The primary goal of a private business, including gambling operators, is to maximize profits. Operators pursue this goal under the requirements of regulatory constraints. However, the behavior of companies often still has consequences that are external to its profit function and negatively affect the public, including health effects. In an attempt to deal with these consequences and achieve a balance among the economic, environmental, and social aspects, as well as imperatives, firms engage in corporate social responsibility (CSR) efforts (Swathi 2018). CSR has been defined as “a concept whereby companies integrate social and environmental concerns in the business operation and their interactions with their stakeholders on a voluntary basis” (The Commission of the European Communities 2001, p. 6).
Cai et al. (2012) posed the question: Can firms in controversial industries be socially responsible while producing products harmful to a human being, society, or environment? Examining the CSR engagement of firms involved in supplying goods with negative health effects (e.g., tobacco, gambling, alcohol), the study sought to investigate the relation between a firm’s choice of CSR activities and its market value, finding that after controlling for various firm characteristics, CSR engagement was positively associated with firm value, consistent with a value-enhancement hypothesis. In essence, this shows that businesses in controversial industries utilizing CSR as a means to improve transparency, strategies, and philanthropy also enhance firm value (Cai et al. 2012). This finding suggests that businesses have an intrinsic interest in engaging in CSR. But is that also true when CSR opposes financial interests, for example, when a firm is selling addictive goods and is supposed to block access to some of their customers?
CSR in the alcohol market
The discussion on CSR in markets for demerit goods with negative effects on adult public health focuses mostly on alcohol. Under the general framework of corporate social responsibility, the alcohol industry has increased ‘responsible drinking’ prevention activities. Most of these have often been described as instrumental to the industry’s economic interest (Babor and Robaina 2013) and designed to maximize the long-term profits (Garriga and Melé 2004). The very term “responsible drinking” has been challenged by researchers, who consider such messaging to be intentionally ambiguous and potentially part of strategies to protect the industry’s interests (Hessari and Petticrew 2017).
A content analysis study concluded that these ‘responsible drinking’ campaigns strategically enable the industry to confuse the presentation of health information and sometimes undermine official government instructions on alcohol harm (Jones et al. 2017). It has been shown that viewers unequivocally interpret government-developed campaigns as warnings against the harmful consumption of alcohol while industry messages are associated with a range of interpretations, sometimes understood as an encouragement to consume more alcohol (Jones et al. 2017). Thus, these initiatives instead serve to brighten the image of the industry while being ineffective in moderating consumption (Jones et al. 2017).
Studies also indicate that cost-effective interventions are those, often neglected, that are focused on total populations, controlling availability, affordability, marketing of alcohol, and drinking and driving (Casswell and Thamarangsi 2009; Room et al. 2005). By contrast, campaigns targeting individual behavioral change have not yet been proven to be significantly effective when it comes to harm reduction. On the contrary, they can sometimes prove to be counterproductive as most ads tend to focus on short-term harms while the most difficult alcohol-related problems are associated with long-term usage, emphasizing individual risk management and responsibilization (Dunstone et al. 2017) again.
Responsible gambling, CSR, and public health
By the late 1990s, gambling expansion was established as a public health issue (Korn and Shaffer 1999), garnering attention to address concerns regarding problem gambling and reducing associated harms to players and the community. In turn, governments and organizations providing gambling services, particularly electronic gambling machines, felt pressure to demonstrate their commitment to CSR and adopt responsible gambling (RG) policies (Hing 2002; Hing 2010; Reith 2008).
Calls to understand CSR in dangerous consumption industries, such as pharmaceuticals, tobacco, alcohol, and gambling, have been issued (Devinney 2009; Leung and Snell 2017). As reviewed by Leung and Snell (2017), CSR in the gambling industry has received scholarly attention with studies investigating the impact of CSR on financial performance, consumers’ perceptions of gambling, and perceptions of RG by casino employees. However, whether these RG programs achieved the positive effect on player protection and public health that they were designed for was not sufficiently tested.
Since 2004, the construction of RG has primarily been associated with a series of position papers referred to as the Reno Model I–V (Blaszczynski et al. 2004; Blaszczynski et al. 2008; Blaszczynski et al. 2011; Collins et al. 2015; Ladouceur et al. 2017). Responsible gambling, as defined by the Reno model authors Blaszczynski et al. (2004), comprises policies and practices designed to prevent and reduce potential harms associated with gambling, incorporating a diverse range of interventions designed to promote consumer protection, community/consumer awareness and education, and access to efficacious treatment. In this light, gaming corporations and associated governmental bodies rest upon an individual’s right to informed freedom of choice.
