Dr Peter Collins – Written evidence (GAM0079)

By Dr Peter Collins, Professor of Public Policy Studies and Director of the Centre for the Study of Gambling, Salford (2000-2010, Retd); Founder and Executive Director, South African National Responsible Gambling Programme (1999-2013 Retd). Special Advisor to Joint Scrutiny Committee reviewing the National Gambling Bill (2003-4) Author (2003): Gambling and the Public Interest” Praeger, Books, USA, Principal Researcher author of Report of the Likely Effects of Reducing Maximum stakes on B2 machines (2016) etc.

QUESTIONS. I begin by answering briefly the Committee’s initial questions seriatim and then offer a brief conclusion about what’s gone wrong.

The Committee's call for evidence includes the following questions:

•                                                                                                                                                           How effective is the Gambling Act 2005 in achieving its aims of preventing gambling from being a crime or disorder, ensuring that gambling is conducted in a fair and open way, and protecting children and other vulnerable person from being harmed or exploited by gambling?
•                                                                                                                                                           Does the Act need to be updated to reflect the significant changes in technology, and latest knowledge on gambling-related harm, since it was introduced?
•                                                                                                                                                           Should gambling operators have a legal duty of care to their customers?
•                                                                                                                                                           What are the social and economic costs of gambling?
•                                                                                                                                                           How effective is the voluntary levy?
•                                                                                                                                                           Are the services available for the treatment and support of people who are harmed by gambling sufficient and effective?
•                                                                                                                                                           What steps should be taken to better understand any link between suicide and gambling?
•                                                                                                                                                           What more should be done to educate the public about gambling?
  How should we make decisions about the regulation of gambling advertising?
•                                                                                                                                                           What are the risks associated with the increasingly close relationships between betting operators and sports leagues, broadcasters and clubs?
•                                                                                                                                                           Should children be allowed to play games machines including fruit machines, pushers and cranes?
•                                                                                                                                                           Should any changes be made to the rules governing the National Lottery?

ANSWERS

1. CRIME. Since the Gambling Acts of the 1960s, crime associated with gambling has never been a significant issue in the UK gambling industry. Anecdotally, small-scale money-laundering used to take place and may still take place at hard-to-regulate LBOs and so-called “1968” casinos. All other crime associated with gambling, e.g. embezzlement, is a consequence of “problem” or “excessive” or “disordered” gambling (defined here interchangeably as “instances of people regularly losing unaffordable amounts of money through gambling and/or spending unaffordable amounts of time gambling”).
2. AMENDING THE ACT. I am not really qualified to answer the specific issues this question raises about what needs to be in an Act and what can be left to regulation. My impression is that the Act itself does not need to be updated for this purpose but that regulations and definitions probably need to be tightened to take account of ongoing (and entirely understandable) efforts by operators to circumvent the intentions of legislators. The pretence that FOBTs were not offering casino games has now been addressed (after nearly 20 years). Another issue that may need to be addressed is the increasing blurring the distinction between video games with prizes and electronic gambling machines (EGMs). Attention may also need to be given to the expansion of lottery products into harder forms of gambling online involving the kind of continuous, rapid action play which is much more likely to lead to problem gambling than the basic National Lottery product of a twice-weekly, big prize draw. With internet gambling generally the difficulty is to incentivise UK players to play on sites which are regulated in conformity to UK regulations. These need to include effective rules for identifying problematic play and intervening online appropriately and effectively. There is not much agreement or independent evidence about how to do this. There is also a strong case for reviewing the prohibition on “resort-type” casinos which were widely acknowledged as having the capacity to help regenerate places such as Blackpool.

More generally, there has also been very little new knowledge about how to minimise gambling-related harms by regulation though many (expensive) research projects have been undertaken and many speculations have been both advanced and criticised since “Budd” first complained of the lack of reliable research findings in this area.  There is, therefore, virtually no related “latest knowledge” to draw on.

3.  DUTY OF CARE. What is usually meant by suggesting that operators have a duty of care to their customers is that they should identify and have strategies for intervening with customers who are apparently gambling compulsively, obsessively and beyond their means. This is very difficult to do and, for that reason, is not done very effectively anywhere. It is not impossible with the right training at different levels to solve the practical problems involved and so to exercise a duty of care in a way which is ultimately not significantly damaging to profits and is hugely beneficial to companies in terms of reputation management – and therefore less onerous regulation and lower taxes.

3. SOCIAL AND ECONOMIC COSTS. The biggest social costs such as suicide and family breakdown are not measurable and are mostly multi-factoral in respect of causation. Some argue that social costs also include degradation of high streets, saturation of sporting events by disagreeable gambling adverts, and corruption of public morals, especially amongst the young, by fostering an ethic of wanting something for nothing. Much the greatest benefit of allowing people to do things they want to do with their own time and money is simply player enjoyment. So-called “gambling privilege taxes,” aka sin taxes applied to gambling, may have the benefit of being relatively unpresented compared with alternatives. These considerations show that there is no measurably right answer to cost-benefit questions applied to gambling policy. Getting an acceptable balance between the objectives of consumer choice and consumer protection is a matter for political judgment – as with the regulation of other activities which some think of as vices and others as mostly harmless forms of recreation.

