Gambling - Overview

Young Canadians today are growing up in a culture where gambling is legal, easily accessible – especially online – and generally presented as harmless entertainment.

Youth who gamble are at greater risk than adults of becoming problem gamblers.[1] Approximately four to six percent of Canadian high school students are addicted to gambling and another 10 to 14 percent is at risk of developing an addiction – which means that they already show signs of losing control over their gambling behaviour.[2] A 2020 study found that almost a third of Ontario students had gambled at least once in the previous year,[3] and another released a year later found one in six had gambled with real money.[4] Since then, online gambling has only become easier in Canada: single-event sports gambling was legalized at the federal level in 2021,[5] while in 2022 Ontario established iGaming Ontario to license online gambling operators.[6]

Young people are increasingly turning to internet gambling, which is anonymous and convenient. MediaSmarts’ research has found that about one in five Canadian youth play casino or gambling games online.[7] Even if they don’t seek out gambling sites, youth may see ads for them online. Gambling sites target ads at people who are identified as interested in sports or who follow teams’ or athletes’ social media accounts.[8] These ads often make gambling seem fun, social and risk-free.[9] They can be very effective: four in ten young people say that gambling ads make them want to try it.[10] How often the ads are seen is directly linked to how interested viewers are in gambling.[11] Once someone starts gambling online, gambling companies draw on their personal data – both what they collect while the player is using the app or site and what they have bought from data brokers – to find out how valuable a customer they’re likely to be and to keep them coming back. Ravi Naik, a lawyer who has sued online gambling, has said that “they detect your pattern of play, your likes, dislikes, spending tendencies and exposure to risk. It’s taking information about you and turning it right back on you.”[12] Data collected is also used to identify high spenders and enroll them in VIP programs, which mostly exist to stop players from quitting when they lose money: as one industry insider put it, “virtually everyone in a VIP program is an overall net loser.”[13]

“As long as you have a smartphone, you have access to all sorts of gambling at your fingertips.” Ashley Own, NYC Problem Gambling Resource Center[14]

Youth don’t need money to gamble online, however, and kids from a young age are learning that online gambling is a fun and harmless activity. Popular sites such as Twitch and TikTok contain gambling content, from live streams to betting tips.[15] Many apps offer youth the option to play casino type games such as slot machines and blackjack without using real money, but displaying winnings and losses in terms of dollars. These kinds of sites and applications, called “free-to-play” or “social” casino games, train young people to gamble by blurring the line between real and virtual money.[16] Because you cannot win money, these games are not considered gambling. However, they can still cost users money – in some cases tens of thousands of dollars – by charging for extra chips and offering membership to exclusive online clubs to big spenders.[17] In many cases, these practice sites have a higher win rate than the pay sites to more effectively encourage young gamblers: one in four gamers who play on free gambling sites go on to actually gamble online.[18]

Exposure to gambling begins very early online. Three-quarters of Canadian youth buy in-game or in-app purchases as least once a year.[19] Among the most popular of these in video games are “loot boxes,” in-game items which can be bought with real money and give random rewards, such as new weapons, powers or cosmetic character changes.[20] Loot boxes aren’t exactly the same as gambling – players always get something for their money, though the value of what they get varies – but buying them is psychologically similar to gambling[21] and there is evidence that buying them is linked to problem gambling:[22],[23] as Luke Clark, director of the Centre of Gambling Research at the University of British Columbia, put it, “We can see that clear migration effect, the people who are spending more on loot boxes are more likely to initiate gambling.”[24]

As with social casino games, research has found that the items in loot boxes don’t have to have value outside the game to encourage problem gaming.[25] While some high-profile games such as Fortnite have stopped offering loot boxes, many video games – especially the free-to-play games that dominate mobile gaming – still offer similar features. These fall into two general categories: “pay to win,” which offers the chance to buy an edge over competitors, and “pay to fit in,” which pressures users to buy cosmetic items, such as skins, so that they don’t feel left out.[26] Like gambling, these games make the majority of their money from heavy spenders: half of all money spent on loot boxes comes from just five percent of players.[27] As a result, they face the same pressure as gambling apps to keep the “whales” coming back, and employ “nudges” such as price anchoring, artificial scarcity, and hidden costs to encourage players to buy.[28]

Researchers have suggested four ways that loot boxes can be changed to reduce their negative impact:

