AGA releases research showing financial literacy means better responsible gambling

• AGA argues that prediction market users may have overestimated their skills, although it may not be their own fault entirely
• According to the association, higher levels of financial literacy lead to better levels of responsible gambling
• Sports gamblers are actually more financially literate than non-gambling counterparts

The American Gaming Association (AGA) has released a new study specifically focusing on the financial literacy of gamblers and non-gamblers.

As part of the same study, the association also highlighted what it believed was a misconception among the community of traders engaging with prediction markets, arguing that they were less financially literate and mathematically proficient than they claimed to be.

Prediction market users overestimate themselves

The research commissioned by AGA showed that conventional wisdom about gamblers may be misplaced, while prediction markets may be a product whose dangers have been underestimated. Commenting on the findings of the research, David Forman, AGA VP of Research, had this to say:

"This study shows that, contrary to popular belief, gamblers are financially savvy entertainment consumers – especially sports bettors who demonstrate a particularly high level of financial literacy and mathematical capability."

AGA, which has long taken an antagonistic view towards prediction markets, argued that there are serious risks associated with the vertical, but also experienced by the people engaging with event contracts.

Prediction market users, AGA said in the research, may overestimate their mathematical skill set, unlike traditional sports bettors who have a better overall understanding of their capabilities. AGA also highlighted some of the key findings established by the research.

Based on a five-point system, gamblers scored an average of 3.93 compared to 3.72 for non-gamblers on the financial literacy index. AGA argued that sports bettors had the greatest mathematical confidence and objective capability, while prediction market users were as confident as sports bettors, but were in fact closer to non-gamblers when objectively tested.

Interestingly, AGA was able to establish that financial literacy is actually a predictor of responsible play. Essentially, the AGA tested how likely a person was to score significantly higher on Positive Play relative to their financial literacy. The higher the person’s financial literacy was, the higher that score went.

Financial literacy translates into higher rates of responsible play

According to the association, further investment in financial literacy education could also translate into more responsible gamblers, who understand the risks associated with the activity. Another interesting finding was that casino players had higher Positive Play results than any other group of gamblers.

The association attributed this to the fact that casino players have been exposed to regulated markets and responsible gaming resources the longest, stipulating that this could have been the driving reason behind the results.

AGA did not fail to further criticize the prediction market verticals, arguing that many users may have been misled into believing that they are engaging in "analytical trading" and thus they have an advantage.

The association argues that this is misguided and that "presenting sports wagers as investments" and a "money-making strategy compound the danger by encouraging users to believe they can outsmart what are often sophisticated counterparties they are led to view as peers."

Crucially, Forman argues the biggest possible highlight of the research is that financial literacy could translate into higher rates of responsible gambling.

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