Nudge versus sludge in gambling warning labels: How the effectiveness of a consumer protection measure can be undermined

Abstract

Legal gambling is a large industry in many countries. One way some governments try to protect people from losing more than they can afford is by requiring warning labels on gambling machines and their online equivalents. Prominent labels that make the odds of winning clear serve as nudges: They promote a beneficial behavior (such as deciding that the risk of losing money is too high) without interfering with choice (such as by restricting the availability of gambling). However, if gambling operators use labels that are difficult to understand, find, or read, those messages instead hamper decision-making and thus become sludge. In this article, we report on new research into whether gambling labels in the world's largest regulated online gambling market (the United Kingdom) are more consistent with nudge or sludge. We found that gambling operators overwhelmingly used sludge strategies when posting required gambling warning labels: For instance, they framed the message using a confusing format, applied a small font size to the text, and placed the warning on obscure help screens. We therefore propose that public policy officials throughout the world establish requirements for the wording and presentation of gambling warning labels to ensure that gamblers are well-informed about the odds they face.