Does Pareto Rule Internet Gambling?
Internet gambling has grown substantially over the past decade and with this growth, comes the risk of gambling problems among participants. In order to study the economic tendencies of online gambling subscribers, Tom, et al. (2019). tested the Pareto Principle using Internet Gambling subscriber data. The ‘Pareto Principle’ claims that about 20% of customers (“vital few”), make up 80% of the gambling activity within the sample.
What is the aim?
The aim of this study by Tom, et al. (2019), was to perform the very first study that analyzes gambling activity and losses with respect to gambling clinical status. Researchers sought to use actual expenditure information to better understand gambling revenue distribution. More specifically, researchers hope to determine whether internet gambling fit the Pareto Principle that 20% of customers would constitute 80% of gambling revenue while also examining the proportions of individuals that screened positive for gambling problems in these same groups. Researchers hypothesized that the level of gambling activity will be higher among those players that screened positive for gambling-related problems and the percentage of the ‘vital few’ who have gambling problems will be higher in comparison to the percentage that have gambling problems that are in the other ‘trivial many’ group.
What did the researchers do?
Researchers used a pool of online gambling subscribers (n=1384,) from bwin.party. Inclusion criteria included: restricting the study to seven products for which wagering data was available, must have demonstrated six months of activity prior to enrollment in study, and all gambling records used must have occurred with 365 days of gambling problems being screened using the Brief Biosocial Gambling Screen (BBGS) (Gebauer, LaBrie, & Shaffer, 2010). The researchers distributed a web-based version of BBGS which measured withdrawal symptoms, lying, and the borrowing of money. The researchers pulled the subsequent daily betting data from bwin.party, which included various demographics, gambling product types, amount of money wagered, the net loss of betting activities, and the total number of bets.
Why is this important
This study is important because it is the first of its kind to look at actual gambling activity and losses with respect to clinical status (gambling problems). Additionally, it looks at gambling activities related to the internet, which has increased exponentially over the last 15 years. Researchers emphasize the importance of finding that internet gamblers loosely fit the Pareto Principle, but that the expected ratio is smaller than the original 1%-20%. This could indicate that a smaller percentage of the customer base can be influencing the internet gambling service. This study has the potential to further the study of online gambling and potential to advance prevention, treatments, and inform public policies.
What did they find?
Researchers found that the “vital few” of internet gamblers were between 4.6%-17.8%, slightly lower than the 20% that the Pareto Principle suggests. Additionally, 38%-67% of the “vital few” screened positive for gambling-related problems, while only 24%-35% of the “trivial many” screened positive. They were able to confirm that, although it is not a perfect fit, the notion of internet gambling following the Pareto Rule does indeed apply and that a higher percentage of the “vital few” tested positive for gambling problems than the “trivial many”. They stress the need for future research to further this finding.
Limitations
No study goes without limitations. This study utilized data from bwin.party but they were unable to confirm that account sharing did not occur between multiple individuals. If multiple individuals were to have shared a single account, this could misclassify participants into the wrong “trivial many” or “vital few” category. Additionally, the online survey did not include a control question to verify the accuracy of the participants’ responses, which also could have swayed data due to inattention. Furthermore, the authors point out that the BBGS is not a clinical diagnosis, so participants may also have been incorrectly assigned to a problem gambling group and vice/versa. Finally, a low response rate may affect the representativeness of the sample as well.
References
Gebauer, L., LaBrie, R., & Shaffer, H. J. (2010). Optimizing DSM-IV-TR classification accuracy: A brief biosocial screen for detecting current gambling disorders among gamblers in the general household population.Canadian Journal of Psychiatry,55(2), 82–90.
Tom, M., LaPlante, D., & Shaffer, H. (2014). Does Pareto Rule Internet Gambling? Problems among the “Vital Few” and “Trivial Many.”The Journal of Gambling Business and Economics,8(1), 73–100.
NCRG staffResearch Update
