The gambling industry in the United Kingdom has endured months of criticism, some fair, some unfair. This is metastasizing into the notion that gambling is a Very Bad Thing and must be banned or heavily restricted. Labour deputy leader Tom Watson now claims that it should be regulated on a par with cigarettes.
Much of this stems from two major events. First was last month's publication of figures on problem gambling by the UK Gambling Commission (UKGC), which suggests there are up to 430,000 problem gamblers in the UK. Second was the settlement – not fine – agreed by 888 over significant failings in its social responsibility controls, that saw 7,000 people be allowed to gamble after self-excluding. One of the 7,000 then resorted to crime to fund his habit.
As boilerplate issues these do appear shocking, but are not quite as clear-cut as they appear.
Take the addiction figures. First, these are based on data collected in 2015. At that point the UK was less than a year into a new regulatory regime, which introduced a point of consumption tax and required all companies active in the market to secure a licence from the UKGC. This was designed to tighten controls on the sector. It may be the most recent data available, but it is still two years old, and collected at a time when the market was in flux. The switch to a point of consumption tax also meant that operators were required to declare spending by British players to the British regulator, as opposed to allocating the revenue to where the operator is based. As a result, reported gambling spend in Britain has increased from hundreds of millions of pounds to around £4.5bn. This is a change in how the figures are reported, not a massive increase in gambling. But why let the facts get in the way of a sensational claim?
Second, spread betting is included among the problem gambling figures. Spread betting is regulated by the Financial Conduct Authority – not the Gambling Commission. It is being treated as a trading product for regulatory purposes, then dismissed as a form of gambling when it causes problems. That is simply bad governance. Whether the FCA or the Gambling Commission should regulate the product is open for debate, but it must consistently be treated as a financial product or a gambling product, not whichever suits the issue at hand. The figures show that 20 per cent of spread bettors can be considered problem gamblers, but the test used to identify problem gambling is ill suited to financial products and professional traders.
With 16 per cent of betting exchange customers and land-based poker players showing signs of a problem, these were the joint second most risky forms of gambling. Both are popular among professional gamblers. This, of course skews the figures, considering the frequency and size of bets among professional gamblers that rely on poker for an income, or small bookmakers that hedge bets on exchanges. Separate the professional gamblers from the recreational ones and the picture would look very different.
Moreover, the figures cover an age group starting from 16 years old. Players can only gamble on Lottery products from the likes of the National Lottery and Health Lottery between the ages of 16 and 18. There are no figures specifically covering online gamblers aged 18 and over who can engage in casino games and sports betting. The private (for-profit) iGaming industry is being saddled in part with problems not of its making.
This has led to a reaction governed by emotion, rather than cold, hard evidence. That's not to say there are not problems in how gambling companies operate that urgently need addressing – Gaming Intelligence has been highlighting these issues for almost a year now.
First, let's tackle the bottom line pushed by the media in its criticism of gambling in the past week. That gambling is an industry feeding on the poor and vulnerable. That's wrong. It doesn’t make business sense to gouge a customer for all they are worth then move onto the next. William Hill has been active for 83 years. Ladbrokes for 131 years. Companies that simply bleed punters dry do not last that long; they would either be legislated out of business or become so toxic that customers avoid them at all cost. Customers that gamble in moderation over a longer period are far more valuable than those that burn brightly but briefly.
The industry's terms and conditions have rightly come under scrutiny. Operators have been given too much power to dictate how customers bet. Groups such as Justice for Punters are working tirelessly – and with a degree of success – to bring this issue into the public consciousness. The people behind the organisation are gamblers, not anti-gambling campaigners, who simply want to be treated fairly. This is something that can be wholeheartedly supported. It has led to an investigation by the Competition and Markets Authority, and highlighted a lack of preparedness by the industry to tackle the issue.
This, in turn, has led to wider issues spilling into the open, exemplified by the 888 case. As my colleague Steve Hoare wrote, 888 is one of the best companies in the industry and it will undoubtedly do its utmost to make sure these failings do not reoccur.
However, the industry seems incapable of formulating a unified, coherent and sensible response to the sometimes hysterical rantings in the mainstream press. Senet Group, the body set up to deal with exactly these issues, was quick to claim that the current furore was simply failings on 888's part – it refused to even countenance a wider problem. The muted response from the Remote Gambling Association – normally one of the most vocal supporters of operators – adds to this impression that the sector doesn't really know what to do in the face of such criticism.
