Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries

Accepted Manuscript Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries

Thorsten Teichert, Sally Gainsbury, Cordelia Mühlbach PII:

S0747-5632(17)30395-3

DOI:

10.1016/j.chb.2017.06.025

Reference:

CHB 5036

To appear in:

Computers in Human Behavior

Received Date:

30 October 2016

Revised Date:

03 June 2017

Accepted Date:

15 June 2017

Please cite this article as: Thorsten Teichert, Sally Gainsbury, Cordelia Mühlbach, Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries, Computers in Human Behavior (2017), doi: 10.1016/j.chb.2017.06.025

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ACCEPTED MANUSCRIPT

Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries

Thorsten Teichert ª1, Sally Gainsbury ᵇ, Cordelia Mühlbachc ª Chair of Marketing and Innovation, University of Hamburg ᵇ Gambling Treatment Clinic and Research Unit School of Psychology, The University of Sydney c

Institute for Marketing, Helmut-Schmidt-University

Running title: Positioning of online gambling and gaming products

Acknowledgements The authors have no conflicts of interest to disclose. No funding was provided for this manuscript. Funding was provided for the original research to the lead author by the Free and Hanseatic City of Hamburg, Germany.

______________________________ 1 Correspondence

concerning this article should be addressed to Prof. Dr. Thorsten Teichert, Chair of Marketing and Innovation, University of Hamburg, 3077 Von-Melle-Park 5, 20146 Hamburg, Germany, email: [email protected]

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Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries Abstract Traditionally disparate markets and products, gambling activities and games have begun to overlap in many ways, particularly in the online marketplace. Consumers appear to be moving between these activities, indicating perception of similarities in products. The hybrid nature of some activities has resulted in gambling regulators considering whether they need to act with regards to certain games. Typically, regulatory classifications and taxonomies have been centred on objective features of product offerings, based on the perspective of producers and technology. However, consumer perspective is relevant to defining markets and understanding the potential migratory relationship between products. This research aims to gather an indepth understanding about the multifacetal market space of online gambling and gaming from a consumer perspective. A large-scale survey (n=1000 respondents) assesses perceived similarities between 16 gaming and 9 gambling products by means of holistic triadic comparisons. Multidimensional scaling provides evidence for enduring market boundaries between online gambling and gaming products, but indicates several finegrained similarities on the level of specific products. Products encountering elements of skill, planning, consideration, and achievements over time were perceived differently from those that are more playful and less realistic with immediate outcomes. Consumers did see connections between games and some gambling products, which may explain the joint usage of and migration between products. Insights are thus relevant for regulators, consumers, and professionals in both gambling and gaming industries as market boundaries have become blurred. Key words: Internet Gambling; Online Gaming; Market Boundaries; Triadic Comparisons; Multidimensional Scaling; Classification Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT Positioning of online gambling and gaming products from a consumer perspective: A blurring of perceived boundaries

Introduction The increased incorporation of technology and Internet usage into both gambling and gaming products has resulted in a wider array of products and in many cases convergence between these activities. Research suggests that many consumers increasingly engage in both online gaming and gambling, including online games that replicate gambling activities (Gainsbury, Russell, & Hing, 2014; Gainsbury, King, Russell, Delfabbro, & Hing, 2017; SuperData, 2013). Structural differences between games and gambling have lessened, with many games offering monetary prizes, replicating gambling activities including the focus on wins and money but without monetary payouts, or including elements of gambling or wagering mechanics with chance-determined outcomes whereby a player takes a risk for a potential reward (Jacques et al., 2016; King et al., 2015; Kinnunen et al., 2012). Likewise, some gambling activities now incorporate skill components and social aspects such as interactivity and team play (King et al., 2015; Kinnunen et al., 2012; Lapetina, 2016). Accordingly, several taxonomies have been proposed to differentiate gambling and gaming activities in recognition of the increased digital convergence and emergence of hybrid products (e.g., Gainsbury et al., 2015; King, Gainsbury, Delfabbro, Hing, & Abarbanel, 2015; Parke et al., 2013). Typically gambling regulatory classifications and taxonomies have been centred on objective features of product offerings, based on the perspective of producers and technology, notwithstanding some debate regarding classification, including consideration of the role of skill (Fiedler & Rock, 2009; Hannum & Cabot, 2009; Owens, 2010; Parke et al., 2013). The current paper offers a complementarily investigation of the consumer´s perspective on market offerings.

