Cryptocurrency and links or impact to gambling addiction
Request
Can you please supply any research conducted for the gambling commission, produced in the last four years into cryptocurrency and its impact on or links to gambling addiction. If any part of this request is unclear pleased advise how it may be amended.
Response
Thank you for your request which has been processed under the Freedom of Information Act 2000 (FOIA).
In your email you have requested any research conducted for the gambling commission, produced in the last four years into cryptocurrency and its impact on or links to gambling addiction.
The only information held by the Gambling Commission falling within the scope of your request is contained within the below internally circulated document.
Gambling and investment products: Gambling Commission data shows correlation between risky investing and problem gambling
Data collected on the Commission’s online tracker shows a correlation between investing in risky products such as cryptocurrencies and problem gambling whilst GamCare report a rise in the number of people calling asking for help with problems related to day trading.
Awareness and usage of volatile, unregulated online investment products has rocketed over the last year or so. Despite multiple warnings issued by the Financial Conduct Authority (FCA) (Link to the relevant page on the FCA website (opens in new tab)) around the risks of investing in a unregulated market, the FCA estimate that around 2.3 million adults in the UK own cryptocurrencies (Link to the relevant page on the FCA website (opens in new tab)) – digital currencies usually in the form of transferable tokens such as Bitcoin or Ripple – up from around 1.9 million in 2020. Yet in May this year, the value of cryptocurrencies crashed with the combined market value of all cryptocurrencies now reportedly $1.12trillion (Link to the relevant page on the BBC News website (opens in new tab)), about a third of its value a few months earlier. It seems the fear of recession, lack of confidence in the market, soaring inflation, rising interest rates and unstable stock market are all having an impact.
There are undoubtedly similarities between investing and gambling – both carry a risk where consumers can lose money – but what do consumers think? Evidence shows consumers who have a propensity to risk do perceive investing in these products as gambling. The FCA have found that the most popular reason for consumers buying cryptocurrency was ‘as a gamble that could make or lose money’ with 68% of younger traders comparing investing cryptocurrencies and other high-risk products to gambling. We recognise the need to monitor consumer usage and behaviours towards these products, so earlier this year we asked questions around usage and attitudes towards different investment products on our online tracker survey.
We know that problem gamblers are more likely to take part in other risk-taking behaviours such as drinking alcohol and smoking and investing in high-risk trading is no different. Our data shows a correlation between risky investing and problem gambling. Problem gamblers are much more likely to own cryptocurrencies than non-problem gamblers (38% vs 6%) and are much more likely to invest in mobile trading apps such as eToro, 121, Robinhood or Pepperstone than non-problem gamblers (19% vs 3%). The opposite is true for lower risk investments. Problem gamblers are less likely to invest in bonds and ISAs than non-problem gamblers (17% vs 38%). Over a third (35%) of those investing in trading apps are checking them every day with 20% also making daily transactions. Similar proportions were seen for those who hold cryptocurrencies (32% checking them daily and 12% making transactions every day). Those who check the status of their investment and make transactions more frequently had higher problem gambling scores, supporting academic literature which found associations between stock market trading frequency and problem gambling (Mosenhauer, Newall and Walasek 2021) (Link to AKJournals website (opens in new tab)).
Over half (51%) of those who have invested in cryptocurrencies have done so because they think it’s fun and thrilling. But we know that the addictive nature of gambling can cause harm to many, and our data also revealed that 43% of respondents agreed that investment products can be addictive. At the same time, Gamcare have reported a rise in the number of people asking for help with problems related to day trading (Link to the relevant page on Gamcare website (opens in new tab)) leading to a call for a self-exclusion scheme for consumers involved in high-risk trading. Gamcare’s most recent research has found that those who have experienced serious gambling harms are more likely to experience negative impacts when trading (Link to the relevant page on Gamcare website (opens in new tab)).
It's possible some consumers are turning to other products in an unregulated trading market to get the same thrill that they get from products which they are banned from or have excluded themselves from in the regulated gambling market. But despite numerous warnings from the FCA around the risks of investing in cryptocurrencies, it is evident a large number of UK adults are willing to take that risk. Our data has shown a link between investing in such products and problem gambling and we will reflect on the findings highlighted in this blog and use them to inform future work in relation to cryptocurrencies.
Methodology: Yonder surveyed c.2000 adults aged 18+ online between December 17th and December 19th 2021 and between March 25th and 27th 2022 via Yonder’s online panel. Data is weighted by age, gender, region, social grade, tenure and working status.
Review of the decision
If you are unhappy with the service you have received in relation to your Freedom of Information request you are entitled to an internal review of our decision. You should write to FOI Team, Gambling Commission, 4th floor, Victoria Square House, Victoria Square, Birmingham, B2 4BP or by reply to this email.
Please note, internal review requests should be made within 40 working days of the initial response. Requests made outside this timeframe will not be processed.
If you are not content with the outcome of our review, you may then apply directly to the Information Commissioner (ICO) for a decision. Generally, the ICO cannot make a decision unless you have already exhausted the review procedure provided by the Gambling Commission.
The ICO can be contacted at: The Information Commissioner’s Office (opens in a new tab), Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.
Information Management Team
Gambling Commission
Victoria Square House
Victoria Square
Birmingham B2 4BP