
Casino-like apps have drained people of millions - danso
https://www.nbcnews.com/tech/tech-news/addicted-losing-how-casino-apps-have-drained-people-millions-n1239604
======
ve55
Gambling (in its many forms) has been getting out-of-hand for so many
demographics recently.

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.

~~~
raxxorrax
As a student I worked in a casino for a short time. It just really drags you
down immensely if you get to know people spending their last dime.

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.

------
tuna-piano
There are so many "basically online gambling" adjacent companies. They seem to
take advantage of the same psychological loophole, but likely leave the vast
majority of people involved worse off.

-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...](https://www.consumer.ftc.gov/articles/0037-online-penny-auctions)
[2][https://www.distractify.com/p/is-omaze-a-
scam](https://www.distractify.com/p/is-omaze-a-scam)

~~~
drchopchop
That is a great point, and I have been fascinated by these, especially the
penny auction sites. DealDash is clever and has a mechanic where if you bid it
keeps the auction alive for 10 more seconds (which must keep user engagement
sky-high). Someone does actually win something, but everyone else loses both
time and money - which is the difference between this and, say, eBay.

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.

~~~
rasz
Almost everyone does extended time on bid now. Even places like Copart auto
salvage auctions, the thing is for B2B sales yet looks like Vegas slot
machine.

------
drchopchop
Worked in this industry for quite a while (too long, in retrospect). The
amount of micro-targeting towards "whales" was insane. People would
essentially pay for the experience of feeling like they were in Vegas, and a
certain small percentage of them would have latent gambling addictions that
we'd unlock.

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.

~~~
GaryNumanVevo
I’m not super familiar with the industry what are LTV, CPI, and RTP?

~~~
drchopchop
LTV = lifetime value, how much $$ a player is expected to spend (usually
expressed in cohorts)

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.

~~~
GaryNumanVevo
Any reason the RTP doesn’t approach zero?

~~~
drchopchop
Zero wouldn't be fun. You need to allow people to win, just not over time.
Slots is a random series of losing, small wins, bigger wins, and very
occasionally big bonus rounds (every ~100-200 spins) which is the dopamine
hit. The key is that over time, the losing needs to happen more often than the
winning.

------
ashtonkem
Semi unrelated, I remain stunned at how effective free2play games are at
generating revenue.

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.

~~~
johnatwork
They have a few other similar games that uses the same tech and feel to them
(Tanks instead of ships), but your point stands (and they are all F2P AFAIK,
same formula).

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.

~~~
ashtonkem
It’s not even clear that spending money gets you an actual advantage in the
game, it appears to mostly just accelerate the process of getting the higher
tiered ships in a given nation’s tech tree.

------
danso
The implications of this article – that addiction can happen even without
real-world reward – seems to be inline with how non-U.S. courts have reasoned
when it comes to regulating lootboxes (e.g. Overwatch)

[https://en.wikipedia.org/wiki/Loot_box#Regulation_and_legisl...](https://en.wikipedia.org/wiki/Loot_box#Regulation_and_legislation)

~~~
falcolas
In my opinion, they are identical. Purchasing an intermediary currency, buying
spins at the wheel (buying lootboxes), experiencing the buildup and hype for
the boxes opening, and the rush of dopamine for winning/losing.

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".

------
currymj
"Addiction By Design" by Natasha Dow Schull is a really great book about the
slot machine industry.

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.

~~~
drchopchop
The psychology is very important. All the big players in this space employ
people with experience designing actual Vegas slot machines, and the goal is
to try to replicate it as much as possible. Everything from the line patterns,
to the way words and icons pop, to the arpeggiated audio cues, is taken
straight from tried-and-true Vegas templates. For someone who has spent time
in real casinos, these games will feel very familiar, and trigger the same
emotions.

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).

------
themodelplumber
This article makes me wonder about the value comparison between spending even
$3.99 on an app store game you really like vs. buying some scratch-off
tickets. They both come with an excitement factor, but only one puts a
substantial payoff on the table, generally increases the tax revenue base, and
gets you out of the house...

------
ramoz
I saw how much my mother spent on Candy Crush after she passed away. It breaks
my heart with a whirlwind of emotions... like whether I should be angry these
apps know how to exploit human emotion, or at peace because they provided her
comfort in a rough time. They're not gambling, but clearly they know how to
trigger some personal & psychological investment.

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.

------
GaryNumanVevo
This is actually quite fascinating. If I’m understanding the article
correctly:

“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.