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ACCEPTED MANUSCRIPT Theory Consumer’s perspective of gambling and gaming products Gambling is generally defined, from a regulatory perspective, as an activity in which the user risks something of monetary value on an unknown outcome, which is determined primarily by chance, for a potential monetary reward (Owens, 2010). Therefore, the elements of skill and investment of money are key characteristics distinguishing games from gambling. Gambling activities that require active orientation and decisions from players such as poker may differ from those based more on chance or with fewer active decisions such as gaming machines or lotteries (Kinnunen et al., 2012). The classification of activities as games, competitions, or gambling activities is not always consistent between jurisdictions. For example, arguments have been made that poker should be classified as a skill game, as opposed to a gambling activity (Fiedler & Rock, 2009; Hannum & Cabot, 2009). Similarly, Daily Fantasy Sports are classified as gambling activities in some jurisdictions, and skillbased competitions in others, with substantial debate over the role of chance and skill (Pickering, Blaszczynski, Hartmann, & Keen, 2016). Several court cases in the US have alleged that social casino games constitute a form of illegal online gambling in which consumers have unfairly lost substantial amounts of money (Dayanim, 2015). Given the difficulties which regulators and researchers face when defining and separating these activities, it is to be expected that consumers may have problems distinguishing between some gaming and gambling products (Carran, 2013; Humphries & Latour, 2013). Consumer perspective of the role of skill within gambling and gaming activities is likely an important factor in how these are classified. However, consumers may also be inaccurate in their perceptions of the role of skill within games and gambling (MacKay et al., 2014; Turner, Macdonald, Bartoshuk, & Zangeneh, 2008). For example, scratch tickets and lottery tickets are generally not considered gambling, unless purchased frequently (Lange, 2001; Williams, Volberg, & Stevens, 2012). Finally, they might care more about other design features, for example, the emotional appeal of a gam(bl)e, than about the presence or Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT absence of skill elements. Thus, it is questionable whether gambling activities that involve less skill, or perceived skill, are in fact considered to be different to skill-based games from a consumers´ perspective. The arguments provided above let us assume that it is no longer sufficient to compare the product class of gambling against the product class of games. Consideration of the distinction between and within these activities needs to occur at a product level (Ghumann & Griffiths, 2012). Research suggests that users move from gambling to social casino games and vice versa, which suggests that to some extent these activities may be interchangeable for some users (Gainsbury et al., 2016). Similar results were found in an adolescent sample (King, Russell, Gainsbury, Delfabbro & Hing, 2016), contributing to concerns about the impact of gambling-themed games on youth (King, Delfabbro & Griffiths, 2010; King et al., 2014). Furthermore, motivation for gambling typically differs between activities, for example bingo and card gambling tend to be related to social considerations in comparison to lottery, race betting and casinos (Lam, 2007). This and other studies suggest that some gambling activities may be used for similar reasons to use of social games, including for excitement and fun, for the competition and challenge and to relieve stress (Hollingshead, Kim, Wohl, & Derevensky, 2016). If the fundamental motivation to play two activities is similar and the activity satisfies similar needs and produces comparable affect, it is understandable that the activities be perceived as analogous. However, there are important structural differences between gaming and gambling, notably, the ability to lose considerable amounts of money, which could lead to negative consequences for users, particularly if they overestimate the role of skill (Gainsbury, King, Russell, & Delfabbro, 2016). Accordingly, understanding the consumer perspective is critical to the consideration of the increasing convergence between gaming and gambling.

Regulatory perspectives Despite some commonalities in features of design, gaming products are not classified and regulated as gambling activities (King, Gainsbury, Delfabbro, Hing, & Abarbanel, 2015; Owens, 2010). Several Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT jurisdictions have raised concerns about the convergence of these activities, particularly in relation to online games with aspects of gambling and games that may facilitate and/or encourage migration from gaming to gambling. The UK Gambling Commission has recently held several inquiries into gaming activities, concluding to date that some (social casino games) fall beyond their remit, while others betting with virtual in-game items (skins) represent a form of gambling that requires regulation (Gambling Commission, 2017). In contrast, the Belgium Gaming Commission has been granted authority to regulate social casino games (Dayanim, 2015) and certain elements of games have been classified as gambling by Japanese regulators and banned from being included in games (De Vere, 2012). In 2013, a bill was created to amend the Australian Interactive Gambling Act to classify online social games with gambling themes as gambling. However, one problem raised against this unsuccessful bill was the difficulty in defining which games should be classified as gambling. These examples demonstrate the blurring of boundaries within the marketplace of gambling and gaming and the need for a more fine-grained analysis to account for the heterogeneity of product offerings. The regulation of online gambling and gaming is extremely important for consumers as well as operators. Products classified as gambling activities are subject to a large amount of regulatory requirements, as well as license fees and taxes. In comparison, online games are subjected to consumer product regulation with few restrictions. Thus, the implications of classification are wide reaching.

