Free bets increase risky gambling behaviour, ESRI study finds

Irish Examiner

2 days ago

Offering free bets leads gamblers to spend more, lose more, and pushes them into making bad decisions, a new study has found.
The Economic and Social Research Institute (ESRI) said that those at risk of problem gambling are more susceptible to the inducements offered by gambling companies, such as free bets and moneyback guarantees, and experience significantly more harm from their exposure to them.
'Our findings imply that gambling offers aren't merely marketing tools, but pose a real risk of financial harm, particularly among vulnerable groups,' said Dr Diarmaid Ó Ceallaigh of the ESRI's Behavioural Research Unit.
'The results support the case for stricter regulation of gambling offers in Ireland, following steps already taken in other European countries, such as banning sign-up bonuses, restricting offers to at-risk individuals, and capping their value.'
Funded by the Gambling Regulatory Authority of Ireland, which was established earlier this year, the ESRI used a controlled experiment to test whether offers from gambling companies altered betting behaviour.
Typically, operators offer sign-up bonuses to customers such as free bets. While Ireland passed new gambling laws last year after years of delaying, it stopped short of banning free bets altogether.
Instead, such offers cannot be targeted at a specific person or group. However, within the law, the minister of justice will have the power to clamp down further on free bets should they so wish.
This ESRI study looked at these inducements using a sample of 622 men under 40 just prior to the Euro 2024 football tournament last year. The participants were given money to place up to six realistic bets on matches at the tournament.
Half of them were selected at random to receive offers of free bets and moneyback guarantees. The other half received no such offers.
The ESRI said these inducements caused participants to spend 10% more and almost halved the number of people opting not to bet.
Some of the bets were intentionally designed as 'bad bets', which offered odds well below the normal market rates which meant participants were better off choosing other options or not betting at all. Those exposed to the offers were three times more likely to spend money on these bad bets.
The researchers said that previous studies have shown inducements led to riskier bets, but this was the first to show an increased take-up of poor value options.
The participants were also asked about their understanding of inducements and, even though most were regular betters, most of them didn't realise that there were restrictions on free bets.
Furthermore, many didn't know they wouldn't receive their stake back on a free bet, which is a standard industry practice.
The study said:
Our findings add to growing evidence that inducements lead more people to gamble and gamblers to spend more, increasing financial losses for consumers and raising profits for operators.
Reacting to the study, Gambling Regulatory Authority of Ireland chief executive, Anne Marie Caulfield, said its findings show that the general public isn't aware of the dangers associated with the relatively benign-seeming free bets.
'It is our responsibility to ensure that gambling operators do not encourage excessive or compulsive gambling behaviour, and that we protect vulnerable people in our society, such as children and young people and those more likely to experience gambling harm,' she said.
'The Gambling Regulation Act 2024 sets out obligations for licensees in the way in which inducements can be offered, including a ban on targeted inducements, and the findings of this study affirm these measures.'