In gambling regulation, the house shouldn’t win

Are deregulatory urges in Downing Street about to hand the gambling industry a victory?

After watered down audit reform and delays to the empowerment of a digital watchdog, a long-awaited paper on gambling regulation is reportedly the latest to undergo vetting for “unconservative” traits by policy chieftains.

But adding gambling addiction to corporate malfeasance and tech monopoly power in the list of problems neglected by reform efforts would be a tragic mistake.

In the book Jackpot: How Gambling Conquered Britain, journalist Rob Davies makes a persuasive case that the 2005 Gambling Act — through naivety and by dint of timing — unleashed changes that have done significant harm.

It was impossible in the pre-iPhone era to regulate for a world where smartphones put a casino in everyone’s pocket. The new technology prompted a wave of innovation around in-game betting, product design, marketing and inducements — and removed any distance between betting firms and their customers. A tidying-up exercise isn’t enough for an industry transformed by such changes.

Campaigners would like to stop what they see as the systematic recruitment and cultivation of gambling addicts

As wrangling over the final package of measures continues, that remains a risk. A maximum stake of £2 to £5 for online casinos would simply mirror the £2 restriction on machines in shops and has been baked in by the industry and its investors: “anything over £2 is a win”, said one analyst. Even a £2 cap would hit UK industry revenues by just 6 per cent, according to research cited by Numis, which notes that many operators had voluntarily placed limits at £10 already.

That is no substitute for broader measures to curb the industry’s reach and prevent harm. These could include “non-intrusive” affordability checks on those at risk of unsustainable losses, although the value of these will hinge on the details: a 2021 study using data from Lloyds Banking Group (and cited by Davies) found that signs of financial harm, such as missed payments or high-cost borrowing, were evident at relatively low deposit levels, of about £90 a month for the average household. In a world of digital financial profiles, there should be a better solution than the uploading of payslips by those already struggling with their spending.

Meanwhile a ban on “free” bets (that often aren’t free at all) and VIP perks for gamblers who have incurred heavy losses sounds like stopping an arsonist from pouring petrol on his blaze. Helpful, but insufficient.

Such rewards programmes can seek out and fuel unhealthy gambling habits and losses. A House of Lords report said that the online industry makes nearly 60 per cent of profits from less than 5 per cent of its customers. “Problem gamblers” — a horrid term — accounted for just 0.8 per cent of players and a quarter of profits. (Some in the industry dispute such figures. But few publish any of their own ample data on players: Kindred, one exception, attributes 3.3 per cent of revenues to high-risk gamblers.) 

Campaigners would like to stop what they see as the systematic recruitment and cultivation of gambling addicts, who are disproportionately young and male. Hence the focus on banning advertising on football shirts, which has been one avenue for normalising and glamorising betting and making it appear an intrinsic part of the sporting experience.

That is part of an explosion of marketing, promotion and sponsored content since 2005, the effects of which are intuitively obvious but ill understood. In fact, one problem in this whole debate — rightly dominated by devastating cases where gambling addicts took their own lives — is a lack of decent data and research. The first proper public review of gambling-related harms, which estimated the number of suicides linked to gambling at more than 400 each year, was only published in 2021.

It’s inexcusable that the level of problem gambling remains disputed (though it is agreed that harm varies hugely by product). 

Why rely on problematic survey evidence, which also probably understates harm, in an online industry armed with reams of real-world data? Sharing that should be part of tougher licensing conditions. The need for better, independent research is one good argument for a statutory industry levy, that would also help improve addiction prevention and treatment.

This isn’t government meddling, or nanny statism. The white paper should be the first step to improving the understanding and safeguards in a high-tech industry where regulation has been hopelessly outpaced. Unconservative to act? It would be unconscionable not to.

helen.thomas@ft.com
@helentbiz