll simply carry around the "cashout" tickets, and scan them back into the system the next time they visit the casino. I hypothesize that they rarely, if ever, actually cash out.
I'm actually at a point of disbelief. I simply don't believe that gamblers spend hundreds of thousands of dollars on a game they know will never make them any money. I'm open to the idea, but it certainly strains credulity. Why? Why would anyone do that? What would even drive one to do that?
And if you do win... can cashing out for boring dollars ever compare to the excitement of being allowed to spin the wheel again - for the chance of an even bigger prize?
It's a finely tuned dopamine loop that's been perfected over centuries, designed with one goal: to keep susceptible people pulling the lever. The house, after all, doesn't win if you leave.
You pay for the dopamine hit you get when you "win." The money - in real gambling - is a nice bonus.
But it's the hope of a neurotransmitter cascade in the brain that's really in charge.
See variable reinforcement schedules: https://allpsych.com/psychology101/learning/reinforcement/
I can certainly see that being enough to persuade some people to spend hundreds, maybe even thousands. But there are always outliers, which is why I can swallow the idea - even though it's bonkers - that somebody might spend $400k over 8 years, or still be spending $600/month even though they know it's bad for them.
It's addiction, it isn't rational.
the stereotypically "male" kind wants to take risks, win big, prove they are skilled, etc. and will tend to play games like roulette or blackjack, or poker, or bet on sports and horses.
there is a different kind, associated more with slot machines and female gamblers, where they're not playing to win, they're playing to keep playing -- the slot machine produces a mental state that they find compelling and difficult to leave.
from the way people describe it it's comparable to "one more turn" in video games.
My non-cynical take: gambling addiction seems pretty prevalent in at least American society and this is just the market responding to those conditions.
You can't really launder money through an app that offers no way to get money back out of it.
If there were a way to "gift" coins to people, which would allow them to be sold on sites like eBay, then you could launder money, because you'd be able to buy coins from Big Fish, and sell them elsewhere at a discount. You'd lose money on the flip but then, when you launder money, you always lose some portion of it (often quite a large portion).
(I don't know enough about these apps to know whether that's an option or not, but I suspect not.)
The only way Big Fish could be used to launder money is if they were owned by the people doing the laundering, who would then have a route to get money "through" the company. For third parties I don't think it's a possibility, unless they were in cahoots with the owners.
Actual gambling apps would provide a much better option for laundering money, which is perhaps a bigger motivator for regulation of that industry than addiction is. Or at least they would in a cash environment. Apps maybe less so because there's always a paper trail for the money (not to say it can't be done though).
Take all this with a pinch of salt because it's hardly my area of expertise but the main point stands: to launder money you have to have a way of getting money both into and out of a business.
dirty cash -> giftcards -> casino app -> app developer
I wonder if a 30% cost for big players is considered acceptable in money laundering. North Korea laundered $81 million (that they stole from banks) through Philippine casinos [1], so it isn't an outrageous idea that an app could be used for money laundering.
[1] https://www.bloomberg.com/news/features/2017-08-03/a-baccara...
[0] https://en.wikipedia.org/wiki/Gacha_game [1] https://www.youtube.com/watch?v=LvdtJsZpuQ4
It shouldn't be possible to spend a hundred thousand dollars in in-app purchases.
IMO this falls inline with smoking weed or drinking alcohol. If I choose to do something and it doesn't directly hurt others, why can't I?
I know, being drunk can cause accidents and kill people; same for drugs (weed is a bad example here) and destroy families and stuff, but it should still be my choice if I want to do these things myself.
Too much regulation is just as bad as no regulation.
All of this said, the only casino game I personally play is MyVegas which offers real rewards at real MGM properties (and others). I've spent maybe $100 real currency in the app since I started playing years ago and have gotten free nights at their hotels, tickets to shows, etc... so it's not allllll doom and gloom.
Society has decided that, for the good of society as a whole, this answer is no. That the good of society is more important than the desires of any given individual.
For example, most countries (an organized society) have laws regulating gambling (and drinking, and smoking, and ...).
There is a whole field dedicated to engineering choices of individual humans, it's called "marketing". Oh, and also "recruitment". The choices are entirely yours, sure, and yet they're still malleable and largely predictable. I bet there is even statistics "such% of population is susceptible to this tactics, and such% of population is susceptible to that trick, and there is this negligible % of those who pretty much can't be swayed in a reliable way, but they don't matter (too few of them)".
The thing is, government prohibition is just one of the least effective methods, but it is also the laziest and easiest and most obvious one which is why people come up with it all the time.
10,000 to one person may be the equivalent of 100 to another to 10 for another.
Lotteries are effectively government sponsored loot boxes and the reward chance is probably less.
I really want a “paid, no IAP” filter. The gameplay quality of those titles trends far higher.
An alternative is subscription, that seems to be the Apple Arcade model.
The lack of filter or parental setting to hide any apps with IAP reflects poorly on Apple’s customer centricity.
>"These games are not gambling because, among other reasons, they offer no opportunity for players to win money or anything of value," the statement said in part.
The monetary reward is 0, but you're still playing a game of chance in order to win a prize, and you still need to put down money to play (presumably after losing all your initial free coins).
I don't know what the legal definition of gambling is, but that still seems like gambling to me. Maybe that's too wide of a definition, but regardless it appears to be tapping in to the same addiction hooks as gambling.
It does. Arcade games are typically games of skill rather than games of chance (although that obviously varies). Additionally, in the end what it probably comes down to is how much attention the purveyor draws to themselves.
If arcades started becoming so successful that they create addicted children to lose thousands of dollars of their parents money, I'm sure you'd start seeing arcade regulations. And in fact when pinball games first came out, you did see lots of governments get involved as it was viewed as corrupting children.
Now that physical coins have disappeared there's absolutely nothing 'fun' about the process! Playing a computerized slot machine is about as pleasurable as feeding a parking meter.
$3.99 to make 100 spins at fake-$100 each, vs $99 to make 100 spins at fake-$10,000 each. (numbers totally made up, btw)
https://www.denverpost.com/2020/02/25/sports-betting-colorad...
Crazy and very sad and kind of funny all at once.
I lean very very heavily in the let people do dumb stuff if they want camp but it feels like they have just found a way to break the minds of a certain group of people. It feels to me like this would be a good case for regulation. On the other hand this already makes zero sense. How would you even legislate against it?
Probably still cheaper than two years of mental health care for two people in US.
Maybe just have sex instead?
It's interesting these games don't actually payout. It sounds shocking at first. But then again, if they did actually payout you'd still end up with nothing in the end if you play it long enough.
"After a long legal battle, 2 million players, including Shellz and her husband, will be eligible to get a small part of their losses back — about 20 percent for those who lost $10,000 to $100,000."
I'm guessing the company doesn't care and is probably fairly assured these people will just pump it back into their machine.
Having grown up with two addict parents I can tell you that “Just try doing something else” isn’t typically a useful strategy.
And what should they do afterwards? They will still have a lot of time remaining.
Similar addictive behaviour occurs with these apps and the games are designed to be as addictive as possible. While users should take personal responsibility, it would be trivial for these app producers to provide users with some protections from themselves.
> As in a real casino, players exchange money for coins to bet. Unlike in a real casino, there is no way to win money back or earn a payout on coins. But that has not stopped Shellz and her husband from spending about $150,000 in the game in just two years.
This is unreal! How can you spend $200 A DAY on a game that you cannot win anything back from? I'm having a really hard time understanding how or why these people keep playing the games.
By the way, have you heard of the Cookie Clicker?
I wonder if an actual casino could get away with that business model.