The current study The vast majority of empirical studies within this novel field are centered around ‘objective’ participation/prevalence rates and/or risk factors, the study at hand goes a step further by assessing the subjective views about these products of the consumers themselves. This research aims to understand the market space of online games and gambling from a consumer perspective. This perspective is highly important to verify whether current regulatory frameworks classify products using market boundaries that are understood and agreed upon by consumers. Revealed similarities Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT between products may enable identification of likely migration patterns as the more similar products are from a consumer perspective, the more they are likely to be used interchangeably. Therefore, it is possible that some online games represent entry-level or ‘gateway’ products, whereby users may migrate to riskier gambling. As this is the first study to examine how online games and gambling activities are classified by consumers no specific hypotheses were tested. Instead, the objective of this exploratory study is to assess the overall similarity between online games and gambling activities with and without money and the heterogeneity of specific online gambling activities from a consumer perspective.

Methods Sample Data was collected as part of a larger study designed to investigate the gaming and gambling sector by means of an online questionnaire. The categorization described above was a core component of the survey. Additional scales from addiction and flow research were retrieved and used for structural equation modelling (not part of this paper). Between April and May 2015, a professional market research agency collected responses by using one of the prominent online panels based in Germany. Participants were preselected on a pro-rata basis contingent on their experience with either online gambling or online games (having played at least once in the last four weeks). This ensured that participants answered only questions about product categories where they had make first-hand experience. Participation in the survey took approximately 30 minutes and was done online at a time of the participant’s choosing. Participants were provided possibilities to collect points as reward for participation in the survey with the chance to convert it into gift voucher or cash. All answers were mandatory (providing a “no answer” option), leading to a full dataset of 1000 responses. The final sample comprised of 1000 (51% male) participants aged 18-65 years old, spreading around equal across five age groups of 18-24 (14%), 25 – 34 (24%), 35 – 44 (20%), 45 – 54 (24%), 55 – 64 Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT (17%) years old. 40% of respondents were married, 26% single, 24% in a partnership living and 10% divorces or widowed. The educational level varied between 12% primary school, 33% secondary school, 29% high school and 26% university education.

Research Design The empirical survey was designed to mirror consumer behavior by examining implicit perceived relationships between online gambling and gaming products. Gam(bl)ing is typically a lowinvolvement activity where first impressions matters most. Therefore, spontaneous decisions about the closeness or distance of alternative product offerings were assessed using triadic comparisons taken from the Repertory Grid Technique. This multifunctional research instrument has been verified as appropriate to explore subjective perception in a variety of research fields (Kelly, 1991;Marsden & Littler, 2000; Walker, Harper, Lloyd, & Caputi, 2003). The method of inductive similarity assessments bases on the psychological theory of personal constructs (Kelly 1991). According to this theory, people´s assessments differ based upon their individual schemas or ways of seeing the world to which they refer to when interpreting actors, objects or events. Thus, product categorization cannot be assessed by objective features or from external experts but has to be elicited from consumers´ subjective perceptions. Within triadic comparisons (see Figure 1 for illustration), participants are asked to make similarity decisions based upon their own subjective impressions of similarities and dissimilarities. Such triadic comparisons are considered as a core component of the Repertory Grid Technique (Marsden & Littler, 2000). Participants are asked “Which two categories from the three are similar and which one is different to the two others?”. For example, a single triad consisted of Sport Bets, Card Gambles (no poker) and Beat´m-Up Games. Four out of five respondents who assessed this specific triad indicated Sport bets to be different from the other two. This shows that these respondents differentiated these three products not by the gambling aspect as such but by other facets, e.g. by the degree of an active participation in the gam(bl)e. Positioning of online gambling and gaming products from a consumer perspective

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Figure 1: Exemplary Triadic Comparison Task

Measures and Analyses Twenty-five online gaming (16) and gambling (9) products were identified based on pre-testing of prominence and availability within the jurisdiction where the research was conducted (Table 1). Gambling products were classified based on legal distinctions, and as such had less heterogeneity than games, which are a largely unregulated and highly varied product category. As such, a retention of more gaming categories was favoured over a forced reduction, which may have introduced inaccuracies in participant responses. Online games were compared to online gambling with and without real money in triads. A balanced incomplete block design (BIBD) was used to reduce the overall complexity of the survey (Colbourn & Dinitz 2007). BIBD enables the use of a subset of triads, whereby each pair of products occurs equally often across all triads (Burton & Nerlove 1976). Here, a BIBD consisting of 300 triads led to an orthogonally balanced data set where every category and every combination of categories are equally often part of the whole survey. The triadic comparisons for the Repertory grid sequence were identical for the variations with and without money. Three triads per participants lead to 3000 similarity decisions in 1000 questionnaires. Each of the 300 triads was thus repeated five times for a pool of 2 x 1500 triads in total. The well-balanced BIBD experimental design led to a nearly equal number of 28 observations for each combination of stimuli pairs (max=30; min=24 due to missing values). Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT Category Add-on lotteries

Short Description of meaning (text presented in German language to participants) Online competitions or lotteries where the profit depends on the winning numbers of the draw before.