~~~
falcolas
The act of spinning the wheel is its own reward, dopamine wise. The
anticipation of winning it big. The colorful displays. The hope as the wheel
looks like it's going to land on the big payout. Even losing is its own rush.

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?

------
admax88q
I wonder, if instead of trying to regulate these companies, it would be more
effective for the government or some sort of support organization to award a
grant to some free software developers to flood the market with actually free
"casino simulators."

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.

~~~
SQueeeeeL
I would imagine there's a strong psychological benefit to earning coins with
"real" world value. People love the feeling of "winning" $10 of tokens; even
if you can't cash them out...

------
PaulHoule
[https://en.wikipedia.org/wiki/Fate/Grand_Order](https://en.wikipedia.org/wiki/Fate/Grand_Order)

~~~
pjc50
There's a lot of these about, but I'm astonished to see how much money FGO has
brought in.

~~~
PaulHoule
FGO is astonishing in that it combines a combat system that isn't that bad, an
abominable English translation, an advanced Moe character system similar to
Pokemon, Neptunia, etc and (in the general 'Fate/XYZ' meta-setting) an
astonishingly good pretense.

Put Moe addiction together with gatcha and you will get some Otakings to spend
$70k or more on the game.

------
Koala_ice
They're talking about Robinhood, right?

~~~
soylentcola
I recognize and understand the snark/sarcasm regarding that sort of stock
market gambling, but regardless of other details, at least you can cash out
any earnings in Robinhood, no?

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.

------
runnr_az
The strangest part of this - winning is literally impossible, right? They buy
chips in the game, but there's no way to turn them back into money...

~~~
badRNG
I'm completely confused here. I have always assumed gambling addiction is
centered on winning it big, to recoup prior losses, or to otherwise change
one's station in life. None of these things are possible on these apps.

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?

~~~
GaryNumanVevo
My cynical take: there’s probably a nontrivial amount of money laundering
going on through these apps. Especially prevalent in any game that accepts
“gift cards” as payment. Typically you’d pay people cash in hand to go buy a
$1000 worth of gift cards in cash.

My non-cynical take: gambling addiction seems pretty prevalent in at least
American society and this is just the market responding to those conditions.

~~~
bartread
> there’s probably a nontrivial amount of money laundering going on through
> these apps.

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.

~~~
GaryNumanVevo
Apologizes, I meant to say that if you owned the application, it would be a
super easy way to launder. Especially due to the sheer volume of similar apps
on the play store and numerous grey-market giftcard processors.

dirty cash -> giftcards -> casino app -> app developer

~~~
badRNG
That certainly sounds plausible.

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...](https://www.bloomberg.com/news/features/2017-08-03/a-baccarat-
binge-helped-launder-the-world-s-biggest-cyberheist)

------
bennettfeely
Apple and Google could easily remove these type of apps from their stores but
of course they won't. They're culpable.

It shouldn't be possible to spend a hundred thousand dollars in in-app
purchases.

~~~
lsiunsuex
A problem with thoughts like this though, should I, the consumer, be able to
choose what I want to do and not my app store of choice?

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.

~~~
falcolas
> ... should I, the consumer, be able to choose what I want to do and not ...

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 ...).

------
nend
>In a response to NBC News' inquiries, the company issued a statement saying
its games are not gambling and should not be regulated as such.

>"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.

