Submission Type

Presentation

Submission Title

The value of regulation to platform-based businesses: Evidence from online poker markets

Session Title

Session 1-4-C: Taxation and Regulatory Lessons

Location

Caesars Palace, Las Vegas, Nevada

Start Date

28-5-2019 3:30 PM

End Date

28-5-2019 4:55 PM

Disciplines

E-Commerce | Gaming and Casino Operations Management | Strategic Management Policy

Abstract

Online platform businesses face challenges with consumer trust. Internet purchase intentions are generally influenced by consumers’ perceptions of trust in the retailer and platform business must additionally satisfy consumers scepticism over the conduct of network members. Using data from online poker markets, a platform-based industry, this study demonstrates that government regulation can add substantial value online platforms, even on sites with private trust measures. We find online poker consumers are willing to pay meaningful sums for government regulation, even after controlling for infrastructural signals (security) and indirect signals (firm size). The results suggest government intervention in gambling markets is warranted, and may be useful in other networked industries with asymmetric information.

Keywords

platform-based business, two-sided markets, online poker, regulation, asymmetric information

Author Bio

Bradley S. Wimmer is a Professor in the Department of Economics at the University of Nevada, Las Vegas, and a non-resident fellow in the Brookings Institution.

Kahlil S. Philander is an Assistant Professor at Washington State University's Carson College of Business, and an Honorary Lecturer at the School of Psychology at the University of Sydney.

Funding Sources

No external funding was received as part of this study.

Competing Interests

In the past three years, KP has received funds from the British Columbia Lottery Corporation, Washington State Gaming Commission, Manitoba Gambling Research Program, Responsible Gambling Council of Canada, UNLV International Centre for Gaming Regulation, U.S.-Japan Business Council, Wynn Resorts, West Virginia Lottery, Indiana Gaming Commission, Board of Regents of the Nevada System of Higher Education, and iDevelopment and Economic Association. He has received reimbursement for travel from the National Council for Problem Gambling, International Association of Gaming Advisors, National Centre for Responsible Gambling, North American State and Provincial Lottery Association, Evergreen Council on Problem Gambling, Global Gaming Expo Asia, and Alberta Gambling Research Institute.

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May 28th, 3:30 PM May 28th, 4:55 PM

The value of regulation to platform-based businesses: Evidence from online poker markets

Caesars Palace, Las Vegas, Nevada

Online platform businesses face challenges with consumer trust. Internet purchase intentions are generally influenced by consumers’ perceptions of trust in the retailer and platform business must additionally satisfy consumers scepticism over the conduct of network members. Using data from online poker markets, a platform-based industry, this study demonstrates that government regulation can add substantial value online platforms, even on sites with private trust measures. We find online poker consumers are willing to pay meaningful sums for government regulation, even after controlling for infrastructural signals (security) and indirect signals (firm size). The results suggest government intervention in gambling markets is warranted, and may be useful in other networked industries with asymmetric information.