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Mar 23
Market Cannibalization Within and Between Gambling Industries

Contributed by Virve Marionneau, PhD, and Janne Nikkinen, ThD, University of Helsinki Centre for Research on Addiction, Control and Governance (CEACG), Faculty of Social Sciences


Our recently published systematic review paper in Journal of Gambling Issues focused on market cannibalization within and between gambling industries. In economics, cannibalization refers to a process in which a new product or service partly or completely substitutes for those in existing markets. In the field of gambling, this refers to substitution between different types of gambling games. We conducted an analysis of available studies regarding such cannibalization. The final data consisted of 58 original research articles. The results show that new gambling products substitute to a certain extent for existing gambling products, but examples of complete substitution are rare. In most cases, new products only partially cannibalize existing markets, thereby expanding the overall gambling offer. The sector in which the evidence is most convincing is the casino industry, which partially cannibalizes lotteries and pari-mutuel racing. There is also evidence that casinos partially substitute for other casinos and for non-casino electronic gaming machines. Lotteries partially substitute for casinos, other lotteries, sports betting, and pari-mutuel or racing industries. In some cases, market relationships are complementary. This appears to be the case in particular for online gambling which does not seem to reduce consumption in other gambling products, but directly expands the offerings and consumption of gambling games.

Overall, the results indicate that new gambling games do not completely substitute for existing products, but rather expand the market. This expansion of gambling has many direct consequences for consumers, governments and treatment professionals. Although evidence remains limited, the so-called total consumption model appears to apply to gambling. The model has been widely applied in fields such as alcoholism, and suggests that when the total consumption increases, so do the levels of problems. Gambling causes a wide range of harm to individuals, families and societies. Although clinicians face individual problem gamblers at the micro level, it is important to bear in mind these macro level developments to understand that problem gambling is not only an individual condition, but also a result of societal encouragement that some individuals are more vulnerable to. Concretely, this would mean taking into account the manifold gambling opportunities in treatment situations, and understanding how effective marketing strategies and enticing new gambling products may encourage players not only to try new games, but also to gamble more overall.

Our research on gambling at the Centre for Research on Addiction, Control and Governance (CEACG) at the University of Helsinki, Finland focuses on these societal and institutional problems of gambling provision, rather than on the individual gambler. We are currently conducting a European comparison on the use and dependencies of governments on gambling profits. These issues will be discussed in our forthcoming edited volume ‘Gambling policies in European welfare states: Current challenges and future prospects’ (edited by Egerer, Marionneau and Nikkinen; published by Palgrave McMillen in 2018). We are also continuing our research into cannibalization in gambling industries in a forthcoming systematic review paper that focuses on whether gambling industries cannibalize other sectors, such as entertainment and restaurant services. This study will shed further light on the impacts that gambling industries have on local economies, and whether gambling actually brings any additional financial benefit to the jurisdictions that introduce it or whether it merely displaces consumption away from other, less dangerous, commodities or reduces savings.

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