Loyalty rewards — Benign business practice, or a potentially harmful inducement? The case of electronic gaming machines

Loyalty programs act as a form of inducement and are common marketing practice in many industries. Casinos in Nevada and registered clubs (and some pubs) in New South Wales (NSW) offer loyalty reward programs to encourage customers to keep spending. The research question explored in this paper is: Do gaming operators in Nevada and NSW utilize player loyalty rewards as an inducement for increased gambling expenditure? Thirty-eight semi-structured interviews were conducted during May-July 2005 in Nevada and intermittently during 2005 and 2006 in NSW. Some additional interviews were conducted during 2013. Quotes from the seventeen respondents specifically referring to loyalty rewards are referred to in this paper. Results highlight the popularity of loyalty rewards, which in turn encourage repeat patronage. Whilst the link between loyalty reward programmes and problem gambling is inconclusive, it is important for gaming operators to use player tracking data to help ameliorate problem gambling, rather than using the data to exploit known problem gamblers.