• Make clear what the odds are of receiving each possible item and keep odds consistent. Two-thirds of games use a “pity timer” that makes initially rare rewards more and more likely the more loot boxes you buy. This pressures players to spend more to increase their odds of getting the rarest rewards.
• Reduce the number of items available to win. Many loot boxes contain 80 possible rewards or more, which makes it almost impossible for players to calculate their likely value. Researchers recommend a limit of no more than 25.
• Make each item equally likely to be won, rather than having more and less rare rewards.
• Make it impossible to get the same item more than once so that players won’t feel pressure to “chase” the specific reward they want.[29]

Loot boxes aren’t the only video game element that resembles gambling. Roblox, a game-making platform that is the eighth most popular app or website among Canadian kids (and fourth among those in Grades 4 to 6)[30], was sued in 2023 for allowing gambling on third-party sites using its Robux game currency.[31] Video game “skins” (customizable character designs) are also used for gambling: at least half a million children in the United Kingdom are thought to have participated in this.[32] Other games feature “token wagering,” in which players bet or win points that can be redeemed for in-game rewards.[33]

Online gambling is difficult to regulate because of the varying laws in different countries and provinces. Some countries, such as Belgium, have banned the sale of loot boxes in video games, while other countries have taken an approach based on raising awareness of the problem. In Canada, loot boxes and other gambling-like game features are not currently regulated at either the federal or provincial level.[34] The Entertainment Software Rating Board now indicates whether a game has in-game purchases and whether or not those include random items such as loot boxes, but this does not necessarily change the overall rating of the game.[35]

Young people may also be exposed to gambling through traditional media, such as televised poker tournaments. Watching these has been shown to make viewers more receptive to gambling ads.[36] Gambling is also associated with sports. In Australia, three out of four children aged 8-16 who watch sports can name at least one sports betting company.[37] With single-game sports gambling now legal in Canada, Canadian teams and leagues such as TSN,[38] the Toronto Blue Jays and the NHL have formed partnerships with betting companies.[39] The rise of esports, professional video game competitions which are extremely popular among teen boys, has led to its own gambling industry as well, with revenues projected at ten billion dollars (US) in 2020.[40]

"I love to watch sports, but watching them on television today feels like I’m in a casino.” Bruce Kidd, former Olympian[41]

Kids are also increasingly exposed to gambling, with influencers, musicians like Drake and actors such as Jamie Foxx either endorsing brands or publicly gambling.[42] Gambling streams frequently rank in the top one percent on Twitch.[43] While the Alcohol and Gaming Commission of Ontario has acted to ban athletes, influencers and other “celebrities who would likely be expected to appeal to minors” from advertising online gaming as of February 2024, this only applies to online gambling companies licensed under iGaming Ontario.[44] There is evidence that more exposure to these makes young people more likely to get involved in gambling[45] and make it seem like a normal activity.[46] This normalization of gambling, along with exposure to gambling ads, the perception that peers are gambling and a perception of winning as being linked to skill rather than chance, all contribute to youth seeing gambling as being less risky.[47]

In May 2012, the Canadian Pediatric Society (CPS) released a policy statement on gambling in children and adolescents. 

Among the CPS recommendations:

• Physicians and healthcare providers should screen for gambling problems, as well as depression and suicide risk in adolescents already known to have a gambling problem.

Parents should be aware of the signs of problem gambling and monitor their children’s online activities and gambling habits.

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[1] Friend, K.B. & Ladd, G.T. (2009). Youth gambling advertising: A review of the lessons learned from tobacco control, Drugs: Education, Prevention and Policy, 16(4): 283-297.

[2] Gambling problems. International Centre for Youth Gambling Problems and High-Risk Behaviors. http://youthgambling.mcgill.ca/Gambling2/en/adolescents/adproblems.php

[3] Boak, A., Elton-Marshall, T., Mann, R.E., Henderson, J.L. & Hamilton, H.A. (2020). The mental health and well-being of Ontario students 1991-2019: Detailed findings from the Ontario Student Drug Use and Health Survey (OSDUHS). Toronto, ON: Centre for Addiction and Mental Health. Retrieved from https://www.camh.ca/-/media/files/pdf---osduhs/osduhs-mh-report2o19-pdf.pdf    

[4] (2021) The Well-Being of Ontario Students: Findings from the 2021 Ontario Student Drug Use and Health Survey. Centre for Addiction and Mental Health. https://www.camh.ca/en/science-and-research/institutes-and-centres/institute-for-mental-health-policy-research/ontario-student-drug-use-and-health-survey---osduhs

[5] Hill, D. (2022) Single-game sports gambling is a risky bet for Canadians. The Globe and Mail. Retrieved from https://www.theglobeandmail.com/opinion/article-single-game-sports-betting/

[6] Ralph, D. (2022) Ontario’s online gambling market launches today. CTV News. Retrieved from https://toronto.ctvnews.ca/ontario-s-online-gambling-market-launches-today-1.5847087

[7] Brisson-Boivin et al. (2022) Young Canadians in a Wireless World, Phase IV: Life Online.

