May 19, 2024

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The Impact of Social Responsibility Initiatives in Casinos

Casinos primarily seek to maximize profits; however, this comes at the cost of externalities that impact public and other stakeholders, including environmental, social and economic consequences. Casinos can engage in CSR activities to mitigate these effects.

Casino companies typically employ two main CSR themes in their social responsibility strategy: community involvement (via donations and employee volunteering services) and environmental sustainability.

Environmental impact

Casino companies must prioritize CSR initiatives, but should also assess the effects on customer retention. Since 80% of casinos’ revenue comes from repeat visitors, casinos in high tax rate areas must assess how various CSR activities impact customers’ loyalty.

CSR is essential to all businesses, but especially crucial in highly contentious industries like gambling (Lindgreen et al., Citation 2012). Such businesses can often be perceived negatively due to providing products or services which cause real or latent harm to either individuals or the environment, leading customers to turn against them further.

This study sought to develop a CSR measurement scale for the gaming industry based on existing literature and discussions with casino managers. The proposed scale includes six dimensions – employees, customers, shareholders, environment and community involvement being among them – which may account for its popularity within this study’s goal. Community involvement proved especially effective as an antidote against negative effects associated with problem gambling.

Social impact

Social Responsibility (SR) is an integral component of a company’s corporate image and especially crucial for contentious industries like gambling. While gambling may bring pleasure and tax revenues to society, it also creates negative outcomes like addiction and family tensions that need to be mitigated through CSR activities such as responsible Gambling programs or community involvement initiatives. Casinos have taken steps such as these initiatives in order to combat negative perceptions associated with their industry – this includes Responsible Gambling programs (RG) programs as well as community outreach projects.

However, these social responsibility (SR) efforts aren’t always successful; for instance, casino RG programs don’t effectively target problem gamblers or are too opaque, leading to distrust and negative word-of-mouth (WOM). This study investigates how casino’s Socially Responsible Initiatives affect customer loyalty in high tax rate local markets by using Carroll’s (1979) four-dimensional CSR concepts to evaluate how economic, legal, ethical, and philanthropic responsibilities relate to customer loyalty.

Economic impact

This research endeavor investigated the influence of CSR on casino customers’ purchase intentions using a questionnaire developed with input from two consulting casino industry experts. The instrument employed in Salmones et al’s (2005) survey included six attributes of CSR such as employee, customer, shareholder, environment community and government.

Results demonstrated that US casino companies utilize CSR activities to establish legitimacy and conceal negative externalities related to their core business activities. They implement various strategies – public education, employee training programs, resources for help and self-exclusion programs among them – in order to practice CSR.

The authors used exploratory factor analysis to identify the core components of CSR. Dimensionality was validated using Kaiser-Myer-Olki (KMO) tests and Barlett’s test of sphericity, both yielding acceptable results indicating stable factors; KMO results also demonstrated this with low item-to-total correlations providing evidence of this stability. Furthermore, authors discovered a strong relationship between CSR and customer loyalty.

Community impact

Although much research has been conducted on CSR, further understanding is still required of its success in casino gambling. One factor may be how management perceives CSR: without an understanding of its financial payoff for them to undertake these activities altogether.

To address this problem, the present study examines casino companies’ CSR disclosure and communication using content analysis on standalone CSR reports and websites of 30 casino companies from across the US. Our analysis revealed that most companies disclose little or nothing about their responsible gaming activities while allocating minimal space or completely disregarding it; these practices likely disengage stakeholders from these controversial activities while increasing customer attraction and increasing revenue growth.