Half of Indonesian people are financially literate, according to data from the Financial Services Authority (OJK), and this is a significant development compared to a decade ago when only around 20% of the population. However, this does not mean that we are free from irrational decisions in managing finances, including when discussing online gambling (judol).
Financial literacy is a popular argument when talking about gambling addiction. In fact, research from Hiroshima University in Japan shows that there is no significant relationship between financial literacy and gambling addiction. This means that even someone with high financial literacy can lose logic and get caught up in gambling. This indicates that gambling addiction involves complex psychological aspects, which are not always related to financial knowledge
someone. So, why does a gambler believe he can win even though he knows he will definitely lose?
Psychological biases in online gambling
This question is one that is often explored in the behavioral finance literature – a branch of economics that studies the relationship between psychology and a person’s financial decisions.
For example, a study showed that gamblers tend to choose high-risk bets when they lose, or keep betting because they have won. This behavior is often referred to as “hot-hand fallacy”, namely the belief that victory will occur and if you ever experience this victory, your belief will increase even more.
This “hot-hand fallacy” becomes one of the framework theorems of the gambling business operator’s model by allowing gamblers to win several times, then after that they are made to lose.
Another psychological bias is the “gambler’s fallacy”. This bias encourages players to keep betting because the perceived chances of winning the jackpot increase after repeated losses. They feel confident that the number/color/image they are betting on will definitely appear because it has never appeared before.
Judol operators also use the “illusion of control” or the illusion that gamblers have control of the game in order to continue betting. For example, they let new gambling account owners earn winnings at the start to stimulate more bets.
As a result, many gamblers think they know the recipe for winning judol, namely by frequently creating new accounts and hoping for an early win on each account. These gamblers do not realize that they have stepped into the operator’s trap and are at risk of huge losses.
In short, operators’ psychological manipulation bias not only negates the role of financial literacy, but also increases risk appetite.
Research shows how these psychological biases influence excessive betting passion (“obsessive passion”), which leads to gambling addiction. The impacts include lethargy and lack of concentration in daily tasks, as well as impacting mental health. This also explains why addiction can lead to criminal acts such as cases of murder or fraud.
Regulatory role
Manipulative actions using psychological bias by judicial operators actually guarantee and control countries that have a judicial regulatory framework.
In these countries, there is an obligation on the part of gambling operators to be transparent and open regarding the chances of winning and losing, including implicitly managing the problem through psychology. The aim is as simple as to protect gamblers from potential fraud and gambling addiction.
In countries that have gambling regulations, gambling operators are also not free to carry out promotions. For example, in the UK, gambling advertisements have a broadcast time of over 9 pm and follow the rule of “playing responsibly”. In fact, the British government does not allow public figures or influencers to become models for gambling advertisements.
With regulations in place, manipulative actions can be quickly addressed and punished. The Philippine government, for example, quickly closed the judol e-sabong site because it was suspected of committing fraud and triggering addiction. In Cambodia, the government closed down 231, illegal judol that indicated not only fraud, but also human trafficking.
In countries that prohibit gambling, such as Indonesia, the situation is very different. Gambling operators who enter illegally can freely manipulate and utilize psychological biases to ensnare players and cause addiction. Moreover, most of the judol advertising models are actually influencers. This explains the losses of the Indonesian people due to judol reaching IDR 300 trillion.
