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How gambling exacerbates the overall problem of managing a limited household budget

August 2nd, 2016

Sports gambling companies offer two main betting categories: a single bet, or a multi-bet. Single bets, placed on one game at a time, offer frequent small wins; while multi-bets, placed on the results of multiple games, pay out rarely but in large amounts. It is possible to place all bets using SMS from a basic phone, but the task is much easier via applications on smartphones. As subsequent blogs will show, some users have adopted smartphones for this very purpose.

After placing their bets, bettors wait a few days to know whether they have won or lost. Small winnings are sent via mobile money while big wins are announced on mainstream media with all the accompanying fun and flare. All activity on the betting platforms are captured and stored, and can be retrieved in the form of statements, downloaded from the web or viewed on phones.

The research analyzed statements from eight regular bettors. The bettors had never previously reviewed their statements – one of them said, “I know if I looked at my statement I would stop betting.” Half of the bettors had a positive balance at the time of review, but by small margins. The other half had lost more than enough money to make up for the winners – and by estimates, this translated into a margin of 10-20% for the betting companies.

Bettor Total Bet Amount (KES) Wins (KES) Outcome: Win/(Loss) (KES)
Sportpesa 1 3,950 2,651 (1,299)
Sportpesa 2 10,192 11,395 1,203
Sportpesa 3 2,200 0 (2,200)
Sportpesa 4 3,312 6,257 2,945
Sportpesa 5 16,650 10,674 (5,976)
Betway 1 11,679 11,926 246
Betway 2 1,850 2,856 1,006
Betway 3 101,004 83,708 (17,297)
Aggregate 150,837 129,467 (21,372)
KES 100 is approximately 1 USD

Both the low- and middle-income bettors tended to place small bets close to the minimum amount; they typically preferred to spend more money placing frequent small bets, as opposed to fewer larger bets. In the rare event that bettors won a large bet, they tended to subsequently increase the size of their bets, but this would fall back to “normal” after only a few days.

Bettors who were aggregate losers tended to bet more frequently; one bettor in particular had placed 600 bets in just three months – including 25 bets on one particular day.  Another loser placed 22 bets in three months and yet had never won; nonetheless he remained hopeful that one day it would be his turn.

Bettor Number of Days Total Number of Bets Average Bets per Day Max Number Of Bets in a Day Average Bet Amount (KES) Maximum Daily Bet Amount (KES)
Sportpesa 1 19 38 2.0 5 200 100
Sportpesa 2 26 61 2.3 5 165 1350
Sportpesa 3 14 20 1.4 4 110 300
Sportpesa 4 15 21 1.3 3 157 382
Sportpesa 5 16 113 7.0 17 147 1,700
Betway 1 55 168 3.1 11  70 1,108
Betway 2 29 36 1.2 3  51 150
Betway 3 70 600 8.6 22 161 2,900

Considering the total average losses across the eight respondents – about KES 890 per person per month – it’s not surprising that middle-income bettors tended to view loses as inconsequential. For the low-income bettors with average household incomes of around KES 7,500 per month, this average is more than 10% of their household income, an amount that can impact on food, transport, and well-being. And of course for some individuals the impact is much greater, such as for those who may develop a gambling problem (although the research did not interview anyone who admitted to having a serious gambling problem).

To find out why people gamble, please read the next blog  in this series.

This was the median income in the Kenya Financial Diaries covering 2013-14.

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