Instant Lotteries

Online gambling or lotteries where an immediate decision is made with regard to the profit (often in form of scratch cards).

Sport Bets

Online betting which refers to a sports event without reference to a special type of sport (e.g. live betting or betting on an event).

Racing Bets

Online betting which refers to a race without reference to the content alignment (e.g. car races, horse races, dog races).

Virtual Slot Machines

Online gambling that is played through a virtual slot machine. For instance, three spinning reels are turned. And if there appears the same picture three times, it is seen as a win.

Casino Table Gambles

Online gambling that is played at tables in online casinos (e.g. roulette, dice games, card games, but no poker).

Card Gambles no Poker

Online card games where players either play against the computer or other players.

Poker Cash Gambles

Online poker games where players are able to drift into the game or can be paid out at any point of time.

Poker Tournaments

Online poker game which is presented as a competition where the best poker player wins.

Adventure Games

Online games where participants of an interactive story experience adventures or have to solve a problem.

Beatemup Games

Online games which focus on (physical) violence – often within the framework of different kinds of martial arts.

Bubble Shooter Games

Online games that combine elements of puzzles and shooters. By merging, identical elements disappear and the player wins points (for the merging).

Casual Games

Online games which are easily accessible, offer prompt success, e.g. serve for passing time.

Collectible Card Games

Online games where sets of cards are collected to play against the computer or other players.

Ego-Shooter Games

Online games where the player interacts in a three-dimensional game world and often has to follow tactical strategies (the game is shown from an inside player perspective).

General Sports Games

Online games that adjust a special kind of sport from the perspective of a player as realistically as possible.

Hack and Slay Games

Online games where participants eliminate opponents by beating or hacking and get points by doing so.

JumpnRun Games

Online games where the game characters move by walking or jumping and get points by collecting appearing items.

Management Games

Online games where player take a management function and are able to set up a company or any similar or are able to manage a team.

Music Games

Online games which focus on singing and music. Either in form of own singing performances like karaoke or in form of own creations like playlists.

Puzzle Games

Online games where quizzes have to be solved by knowing or guessing.

Racing Games

Online games where a fixed distance has to be driven by car or by another means of transport – either against the clock or in a competition against other players.

Skill Games Soccer Games Strategy Games

Online skill games that are designed in an easy way, often played in a direct competition. Online games where soccer is adjusted as realistic as possible from a player perspective. Online games where the players make long term plans about their strategy and decisions.

Table 1: Explanation of gam(bl)ing categories provided to respondents

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ACCEPTED MANUSCRIPT Each participant answered three triadic comparisons and thus evaluated a maximum of nine different categories. Each participant either answered questions comparing games with gambling with money, or games with gambling without money, with half the sample responding to each category. To reduce repetition, each participant responded to triads across different product categories. Basic knowledge about the categories was checked to ensure understanding of the categorization task. Data analysis is performed by means of Multidimensional Scaling (MDS). This is the by far most frequently used market mapping tool in Marketing and related fields (Carroll & Green 1997). The method visualizes perceived similarity of competing product offerings such that similar items are located close to each other while dissimilar items are located far apart (Hout et al. 2013). A similarity matrix of pairwise object comparisons serves as input, and MDS searches for a representation of this matrix in a multidimensional space. The multidimensional scaling was estimated using the Proxscal procedure for ordinal data, implemented in SPSS 23.

Results Pairwise similarities between games and gambling products The similarities relation between single categories were measured as mean values of stated similarities, that is, the proportion of triads in which two categories were named to be similar. Hereto, the 2827 triads (173 triads or 5.7% of total answers were not usable for this analysis) were decomposed into a similarity matrix with 8481 pairwise comparisons. The balanced design ensured an approximately equal cell frequency of 28 observations per cell for each of the 300 stimuli pairs. Table 2 depicts the most relevant excerpt of this matrix in which pairwise similarities between gambles and between gambles & games are displayed as relative values. The results for gambling with and without money were highly comparable. Thus, they were averaged out in the analyses.