This gives gambling's critics free reign to ramp up their attacks, calling for harsher and harsher sanctions, and claiming more and more failings. Affiliates are currently under scrutiny, for "profiting from customer losses". To be accurate, they receive a commission based on customer spend, for having attracted a site visitor and converted them into a depositing customer. Sky Betting & Gaming has already shut down its affiliate programme as a result.
Amazon runs its own affiliate scheme. The notion that their affiliates are profiting from customer spend does not seem to cross many peoples' minds. Ultimately it's the same thing – a marketer takes a cut for helping a larger company sell its goods and services. There is, however, a clear failing here – operators need to take more responsibility for monitoring and regulating affiliates' output before they completely destroy the industry's reputation for the sake of making a quick buck. If that means operating affiliate programmes is not viable, then let's face it – more will be shut down.
There is also often talk of how it's up to gamblers to regulate their habits – a defence employed by the alcohol and junk food industries. They claim that is a personal choice among consumers whether to indulge in these habits. This personal choice argument may have been good enough for the Guardian when launching its GoWager betting site, but the industry has allowed itself to be hit by far too much negative publicity to maintain this argument.
The gambling industry needs to move quickly to address its image problem. This can only be done by taking steps to ensure it is operating in a fair and responsible way. Once that house is in order, it becomes much easier to defend against misleading accusations against the industry. Operators need to be using their reach into communities and links with high-profile sporting bodies to achieve this. William Hill working with Tottenham Hotspur's youth employment programme is a good example.
This would also go some way to tackle the increasingly negative perception of gambling and its advertising. There has been a lot of talk about minors being exposed to gambling through sporting broadcasts. But it is important to note, gambling sponsorship helps subsidise the cost of showing live sports. At a time when people already complain of being priced out of watching their favourite football team, a ban on gambling advertising and sponsorship will make the situation a whole lot worse.
It is also worth nothing that gambling accounted for around 3 per cent of the UK's £5.4bn TV ad spend last year, and there are plenty of products that are arguably as harmful as gambling being advertised. The latest UKGC figures may suggest a link between increased advertising and problem gambling, but this does not acknowledge the vast increase in televised sport. And there is no body speaking out in favour of showing less football on Sky Sports and BT Sport to assess its effect on gambling rates.
Fixed-odds betting terminals are a more clear-cut issue. The machines have evolved into a politically toxic matter. They do prop up the retail betting sector, but with this industry in decline and new controls all but inevitable, the bookmakers should see the machines' demise as an opportunity. There is a strong argument that the operator that bites the bullet, reduces the size of its retail estate and focuses on the internet will carve out a position as a major power. Just look at bet365, although it does have the advantage of being a private business.
While the criticism of the UK gambling industry may be well over the top, the fact that it has been allowed to build creates a major problem.
As Ladbrokes Coral group communications director Donal McCabe told Gaming Intelligence earlier this year: "The industry has to be careful it doesn't come across like King Canute, standing against a tide of adverse public opinion. I watch sport with my kids, and they know most of the adverts. When I'm watching TV with my mother I see gambling ads.
"We can all argue that we're acting within our rights – we are – but if the public think there are too many ads, that is the issue," he says.
The industry does not need to come out fighting to deny that there is a problem. It needs to address each criticism with an evidence-based response, and where a clear issue is identified, it needs to set out a plan of action. No more associations, no more detailed plans to close the stable door after the horse is bolted. The industry needs to act quickly to address the genuine issues that exist and to combat the accusations that are clearly false. The head in the sand approach is not working.
Recent related articles from Gaming Intelligence:
Tackling the industry's perception problem - How CSR can help the gambling industry improve its image (First appeared in the Apr-June 2017 issue of GIQ magazine.)
Time to turn off? - Examining the issue of gambling advertising (First appeared in the Apr-June 2017 issue of GIQ magazine.)
Risking it all - An analysis of the CMA investigation into gambling advertising (First appeared in Jan-March 2017 issue of GIQ magazine.)
BLOG: UK regulator bares its teeth Looking at the 888 Holdings social responsibility settlement
BLOG: UK newspapers prepare ground for legislative backlash The UK press' reaction to the latest UKGC addiction figures