To classify RG programs as supporting public health, there is an expectation that these codes will exceed the mandatory measures demanded by law and include additional voluntary measures. Mandatory measures for gambling halls in Germany are, most notably, the legal age of 18 years and the prohibition of smoking and alcohol in slot machine halls (but not at machines in bars). The German gambling treaty of 2012 states that gambling operators are obliged to “encourage gamblers to play responsibly and prevent the emergence of gambling addiction” (§6 gambling treaty). This rather general rule is made more concrete in the appendix of the treaty that defines these mandatory measures for RG programs: (1) appointment of a director for the development of the RG program, (2) training of staff to detect potential problem gambling behavior; (3) regular documentation and reporting on the effects of the RG programs, (4) provision of information to players about, for example, chances of winnings, a self-test of gambling problems, and a hotline for gambling problems; (5) a prohibition against sharing revenues with senior staff; (6) a prohibition against any of the staff participating in gambling.
The combined requirements to train staff and to encourage players to gamble responsibly could be understood as operators having the duty to proactively approach potential problem gamblers with the intention to help them by, for example, referring them to treatment. While such an approach is a promising prevention effort, we do not see it as a mandatory rule but rather as a voluntary measure for two reasons: (1) neither the gambling treaty nor its appendix explicitly state that the encouragement to play responsibly has to involve a proactive personal approach by staff members or that it should involve a referral to treatment; (2) if mandatory, such an obligation would induce a liability of the operators to compensate customers for damages to a pathological gambler in case of non-compliance—a liability that has not been recognized by courts. Still, we acknowledge that an interpretation of approaching potential problem gamblers as a mandatory measure is tenable. In that case a violation against the rule would be more severe, since it is mandatory and not voluntary.
Revenue sharing with problem gamblers
Spending for gambling is highly concentrated in a small group of high-intensity gamblers (Fiedler et al. 2019). For example, 80% of revenue from fixed-odds sports betting is generated by 5.7% of high-intensity gamblers (Tom et al. 2014). In poker, revenue is yet more concentrated: 1% of the gamblers account for 60% of operators’ revenue, 5% account for 83%, and the top 10% of players deliver 91% of the operators’ income (Fiedler 2012, p. 17). The dose-response relationship suggests that gambling problems and the amount of money spent are positively correlated (Currie et al. 2009; Brosowski et al. 2015) and hence that problem gamblers account for a relatively large proportion of spending.
A number of studies provide evidence on the diverging spending habits of recreational gamblers and problem gamblers (Smith and Wynne 2002; Wiebe et al. 2006; Volberg and Bernhard 2006; Fiedler et al. 2019). The gambling report by the Australian Productivity Commission explores asymmetries in gambling expenses in even greater depth and concludes that addicted slot machine gamblers play more often, play in longer sessions, and wager more per time unit (Productivity Commission 2010). The share of gambling revenue derived from specific game forms is not well documented but the existing literature suggests that slot machines have a rather large share. Williams and Wood (2007) assess a share of 61%–62% for slot machines in Ontario. Fiedler et al. (2019) observe 40.2% for slot machines in France and 76.3% in Québec. Smith and Wynne (2002) even find a share of 91.3% for slot machines in Alberta. For Germany, Fiedler (2016, p. 360) estimates the share of gambling hall revenues from pathological gamblers to lie between 67% and 77%. These findings show that slot machine operators have a strong financial incentive to serve problem gamblers. If they would engage in perfect prevention and exclude all problem gamblers as clients, they would lose a very large share of their revenues.
In this article, we operationalize CSR as introducing effective RG measures that either prevent problem gambling or reduce existing harms to problem gamblers. Against the backdrop of the concentration of revenues in problem gamblers and financial incentives of slot machine operators, we hypothesize that voluntary measures of RG in RG programs are limited in number and extent of implementation. We operationalize this in two working hypotheses:
Hypothesis HA: On paper, responsible gambling programs contain mainly mandatory measures whereas additional effective voluntary measures are absent.
Hypothesis HB: In practice, voluntary measures of responsible gambling programs are not sufficiently implemented.