An Experimental Investigation of Decision Making in Sport Betting

Abstract

As more states have legalized sport betting, the sport betting industry is rapidly growing, and sportsbooks are racing to gain a share of this emerging market in the United States. Sports betting coverage, advertisements, and promotions are prominently exposed to the public with the aim of promoting sport betting, acquiring new customers, and normalizing gambling. Sportsbook operators are refining and innovating their marketing and operational strategies to retain customers and boost profitability. At the same time, the number of Americans who regularly bet on sports is increasing with a spike in the number of people with gambling disorder. Although previous studies have explored gambling behavior and sport betting promotions, further understanding of decision making when sport bettors wager on sporting events under the effect of changing odds and gambling promotions is needed. The purpose of this dissertation is to employ experimental design in investigating how changes of betting odds, promotional offers, and sport bettor characteristics influence betting decisions when sport bettors wager on sporting events and exploring the potential role of emotional states during decision making as an underlying mechanism. Study 1 focuses on betting odds and examines how changes of betting odds through line movement and odd-related promotions affect bettors’ decision making when placing a bet on NFL games. Study 2 focuses on gambling promotional offers (i.e., risk-free bets and profit boost) and investigates the interaction effect of promotional offers and sport bettor characteristics (i.e., risk-taking tendence and betting experience) on the risk-taking levels of bettors when they bet on NBA games. Study 3 replicates and expands Study 2 by testing the mediating role of emotional states in sport betting decision making. The results of the studies suggest that betting odds and gambling promotional offers are two important external factors that can change the decision making and risk-taking levels of sport bettors. In addition, the results reveal an interesting interaction effect between promotional offers and sport bettor characteristics, suggesting that bettors’ risk-taking tendency and betting experience can significantly influence their responses to gambling promotions. Furthermore, the findings of the final study underscore the role of fear in the betting process and its impact on responses to gambling promotions, a factor previously overlooked in research on emotional reactions to gambling marketing techniques. This dissertation enhances our understanding of (i) heuristic decision making in sport betting, (ii) marketing framing in sport betting, and (iii) the role of emotion in the risk decision-making process and gambling marketing. The findings also shed new empirical insights on how sport bettors utilize betting odds and promotional offers to inform betting decisions, how different groups of customers may exhibit different levels of risk-taking under the influence of gambling marketing, and how their emotional states during decision making (i.e., fear and joviality) predict and explain their betting behavior, which have important marketing as well as policy ramifications.