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A new study has found that Connecticut's expanding gaming industry is reliant on a relatively small minority of gamblers, with more than 50 percent of total sports-betting revenue coming from less than 2 percent of the state's population that suffer from gambling problems.
The 205-page report titled “Impacts of Legalized Gambling in Connecticut”, conducted by Gemini Research on behalf of the Connecticut Department of Mental Health and Addiction Services, found that nearly 71 percent of all legal gambling revenue in the state comes from fewer than 7 percent of residents, of whom 1.8 percent are problem gamblers and 4.9 percent are at-risk gamblers.
“The proportion of Connecticut gambling revenue from the 1.8 percent of people with gambling problems ranges from 12.4 percent for lottery products to 51 percent for sports betting, and is 21.5 percent for all legalized gambling,” concluded the study, which was published in January.
The problem gambler percentage equates to roughly 50,000 adults and 150,000 people affected when including spouses and children.
The Department of Health study followed Connecticut's 2021 state law to legalize both online and land-based sports betting, as well as online casino gaming. The state also hosts two major tribal casino-resorts and a state lottery.
Some 21.4 percent of total iGaming revenue came from problem gamblers, the report found, although, by at least one methodology, the overall rate of problem gambling prevalence in the state has not materially increased since 2008.
The study also said it was “notable that despite currently having a more extensive array of legalized gambling than other states, Connecticut’s rate of problem gambling is mid-range and the current rate of problematic gambling is lower than in the 1990s.”
Brianne Doura-Schawohl, founder and CEO of Doura-Schawohl Consulting, a government relations firm that specializes in problem and responsible gambling policy, noted that recent research in the UK has similarly highlighted that 60 percent of revenue is coming from an estimated 5 percent of individuals that have a gambling problem or are at risk of developing one.
“Given that I am comparing the UK, a notable, flourishing and well-established [online] market to a still rather emerging market, this should give us all pause,” Doura-Schawohl told Vixio GamblingCompliance.
“Are these flourishing markets all really built from few individuals that are struggling?”
In Connecticut, those surveyed who had gambled in the past year participated in an average of 2.8 different types of gambling, spending a median amount of $413. Among the types of gambling residents participated in were weekly lotteries, including Powerball or Mega Millions drawings, land-based casino games, sports betting and online gaming.
Doura-Schawohl stressed that the data from Connecticut highlights the value of research into problem gambling, “although the research is only as valuable as the policies enacted to address what it shows.”
Doura-Schawohl also noted that Connecticut was one of the few states to include more rigorous consumer protections in its legislation for online sports betting and iGaming, while crediting the state for being aggressive with limiting affiliates and being generous in problem gambling funding.
The Connecticut report's publication comes as members of the General Assembly are set to consider new legislation this session to tighten state laws on the advertising of iGaming and sports betting.
House Bill 5284 would, among other things, codify various existing regulatory restrictions on advertising in statute while also expressly prohibiting marketing to self-excluded players and via media where a majority of the target audience is presumed to be under the age of 21.
HB 5284 is due to receive its first hearing on Thursday (February 29) before the legislature's Joint Committee on Public Safety.
“If a state that has been relatively aggressive in their pursuits is suffering from such tremendous harm and worrisome engagement in the market, it would seem only natural to assume that other states are suffering from the same fate and potentially worse,” Doura-Schawohl told Vixio of the Connecticut study's findings.
“That being said, I don't ever like to 'assume' or base policy positions without evidence, so to echo [Connecticut] Senator [Richard] Blumenthal's comments … this research clearly exemplifies why the GRIT Act is so desperately needed and important.”
Blumenthal, a Democrat who represents Connecticut in the U.S. Senate, last month introduced a federal bill known as the Gambling Addiction Recovery, Investment, and Treatment (GRIT) Act that would specifically set aside 50 percent of the federal excise tax of 0.25 percent of the handle or total money wagered on sports in the U.S. to fund gambling addiction treatment and research nationwide.
Seventy-five percent of the funds set aside would go to states for gambling addiction prevention and treatment through the existing Substance Abuse Prevention and Treatment Block Grant program.
The remaining 25 percent in allocated federal tax dollars would go to the National Institution of Drug Abuse to fund grants for research into gambling addiction.
Supporters of the GRIT Act, including House co-sponsor Andrea Salinas, say the funding is needed to address problems created by the rapid expansion of gaming throughout the country. The American Gaming Association is opposed to the GRIT Act because Congress instead should move bipartisan legislation to repeal the federal excise tax.
One of the most worrisome problem gambling trends, according to Doura-Schawohl, comes from the 2021 Survey of Problem Gambling Services in the United States, which discusses how states are investing in the areas of research, prevention, treatment and recovery.
The survey found that research funding had declined as a proportion of overall problem gambling funding from 2016 to 2021, with two states eliminating all funding.
“States are simply not investing in the vital research to better understand issues such as this,” Doura-Schawohl said. “With the absence of federal funding for vital research, states must step up, and that's simply not something we are seeing enough of.”
Additional reporting by James Kilsby.