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ACCEPTED MANUSCRIPT Within the gambling field (upper triangle in Table 2), two subgroups of gambles can be differentiated along two easily recognizable areas of high pairwise similarities: lotteries, bets and slot machines appear to be distinguished from card gambles including poker. Between both subgroups of gambles, the pairwise similarity values are in general well below 50%, whereas values of around 80% are to be found within the two subgroups. Virtual slot machines seem to bridge these both subgroups of gambling, as they exhibit high pairwise similarity values both with lotteries and bets as well as with card gambles and poker.

pairwise similarities in % of responses Add-on lotteries Instant Lotteries Sport Bets Racing Bets Virtual Slot Machines Casino Table Gambles Card Gambles no Poker Poker Cash Gambles Poker Tournaments Adventure Games Beatemup Games Bubble Shooter Games Casual Games Collectible Card Games Ego-Shooter Games General Sports Games HackandSlay Games JumpnRun Games Management Games Music Games Puzzle Games Racing Games Skill Games Soccer Games Strategy Games

Add-on lotteries 100% 93% 83% 82% 55% 76% 17% 22% 0% 10% 13% 11% 16% 29% 17% 10% 30% 18% 11% 10% 17% 12% 3% 27% 0%

Instant Lotteries 100% 79% 79% 59% 52% 7% 17% 59% 7% 11% 31% 18% 20% 14% 17% 10% 3% 3% 7% 10% 4% 3% 14% 10%

Virtual Slot Sport Bets Racing Bets Machines

100% 90% 76% 4% 61% 3% 11% 4% 4% 13% 10% 3% 0% 45% 10% 14% 34% 17% 0% 17% 14% 27% 17%

100% 62% 50% 4% 7% 18% 14% 32% 7% 4% 36% 0% 59% 4% 44% 24% 11% 10% 54% 18% 67% 7%

100% 93% 28% 93% 48% 0% 19% 44% 32% 32% 17% 15% 28% 38% 14% 7% 7% 4% 17% 11% 14%

Casino Table Gambles

100% 81% 81% 85% 14% 31% 11% 46% 57% 7% 31% 13% 10% 45% 10% 27% 4% 44% 3% 8%

Card Gambles no Poker Cash Poker Gambles

100% 77% 79% 15% 36% 7% 62% 83% 4% 38% 14% 7% 58% 8% 28% 29% 46% 10% 54%

100% 78% 7% 10% 11% 41% 57% 11% 11% 36% 7% 30% 20% 36% 34% 40% 28% 47%

Poker Tournaments

100% 7% 47% 17% 25% 70% 15% 21% 24% 0% 38% 23% 31% 25% 21% 30% 32%

Table 2: Pairwise similarities of gambles and games. Note: Shading reflects the degree of relationship between compared gambles and games; darker shading reflects stronger perceived similarity values. Comparisons between gambling and gaming products (lower part of Table 2) reveal smaller similarities than those within the group of gambling activities (upper triangle). Exceptions are worthwhile to point out: Collectible card games, management games and to a lesser degree strategy games reveal pairwise similarity values above 50% to various poker-related gambles. Casino as well as poker gambles show to be related to management games. In contrast, virtual slot machines reveal

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ACCEPTED MANUSCRIPT high pairwise similarity values with action games, as e.g. with bubble shooter (44%) or Jump&run (38%) games. Unsurprisingly, racing bets show a close association with racing games (54%), however they are as well related to soccer games (67%) and to general sports games (59%).

Joint positioning of games and gambles in a multidimensional space Multidimensional scaling led to a three dimensional solution based upon both established statistical measures as well as by commonly applied visual inspection (Borg & Groenen, 2005): A screeplot identified a three dimensional solution which was supported by a robust but yet acceptable STRESS measure (Stress-I below 0.2) measuring the fit between configuration and raw data (Kruskal 1964). The findings are visualized in the following by means of two-dimensional presentations. For ease of reading (Borg & Groenen, 2005), the coordinates of the three dimensional space are displayed by two separate figurative representations (Dimension 1 vs. Dimension 2; Dimension 2 vs. Dimension 3). The dimensions are sorted according to decreasing importance, that is, relevance for distinguishing the matrices elements. An overall interpretive meaning is provided for each axis for initial guidance. The core (primary) positioning in the top two dimensions of products are depicted in Figure 2. Here, the X-axis largely differentiates gambling and gaming products (left vs. right). However, taking the second dimension (Y-axis) into account, distinct sub-groups within these product classes can be identified. Lotteries, sports and racing bets are grouped (lower left quadrant) but differentiated from gambling card games and casino table games (upper left quadrant), with virtual slot machines located between these groups. The upper left quadrant contains more traditional types of gambling commonly accessed within a casino or gambling venue. These also include activities in which some strategy may be of use in determining outcomes, or minimising losses, and that are played for sessions. In contrast, the lower left quadrant contains games of short active duration, such as placing a bet or purchasing a lottery ticket, which may also involve less strategy. The top right quadrant includes games in which planning and strategy may also be useful and outcomes and achievements Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT may occur over time (similar to the corresponding top left quadrat of gambling activities). Finally, the bottom left quadrant includes games with more activity, adventure, and immediate outcomes with more playful themes. Some products appear to straddle dimensions, including virtual slot machines, which may be perceived as a traditional game, but can occur in a variety of venues with long or short sessions.

