Research spotlight – Gambling Regulation Research: A Multidisciplinary Effort

Research spotlight – Gambling Regulation Research: A Multidisciplinary Effort

By IAGR Media

Prof. Dr. Tilman Becker, Director Gambling Research Center, University of Hohenheim, Germany

The protection of consumers is one important aim of gambling regulation. In particular, vulnerable and young consumers should be protected from the danger of gambling addiction. Furthermore, consumers should be given the opportunity to make informed choices. Accordingly, gambling regulation consists of measures aiming at protecting vulnerable consumers and the youth and informing consumers. In order to come up with an evidence based regulation, expertise in the area of consumer behavior and addiction research is needed.

Regulation shapes the environment of the market participants. Norms, culture, and the law could be regarded as incentive systems in order to establish social equilibria serving the common interest of people. If legal regulations would ask for a behavior which contradicts completely what is regarded as reasonable, socially acceptable, and in conflict with social norms, the legal regulation will neither be accepted nor obeyed. On the other side, if social norms are shared among all people in a society, drafting these norms as legal regulations is not needed. In order to write down sensible regulations, a background in cultural studies is of great help. Naturally, however, a background in law is required, not only in national but also in European law and not only in civil law but also in criminal law. With money laundering, data protection, and taxation as important issues in gambling regulation, an expertise in these areas is needed as well.

Gambling regulation often comes as technical regulation. In order to understand concepts like a random number generator, a safe server, pay-out ratios etc., technical expertise and an expertise in mathematics and statistics is necessary including  computer sciences. With the increasing use of artificial intelligence and blockchain in gambling, the future calls for this expertise ever more.

Regarding to improve gambling regulation, it is important to understand the market. Regulations aim at influencing the behavior of providers. From an economic point of view, providers try to maximize their revenue. Often does this not go hand in hand with maximizing social welfare, as assumed by Adam Smith, one of the founding fathers of political economics. It is vital to understand what drives the behavior of providers. Accordingly, an expertise in the economic sciences is needed for regulation. Regulators have often a background in law and are not aware of the importance of the economic market forces. The German gambling market may serve as an example. Some German regulators are satisfied, if the high courts accept regulations. Anything is fine if this is the case. For example, the high courts have ruled that a prohibition of online casino games does not contravene European or national law. However, this is not the complete picture. Nearly all providers of sports betting offer online casino games. Sometimes, I have the impression that regulators turn a blind eye to the reality of markets. In order to regulate, the markets have to be monitored and accordingly, an expertise in economics is required.

The Gambling Research Center at the University of Hohenheim consists of more than 20 researchers with a background in law, economics, mathematics and statistics, psychology, medicine, and all the other disciplines needed to understand gambling and shape gambling regulations. The Gambling Research Center was founded in 2004. Even before the Research Center was founded,  the University of Hohenheim had seen legal professors examining legal issues concerning gambling and gaming, consumer researchers addressing addiction problems, and mathematicians and statisticians analyzing  winning probabilities. With the foundation of the Center, scientists from other universities were integrated and the interdisciplinary basis was extended. The members of the Gambling Research Center bring their expertise from various fields of knowledge, such as legal and consumer politics, consumer behavior, market theory, mathematics and statistics, finance, law, economic theory, taxation, communication science, household and gender economics, marketing, game theory, statistic and econometrics as well as psychology and medicine.

It is the goal of the Gambling Research Center to scientifically examine the areas of games and betting, chances and the desire to gamble. Depending on the scientific question posed, a team is formed from the relevant fields of knowledge.

What types of knowledge and insights do we expect from research findings?

Games of chance have a long tradition of being used as models for obtaining scientific findings and data. Important areas of knowledge have emerged from researching and studying games of chance. Analysis of dice games gave birth to probability theory and statistics. Utility Theory originated from the analysis of the theoretical St. Petersburg Paradox (concerning a lottery game with infinite expected value).The analysis of parlour games resulted in the development of Game Theory. These examples clarify that for quite a while, games of chance have provided a valuable research model for mathematicians, statisticians, and more recently, economists as well.

In law, the legal perspective is the primary consideration when examining games of chance. The case law is followed and commented on. The relevance of the various legal interpretations are discussed and various legal aspects are considered. In psychology and medicine, knowledge over pathological gambling is increasing and therapies are being developed. Even in these well-established areas of research, little has been done on an interdisciplinary basis so far. An interdisciplinary and multidisciplinary approach to gambling and games of chance is a prerequisite for implementing rational policies.

Each of the scholars and researchers participating in the Research Center hopes to win new knowledge and research findings for their area of expertise. However, the greatest potential of the Gambling Research Center lies in its interdisciplinary approach.

The results of the research not only are of academic interest but also address current unsolved practical problems and questions. Consequently, they are also applicable and significant for current practice. The objectives and questions posed by research projects can be further developed by the researchers themselves or in association with potential external clients.

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