[8] Christl, W. (2022) Digital Profiling in the Online Gambling Industry. Cracked Labs. Retrieved from  https://crackedlabs.org/en/gambling-data

[9] Korn, D. (2005). Commercial gambling advertising: Possible impact on youth knowledge, attitudes, beliefs and behavioural intentions. Report for the Ontario Problem Gambling Research Centre, Guelph, ON.

[10] Derevensky, J., Sklar, A., Gupta, R., Messerlian, C., Laroche, M. & Mansour, S. (2007). The effects of gambling advertisements on child and adolescent gambling attitudes and behaviors. Report for http://www.fqrsc.gouv.qc.ca/programmes/bourses/index.html.

[11] Griffiths, M. (2017). The psychosocial impact of gambling in virtual reality. Casino & Gambling International, 29: 51 – 54.

[12] Satariano, A. (2021) “What a gambling app knows about you.” The New York Times. Retrieved from https://www.nytimes.com/2021/03/24/technology/gambling-apps-tracking-sky-bet.html

[13] Dobby, C. (2022) “Insider alleges Ontario gambling VIP programs aim to stop high-spenders from quitting — even when they want to.” The Toronto Star. https://www.thestar.com/business/insider-alleges-ontario-gambling-vip-programs-aim-to-stop-high-spenders-from-quitting-even-when/article_1a8e59d5-641c-5dfa-9e08-0f345b9336cf.html

[14] Strachan, M. (2022) The Rise of Mobile Gambling Is Leaving People Ruined and Unable to Quit. Motherboard. https://www.vice.com/en/article/ake7gk/the-rise-of-mobile-gambling-is-leaving-people-ruined-and-unable-to-quit

[15] (n.d.) Youth and Problem Gambling. Centre for Addiction and Mental Health. Retrieved from https://kmb.camh.ca/ggtu/knowledge-translation/youth

[16] Drummond, A. & Dauer, J.D. (2018). Video game loot boxes are psychologically akin to gambling. Nature human behavior 2(8): 530 – 532.

[17] Farivar, C. (2020) Addicted to losing: How casino-like apps have drained people of millions. NBC News. Retrieved from https://www.nbcnews.com/tech/tech-news/addicted-losing-how-casino-apps-have-drained-people-millions-n1239604

[18] Kim, H. S., Wohl, M. J. A., Salmon, M. M., Gupta, R., & Derevensky, J. (2014). Do Social Casino Gamers Migrate to Online Gambling? An Assessment of Migration Rate and Potential Predictors. Journal of Gambling Studies, 31(4), 1819–1831. doi: 10.1007/s10899-014-9511-0

[19] Brisson-Boivin et al. (2022) Young Canadians in a Wireless World, Phase IV: Life Online.

[20] Ore, J. (2017, October 29). Are loot boxes turning video games into slot machines? | CBC News. Retrieved May 22, 2020, from https://www.cbc.ca/news/entertainment/video-games-loot-boxes-1.4373079

[21] Drummond, A. & Dauer, J.D. (2018). Video game loot boxes are psychologically akin to gambling. Nature human behavior 2(8): 530 – 532.

[22] Zendle, D., Cairns, P., Barnett, H., & Mccall, C. (2020). Paying for loot boxes is linked to problem gambling, regardless of specific features like cash-out and pay-to-win. Computers in Human Behavior, 102, 181–191. doi: 10.1016/j.chb.2019.07.003

[23] Brooks, G. A., & Clark, L. (2023). The gamblers of the future? Migration from loot boxes to gambling in a longitudinal study of young adults. Computers in human behavior, 141, 107605.

[24] Little, S., & Bala J. (2023) “UBC research draws new links between video game loot boxes and gambling.” Global News. https://globalnews.ca/news/9535007/loot-boxes-gambling-research/

[25] Xiao, L. Y. (2020). Which implementations of loot boxes constitute gambling? A UK legal perspective on the potential harms of random reward mechanisms. International Journal of Mental Health and Addiction, 1-18.