Figure 2: Perceptual positioning of games and gambles according to the first two dimensions Insights about secondary positioning are derived by comparing the positioning of games and gambling according to the second and third dimension. As those two dimensions each explain less of the overall variance as compared to the first dimension, they are likely to be less influential in consumer´s assessment of (dis-)similiarity of gam(bl)ing products. Nonetheless, the first dimension alone is insufficient to describe consumers´ categorization in a reliable way. This implies that the secondary positioning of product offers provides more in-depth insights about consumers´ perspective on the product-market-space.

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ACCEPTED MANUSCRIPT A visualization of the second and third dimension is provided in Figure 3. Here, sports-themed games are grouped together (lower left quadrant), along with racing bets which may reflect the realistic sports element of these activities. Adventure, jump&run and hack&slay games are a group with sports bets and instant lotteries (upper left quadrant), which may reflect their instant outcomes, element of adventure or distraction. Management, collectible cards and strategy games are grouped along with tournament poker (upper right quadrant), which likely reflects the planning and consideration in these games. Overall, Figure 3 gives a different and complementary view on consumers´ perspective of the competitive landscape. Online games and online gambling products are by no means clearly separated as suggested in Figure 2. Instead, several occasions can be identified where specific gambling products are closely related to games. These include sports bets and instant lotteries being aligned with casual action games, poker tournaments grouped with strategy games, poker cash and non-poker card, and casino gambling activities grouped with skill/puzzle games, and racing and addon lotteries grouped with sports and racing games.

Figure 3: Perceptual positioning of games and gambles within dimensions two and three Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT Discussion The overall aim of the study was to gain an in-depth understanding of the online gaming and gambling markets from the consumers' perspective. Based on a large-scale online survey with 1000 respondents from Germany, the authors chose to collect data with the Repertory Grid Technique to identify ways how individuals construe their experiences. Overall, the findings indicate both similarities (see Figure 3) as well differences (see Figure 2 and dimension 1 in particular) between 25 online gaming and gambling forms. Gambling and gaming products were differentiated by participants as the retrieved similarity values were higher within each product group: Gambling activities were grouped together and largely separated from games on the core dimensions of similarity assessments. This suggests that current regulations which differentiate these activities are still appropriate and that consumers can distinguish between gaming and gambling products. This is consistent with taxonomies and theoretical conceptualisations of gaming and gambling, which focus on the role of monetary risks and gains and role of chance, in distinguishing between these activities (Carran, 2013; King, Gainsbury, Delfabbro, Hing, & Abarbanel, 2015; Owens, 2010; Parke et al., 2013). Despite these general groupings, further differences were revealed between gambling products. Both the pairwise similarity comparisons as well as the MDS positioning along the two core dimensions suggests that lotteries and betting are related, but differentiated from card and casino gambling. Lotteries and betting may be perceived as requiring less skill and consideration and shorter involvement as compared with card and casino gambling which may involve prolonged sessions and more active decisions. A distinction may also be made between gambling activities perceived to be more traditional and associated with casinos, as compared to those conducted in a broader context. The placement of virtual slot machines between the two groups may reflect the ability to engage in this activity for long or short sessions and the perception of some consumers that some active involvement may be useful in determining outcomes. The second and third

