Operator integrity and trustworthiness are essential to consumer confidence in the gambling industry

Operator integrity and trustworthiness are essential to consumer confidence in the gambling industry

On Monday 30th May Crown Casino made global news headlines when it was fined AU$80m for illegally accepting Chinese bank cards at the Melbourne Casino.

See this article for example.

This follows an announcement on Monday 22nd February by the Victorian Government that a Royal Commission would investigate Crown Melbourne Ltd.’s (and its associates) suitability to operate Melbourne’s casino after a New South Wales (NSW) inquiry that found Crown was not suitable to hold a casino license.

All these headlines suggest that there are systemic issues relating to Crown’s corporate integrity but the implications are greater for the betting and gaming industry than just who is suitable to run Melbourne’s casino. The impacts of the negative media coverage of the recent days (and months) go beyond the immediate effect on Crown and are directly felt in the psychology of the Australian gambling public. Negative media coverage impacts player’s perceptions of trust and trust is a crucial component of a successful betting and gaming sector.  

Casinos are not the only type of gambling that has been hit by corruption scandals. For example, match fixing in sports betting is also a commonly reported phenomenon. There are even cases where lotteries have been accused of fixing results by weighting the balls. Such incidents matter as they impact on consumer trust. Operator integrity and trustworthiness are essential to consumer confidence in the betting and gaming sector. 

crown casino

Crown Casino

Why does trust matter in the gambling industry?

Gambles are games of luck and if consumers perceive that there is a possibility that the odds are not fair, because they do not trust the service provider, they will choose to spend their gambling dollars on other leisure activities instead. This may be a positive outcome if we consider gambling as a societal problem and an addictive behaviour with potentially harmful effects on gamblers and their families. But for social gamblers whose gambling has no negative impacts this represents a lost entertainment opportunity.

The first principles of economics tells us that when trust is present, transactions costs are lower as there is less need for search activities. You can go to any gambling venue and be sure the outcome of the bet you placed is fair. Fair in the sense that you are just as likely to win as any other punter. Consumer trust in institutions and companies is known to be reflective of their performance and reputation and is important from a corporate brand perspective. When the brand is damaged then trust falls. In the betting and gaming sector, if consumers do not trust the institutions that operate the games then they are less likely to gamble.

In Australia where gambling per capita is the highest in the world, a fall in consumption may be a positive outcome in relation to gambling related harms. Although, it is most likely that any fall in consumption would come from social gamblers not problem gamblers. The societal costs of gambling for social players are much smaller than those of problem gamblers.

Viewing the issue more broadly a fall in participation also represents lost revenue and for State Governments that rely heavily of gambling taxes, this can have significant implications. Gambling activities can be taxed at high rates as it is seen as acceptable for governments to discourage gambling expenditure through high taxes. Gambling is also a price inelastic good relative to other products due to its addictive nature making it a prefect product for high taxation.

So how do we ensure integrity of operators to ensure they are trusted by patrons?

The traditional answer has been through legislation and regulation but as the current headlines demonstrate fintech adds additional layers of complexity in ensuring that gambling operators abide by legislation and actively seek out those wanting to use casinos to money launder or other illegal activities.  As financial systems get more sophisticated, detection becomes more complicated for both the casino operators and the regulators.  Consumer trust may therefore be an important counterbalance. Casino operators have an incentive to self-regulate if they believe they are losing the trust of consumers. Of course, this counterbalance is only effective if the revenues from any fall in consumption due to lost trust are greater than the gains in revenue from allowing/ignoring illegal activities. In the large fintech facilitated global economy this may no longer be the case. The role of trust as a self-regulator in betting and gaming markets may be less powerful with fintech enabled global money markets than has previously been the case. If this is true then we need to ask, will the record fines alone be sufficient to deter operators from allowing/ignoring these activities? The answer to this question remains to be seen. 


Professor Lisa Farrell,
Director Societal Economics Research Group
College of Business and Law, RMIT University. 

02 June 2022


02 June 2022


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Acknowledgement of Country

RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Luwaytini' by Mark Cleaver, Palawa.