Behavioral Responses to Losses Disguised as Wins: A Field Study of Slot Machine Players.

We present the results of a field study examining the effect of losses disguised as wins (LDWs) on subsequent slot machine gambler betting behavior. An LDW occurs when the amount won is less than the amount bet. Using non-experimental, individual transaction gambling data, we examine post LDW betting behavior in a panel of 42,669 gamblers and 17 million slot machine plays. The primary empirical findings include: (1) streaks of three LDWs greater than 75% of the original amount bet lead slot gamblers to increase the amount bet on the next spin; (2) streaks of three LDWs less than 25% of the original amount bet results in gamblers decreasing their bet size on the next spin; (3) slot machine gamblers play faster following streaks of three LDWs compared to losses. We interpret these behavioral findings of differing outcomes associated with small versus large LDWs as consistent with a cognitive dissonance effect (Festinger, 1957). Specifically, the disconnect between the amount "won" (actually lost) and the audio and video stimulus produced by the slot machine highlighting the LDW, produces a dissonance-related arousal that players seek to avoid or reduce leading to changes in betting behavior. Our results complement the experimental findings on LDWs and suggest that the size of the LDW matters in examining the impact on gambling behavior.

Deregulation and Cross-Border Substitution in Iowa's Riverboat Gambling Industry.

When riverboat casinos began operating in Iowa in April 1991 a strict regulatory structure, consisting of mandated sailing, wagering and loss limits, and casino space restrictions, was imposed. The restrictions were removed in May 1994 after Illinois introduced riverboat gambling without space, betting, or loss limits. Using data on casino win and admissions in Iowa and Illinois, this study analyzes the impact that deregulation had on casino win, win per admission, and total admissions. The findings reveal that deregulation significantly increased casino win, win per admission, and total admissions in Iowa. Moreover, when focusing on the "Quad Cities" market, which encompasses both Iowa and Illinois casinos, deregulation is found to result in significant cross-border substitution. In addition, there is evidence that deregulation has partly resulted in existing gamblers losing more money as opposed to increasing the number of gamblers.

Changes in suicide and divorce in new casino jurisdictions.

Using county-level data, this study examines the impact that the introduction of casino gambling has on suicide and divorce. Eight communities that adopted casino gambling between 1991 and 1994 are compared with a matched set of control counties, jurisdictions that are economically and demographically similar to the casino counties. Suicide rates are not statistically different between casino and control communities. Divorce rates are lower in three casinos counties, higher in one, and not statistically different in four. Overall, the results suggest no widespread, statistically significant increase in either suicide or divorce. Possible explanations for the results are provided.