~~~
wutbrodo
It is indeed a very wide definition. Is going to an arcade now gambling?
Perhaps this hinges on how much chance vs skill is involved in the game, but
it's difficult for me to see a principled difference between these apps and
any situation in which you pay money to play a game.

~~~
nend
>Perhaps this hinges on how much chance vs skill is involved in the game

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.

------
canada_dry
As an aside, I used to love playing slots in Vegas when real coins would fall
into the hopper when you won. Apparently they spent a fair amount of effort
making sure that sound was memorable.

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.

------
clegs
Not only can’t you cash out these apps but the apps are basically charging for
zeros. They give players the option of buying and playing $10,000 chips for
$3.99 or you can get “value” instead by buying $1,000,000,000 chips for $99.
Gameplay is the same in both just with more zeros

~~~
hunterloftis
And according to the article those $99-type whales are elevated into the
"high-rollers" areas where the amounts gambled for are larger... leading to a
similar amount of playtime at "higher stakes" only because of digital zeros.

$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)

------
Balgair
Related: Online and Mobile sports betting is legal in Colorado now. Watching a
few of the games this weekend, the ads for the mobile apps are _everywhere_.
Like with the fantasy football craze a few years back, I have a feeling that
this will also be dialed back a lot.

[https://www.denverpost.com/2020/02/25/sports-betting-
colorad...](https://www.denverpost.com/2020/02/25/sports-betting-colorado-
online-casinos/)

------
anm89
> A 42-year-old Pennsylvania woman said she felt saddened that she spent
> $40,000 on Big Fish Casino while working as an addiction counselor.

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?

------
mrhappyunhappy
A ton of games use psychological tricks to get people to spend. Look at
hearthstone from Blizzard. You have to keep buying cards until you get
lucky... and you never do. The randomized fashion makes it so you never stop
spending even though you are one card away from your ideal deck. It has all
the elements of gambling minus the real life rewards. There definitely needs
to be some sort of regulation — perhaps punishing the randomized reward
mechanics.

------
panda21
It obviously wouldn't be nearly as lucrative but these no-payout virtual slots
could easily avoid exploiting people by simply selling access to these slots
with a one time purchase. The whales would probably still purchase every slot
available but at least you set an a cap on how much they can spend and they
can still get their fix.

------
rasz
>about $150,000 in the game in just two years.

Probably still cheaper than two years of mental health care for two people in
US.

------
spelunker
This is an interesting insight into slot machines too - take away any
opportunity to win any money at all and some types of people will _still_
throw tens or hundreds of thousands of dollars at them.

------
nemo44x
"We lie in bed next to each other, we have two tablets, two phones and a
computer and all these apps spinning Reel Rivals at the same time," she said.
"We normalize it with each other."

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.

~~~
zihotki
> Maybe just have sex instead?

And what should they do afterwards? They will still have a lot of time
remaining.

~~~
xhkkffbf
And raising children can be more expensive than these games. Have you seen how
they've gamified the college admissions racket and now everyone has to submit
multiple applications. It's just like the games here.

~~~
mzg
I've heard you can have sex without having children these days.

------
spicymaki
This is another example of using technology to skirt local laws and
regulations. In the US we need more competent regulators and legislators to
keep up with technological change. Hoping to get innovators like Andrew Yang
into government to change things for the better.

------
mensetmanusman
If it wasn’t apps, it was going to be the casinos, right?

~~~
cpitman
The article is implying though that _actually winning money_ is not required
for people to become addicted. It's as if you go to a casino to play slot
machines, with no expectation of ever being able to cash out. You just get
high in winning and losing chips, with no attached monetary value.

I wonder if an actual casino could get away with that business model.

~~~
clegs
Many casinos operate these apps as well

[https://www.wynnlasvegas.com/casino/wynn-
slots](https://www.wynnlasvegas.com/casino/wynn-slots)

~~~
cpitman
Sure, but I'm asking if a physical casino could operate without cash out being
an incentive? Say you get a certain number of chips for free each day you
come, and then you can pay for more chips.

~~~
clegs
Probably with some market downsizing. It’d essentially be an arcade but with
slots. The appeal might be to use large denomination machines, like with the
apps - lots of zeros