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ACCEPTED MANUSCRIPT dimensions identify instant lotteries and sports bets more closely related to games with live-action adventure, racing bets and add-on lotteries more closely related to sports games, and casino, card and cash poker games related to casual, skill and puzzle games. This may suggest that sports bets and instant lotteries are seen as less intense, fun and playful with instant outcomes, while casino and card gambling products have a higher degree of strategy and achievements are made over time. This is also consistent with findings that motivations to play games and gamble are similar for some users, and suggests that considering the experience and intrinsic value of the activities is important from a consumer’s perspective and understanding of activities (Hollingshead et al., 2016). Different classes of game products were also identified. Games that require less skill and knowledge and involve more playful, whimsical and less realistic scenarios with immediate outcomes were grouped together in the core dimensions. Skill, strategy, management and puzzle games were grouped together, along with casual games, likely reflecting the partial element of skill, consideration, planning and achievements over time involved in these games. In the second and third dimensions, sports-themed games were grouped together, along with racing bets which may reflect the realistic sports element of these activities. Adventure, jump&run and hack&slay games were a group with sports bets and instant lotteries, which may reflect their instant outcomes, element of adventure, distraction and the fantasy scenarios, including imagining possible outcomes. Management, collectible cards and strategy games were grouped along with tournament poker, which likely reflects the planning and consideration in these games. Puzzle games were grouped with casual and skill games, along with casino-style gambling products which may reflect shorter sessions of involvement and the role of skill and chance. Unsurprisingly, consumers´ perspective revealed a large similarity between race and sports betting and sports and racing games. However, the core dimensions differentiate between games and gambling activities. Although both sporting games and sports and race betting were similar on one dimension, possibly reflecting skill, consideration and extent of time involved, the sports and race Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT themed games were more likely to be grouped with other games. Findings indicate that consumers view the games as being less serious and more playful and entertaining with immediate outcomes and not a lot of thought required. Sports and racing bets were also separated on the third dimension, with racing bets more closely aligned with sports, soccer and racing games while sports bets were more similar to more playful, imaginary games. This may imply that racing is perceived to be more like a hobby while sports betting is less serious and potentially requires less knowledge or understanding. The placement of casual games along with casino, card and poker gambling products suggests that some of the concerns about these games grooming players to be more receptive to gambling may be valid (Derevensky & Gainsbury, 2016; King et al., 2010). Users clearly see some connection, although this may be indirect, between casual games and traditional gambling products, which may be related to the increasing similarities in these, including casual games that closely replicate gambling products such as social casino games (Gainsbury, Hing et al., 2014; Kim et al., 2015). This is consistent with recent research findings that 54% of the top 100 casual Facebook games contain gambling content (Jacques et al., 2016) and that players migrate between these activities (Gainsbury, Russell, King, Delfabbro, & Him, 2016; Kim et al., 2015). Instant lotteries were positioned closely with online games that are easy to use and provide instant outcomes, which may indicate that this form of gambling is motivated by a desire for distraction or immediate achievements. This can be problematic for those vulnerable to gambling problems with difficulty controlling impulses (Lawrence, Luty, Bogdan, Sahakian, & Clark, 2009). Similarly, sports games were perceived as similar to race betting, while adventure-style active games were related to sports bets, which may suggest that involvement in these games might lead to interest in betting. With growing opportunities to bet on online gaming tournaments (eSports betting) and gamble directly with virtual items (skins betting), it is possible that online gaming introduces users to gambling opportunities (Kim, Wohl, Gupta, & Derevensky, 2016). Further research is thus needed to Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT assess to which extent online gaming can be a gateway to gambling, including among young people and those more vulnerable to the development of gambling problems. Different classes of game products were also identified. Skill games were more closely aligned with other games than with gambling activities, which supports the legal definition of gambling activities as being primarily determined by chance (Owens, 2010). Collectable card games and casual games appeared to have higher overlaps with gambling activities than other games assessed. Collectable card games were closely related to gambling card games and casino table games as well as skill gambling games. This may reflect the perception that these activities all have an element of strategy and consideration with outcomes and achievement over a longer time period, similar to betting on cards, particularly poker. The role of skill in gambling may be overestimated, further increasing the perceived similarities between games and gambling (Turner et al., 2008).