[26] Oldham, A. (2021) How to talk about financially manipulative games (without instigating a media panic). Happy. Retrieved from https://happymag.tv/financially-manipulative-games/

[27] Kersley, A. (2021) Loot boxes are dead. What comes next will be worse. Wired. Retrieved from https://www.wired.co.uk/article/loot-boxes-new-gambling

[28] Close, J., & Lloyd, J. (2020). Lifting the Lid on Loot-Boxes: Chance-Based Purchases in Video Games and the Convergence of Gaming and Gambling. Gamble Aware.

[29] Xiao, L. Y., & Newall, P. (2021). Probability disclosures are not enough: Reducing loot box reward complexity as a part of ethical video game design.

[30] MediaSmarts. (2022). “Young Canadians in a Wireless World, Phase IV: Life Online.”
MediaSmarts. Ottawa.

[31] Kerr, C. (2023) “Roblox Corp facing class action complaint over child gambling allegations.” Game Developer. https://www.gamedeveloper.com/business/roblox-corp-facing-class-action-complaint-over-child-gambling-allegations

[32] Parent Zone. (2018). Skin gambling: teenage Britain’s secret habit.

[33] Zendle, D. (2020). Beyond loot boxes: A variety of gambling-like practices in video games are linked to both problem gambling and disordered gaming. PeerJ, 8, e9466.

[34] Maksic, A. (2019) Gambling in Video Games – Loot Boxes. Peter A. Allard School of Law. Retrieved from www.videogamelaw.allard.ubc.ca

[35] (n.d.) Ratings Guide. Entertainment Software Rating Board. Retrieved from https://www.esrb.org/ratings-guide/#cont_desc

[36] Lee, H.S., Lemanski, J.L. & Jun, J.W. (2008). Role of gambling media exposure in influencing trajectories among college students. Journal of gambling studies, 24: 25 – 37.

[37] Thomas, SL, Pitt, H, Bestman, A, Randle, M, Daube, M, Pettigrew, S 2016, Child and parent recall of gambling sponsorship in Australian sport, Victorian Responsible Gambling Foundation, Melbourne

[38] Ralph, D. (2022) Ontario’s online gambling market launches today. CTV News. Retrieved from https://toronto.ctvnews.ca/ontario-s-online-gambling-market-launches-today-1.5847087

[39] Hill, D. (2022) Single-game sports gambling is a risky bet for Canadians. The Globe and Mail. Retrieved from https://www.theglobeandmail.com/opinion/article-single-game-sports-betting/

[40] Griffiths, M. (2017). The psychosocial impact of gambling in virtual reality. Casino & Gambling International, 29: 51 – 54.

[41] Quoted in Otis, D. (2023) “Are sports betting ads getting out of control in Canada? Experts weigh in.” CTV News. https://www.ctvnews.ca/sports/are-sports-betting-ads-getting-out-of-control-in-canada-experts-weigh-in-1.6399493

[42] Konnert, S. (2022) “Who loses as online betting takes over sports?” The Walrus.

[43]  Little, S., & Bala J. (2023) “UBC research draws new links between video game loot boxes and gambling.” Global News. https://globalnews.ca/news/9535007/loot-boxes-gambling-research/

[44] Alcohol and Gaming Commission of Ontario. (2023) AGCO to ban athletes in Ontario’s igaming advertising to protect minors. AGCO Blog. https://www.agco.ca/blog/lottery-and-gaming/aug-2023/agco-ban-athletes-ontarios-igaming-advertising-protect-minors

[45] McGrane, E., Wardle, H., Clowes, M., Blank, L., Pryce, R., Field, M., ... & Goyder, E. (2023). What is the evidence that advertising policies could have an impact on gambling-related harms? A systematic umbrella review of the literature. Public Health.

[46] Thomas, S., McCarthy, S., Pitt, H., Marko, S., Cowlishaw, S., Randle, M., & Daube, M. (2023). “It is always there in your face.” Australian young people discuss exposure to gambling activities and promotions. SSM-Qualitative Research in Health, 3, 100220.

[47] Nyemcsok, C., Pitt, H., Kremer, P., & Thomas, S. L. (2022). Young men’s perceptions about the risks associated with sports betting: a critical qualitative inquiry. BMC Public Health, 22(1), 867.