Implications The distinctions drawn between groups of gambling activities and games have numerous implications for theoretical conceptualisations as well as policy and business practices. Gambling activities are not perceived as a homogeneous group of products, which is consistent with previous research (Lange, 2001). This isn’t necessarily a surprising outcome; however, some of the distinctions are unexpected. Poker is typically regulated and referred to as a single activity, however the results suggest that consumers perceive cash games to be more closely aligned with traditional casino gambling, while tournaments involve a higher degree of skill, strategy and prolonged involvement. This split classification is also reflected in some regulatory decisions, for example in Australia a review of the national online gambling regulations recommended tournament poker be legalised, but not cash games (Gainsbury, 2010). This is consistent with research indicating that poker, particularly tournament style, is largely determined by skill (Fiedler & Rock, 2009; Hannum & Cabbot, 2009). The conceptualisation of problems related to poker may need a revised treatment approach recognising the accurate belief in the role of skill as opposed to traditional gambling Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT treatment that focuses on understanding the role of chance. For example, a common bias held by gamblers is illusions of control, related to the tendency to overestimate the role of skill in gambling. However, although skill is involved in poker and other gambling activities (wagering), outcomes are still determined by chance, so it is important that this be clearly communicated to players. For example, policy makers should consider implementing consumer education campaigns, acknowledging the role of skill in some gambling, but still emphasising that this is not sufficient to overcome the influence of chance. In a similar result, sports and race betting, which are typically considered both as ‘wagering’, were shown to relate to different online games. Although grouped closely on the first dimension, their positioning along the second and third dimension suggest that race bets are more closely aligned with sporting games and hobbies, while sports bets are more similar to adventure and action games. It is possible that race betting is perceived as a more serious form of betting, while sports betting is viewed as more light-hearted and requiring less formal knowledge and training. The conceptualisation of different types of gambling is important for conceptual models as this is likely to influence the pathway into gambling and the subsequent development of gambling problems. Specifically, sports betting may begin as a social pursuit, and losses be viewed as poor judgement, rather than chance-determined outcomes (Blaszczynski & Nower, 2002). These results suggest that consumers perceive differences within categories of gambling activities, such as cash vs. tournament poker, and may engage in these differently. This needs to be explored further in research, rather than considering all gambling participants together as a homogeneous group. Understanding the perceived similarities between games and gambling may help to create policies to reduce the likelihood of consumers migrating from online games to gambling, which may include consumer education campaigns and consumer protection measures. This is particularly important for young people, who are most vulnerable to experiencing gambling-related harms (Derevensky, Gupta, Messerlian, & Gillespie, 2005). Gambling is an adult activity and exposure to elements of Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT gambling within games, including playing gambling activities without money, may create inaccurate impressions of gambling, which could have harmful consequences (Kim et al., 2016; King et al., 2014). There is evidence to suggest that some users migrate from online games to gambling, and that these users may be at risk for experiencing gambling problems (Gainsbury, Russell et al., 2016; Kim et al., 2015). Although no causal relationship has been established, playing a game with perceived gambling elements may initiate the process of normalisation and increase interest in gambling and participation in gambling activities (Kim et al., 2016; Monaghan & Derevensky, 2008). Further research is needed to investigate the potential for online games to act as a gateway to gambling and what regulation and policies might be useful to reduce this effect. Theoretical conceptualisations of gambling and gaming also need to be continually revised as these products evolve and the boundaries between them are continually blurred. As they are not regulated as gambling products, online game manufacturers can exploit marketing opportunities, particularly where there is close consumer alignment between the markets for games and non-monetary gambling and gambling (Ozuem & Prasad, 2015). Instances have also occurred whereby online gamers can gamble with virtual goods and cash these out for real money (skins) or in-game features include gambling with money (De Vere, 2012; McWhertor, 2016; UK Gambling Commission, 2017). Ad hoc consumer decisions are relevant given the predominance of pop-up advertising for online gambling and gaming products, which enable users to move between products with the ease of a mouse-click or finger-tap. These are just some examples of online games crossing into the gambling market, while attempting to avoid regulation. Nonetheless, although there are some cases of online games potentially impacting gambling participation, the majority of online games appear to have few connections to gambling. As products further evolve, it is important to start examining products and regulations that distinguish between different online games, rather than attempting to regulate increasingly disparate markets with homogeneous policies.

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ACCEPTED MANUSCRIPT Limitations This is the first empirical study to jointly investigate online games and gambling activities from a consumer perspective. However, it is not without limitations. The study was conducted with German participants, which may limit the extent to which the results can be generalised to other populations. Games and gambling are influenced by the larger socio-cultural context (Kinnunen et al., 2014) and German participants may have different views of online games and gambling related to the legal availability of gambling. As the results are based on decisions made by participants without elaboration or reasoning provided, the discussion of results is based on interpretation rather than explicit understanding of the rationale for distinctions made by participants. The act of completing triadic comparisons may overcome bias as there is no ‘right’ way to respond, and the varying ways that individuals complete the task allows diversity to be investigated (Walker et al., 2003). Further research could include more in-depth qualitative components to verify the results. Additional research is also needed with young adults and adolescents given that these populations are likely to engage in online activities and may be at specific risk of developing gambling problems (King & Delfebbro, 2016).

Conclusions An empirical analysis of consumer’s perspectives of the market for online gaming and gambling products reveals important insights that are relevant for academic researchers, policy makers and regulators as well as consumers and professionals within the game and gambling industries. The results show that gambling and gaming activities needs to be considered at a product level as consumers view various distinctions within these markets. Nonetheless, gambling products, although divided by elements of skill, strategy, time involved and prolongation of outcomes are largely distinguished from online games. However, a more in-depth examination reveals a large overlap between games and gambling activities on secondary dimensions. This likely explains joint product usage as well as migration from online games to gambling, and vice versa. As online games Positioning of online gambling and gaming products from a consumer perspective

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ACCEPTED MANUSCRIPT and gambling continue to evolve and new hybrid products are introduced, regulators will likely need to carefully consider how to best define the gambling market. Along with the classification of activities based on the key determinants of chance, consideration, and reward, policy makers and consumers will have to be mindful of the potential for gaming products to act as a gateway to, or otherwise influence gambling. Ongoing efforts are required to investigate the potential link between specific gambling and gaming products as it may cease being appropriate to regulate the broad and divergent gambling and gaming markets with homogeneous policies. In particular, education and prevention measures should be implemented to counter inaccurate illusions of control in gambling activities with perceived similarities with gaming.

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Highlights -

Consumer’s perspectives of the online gaming and gambling market are retrieved.

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Gambling products are distinguished from online games only at first sight.

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Gambling products as e.g. group wagering and poker are perceived very differently.

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Regulators will need to carefully consider how to best define the gambling market.

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Online game manufacturers can exploit marketing opportunities.