4. VOLUNTARY LEVY. The voluntary levy would have worked if industry and regulators had begun by drawing up a list of activities that could reasonably be expected to contribute to the reduction of gambling-related harms; costed these; prioritised them and established a method and a time-table for evaluating their effectiveness. It would then have been possible to agree what activities would be funded, in what order, in respect of treatment, prevention and research. The industry would then be invited to contribute the necessary % of their winnings from players to fund such a programme of work over a period of, say, three years after which it would be evaluated and reviewed. Service providers would then bid for funds from a commissioning body composed of independent experts, regulators and industry representatives. Such an arrangement has the great advantage over a formal levy that it is administered by people who know the issues and the money is ring-fenced. The budget is also needs-based rather than thumb-sucked for diverse PR purposes.

As it has turned out, too many existing vested interests have successfully commandeered too much of the available money and greatly excessive sums have been spent on at least three regulatory bodies, of which the NGB is much the largest and most expensive. It is unclear whether any of these bodies and the funds they have spent have done anything which has clearly and substantially reduced gambling–related harms. Remember, too, that effectively this money is a tax which could have been spent, e.g. on improving the care system or ameliorating the circumstances of the poorest in society.

5. EFFECTIVENESS OF LEVY. Since no strategy for evaluating effectiveness was built in from the beginning or has been introduced subsequently, it is impossible to tell. There is some survey evidence to suggest that not just in the UK but world-wide problem gambling numbers, however measured, have remained stable.
6. EFFECTIVENESS OF TREATMENT. There is good evidence that people with addictions, depression and anxiety disorders are 5 times more likely to recover/get well if they seek treatment than if they don’t. It does not appear to matter what treatment (or how expensive) the treatment they seek is. A critical necessary though not sufficient condition for recovery is that the patient/client believes that the person they are seeking help from really cares about them. There is also evidence that outcomes are no better from in-patient treatment than out-patient treatment. Twelve-step programmes have the advantage that they are free and that “sponsors” and other members are not motivated by the need to make money. Success rates from all forms of treatment seem to be about 20% complete abstinence after two years; 20% no improvement or reduction of engagement with harmful activities; the rest varying degrees of improvement in general well-being and variously frequent or infrequent “relapses.”
7. SUICIDE. Compulsive gamblers commit suicide considerably more frequently than people with other addictive problems. This seems to be because, even if they give up gambling, they typically have before them the spectre of financial ruin. Suicide rates are similarly high amongst those who are ruined by reckless investing. This suggests that psychological counselling of whatever sort needs to be accompanied by financial counselling. It is worth noting that some 80% of all premature deaths from addictions of any sort – drink, drugs, gambling, possibly over-eating – come from smoking-related disease rather than from suicide or other-substance-related diseases.
8. EDUCATION. As with sex, the public and especially the young need to be educated about the dangers of gambling and how to avoid them. They need to know that and why some people enjoy gambling – excitement – but also that if they gamble regularly they will pay for this excitement with their overall losses. They should never expect life-changing wins from high-prize gambling, like the lottery. Instead they should recognise that they are paying for fuel for their solitary or shared fantasies about what they would do if they did suddenly become hugely rich.
9. ADVERTISING. Advertising opportunities to bet during the televising of sporting events is something that mainly affects non-gamblers, especially those who find all gambling distasteful or immoral, by causing them much annoyance. It is unlikely to inform regular gamblers of things they didn’t already know or make them more likely to incur unaffordable losses. Much gambling advertising is also defensive in the sense that companies feel obliged to do it because their competitors do it. If no-one could do it, or everyone were subject to the same increased restrictions, bottom lines would probably not be much affected. What is much more concerning is predatory marketing by online gambling and gaming companies e.g. through offers of “free” money to gamble with which however can only be accessed after people have gambled with a specified amount of real money or for a specified period of time.
10.                     BROADCASTERS AND CLUBS. These would be seriously negatively impacted by rules prohibiting the promotion of gambling by advertising and sponsorship. As with many policy decisions which involve both competing interests and conflicting principles, there is no right answer to questions about what limits should be placed on commercial freedoms to make money other than the necessity to terrify people into abjuring the use of force and fraud (as Hobbes recommended). It is useful, however, here as elsewhere in thinking about gambling policy and regulation to ask: “What do we do and what should we be doing on this issue in relation to alcohol?”
11.                     CHILDREN AND MACHINES. The UK is the only country in the world which allows children to gamble on various types of machine and has done so for more than a century. There is no evidence at all that the UK has, as a consequence of this, higher problem gambling rates amongst either children or adults than are found in countries where children are prohibited from playing very low stakes machines, including cranes and the like. This form of gambling is also now arguably a part of British culture and many adults have agreeable memories of playing these machines on holidays as children. It clearly ain’t broke so don’t try to fix it.
12.                     NATIONAL LOTTERY. Although it is in the nature of lotteries to start by depending for their income on selling lots of tickets which offer the chance to win very high prizes, this market soon becomes saturated and lotteries then depend for growth on a) seeking to offer even higher prizes by amalgamating with other lotteries and b) seeking to offer other “harder” forms of gambling  (i.e. rapid and continuous action gambling for medium-sized prizes) at outlets like supermarkets and on the internet. Scratchcards are the obvious example. The extent to which this has happened with the UK Lottery and whether there have been any undesirable consequences inconsistent with the intentions of parliament when the Lottey was originally authorised seems to me a subject which it would be worth researching.
13.                     GENERAL. The great strengths of the “Budd” report was that it placed the interests of the consumer first and applied to gamblers the principle that, provided they don’t wrongfully harm others, people should be free to spend their own time and money on recreational activities of their own choosing. Equally, provided they don’t engage in the abuses of force and fraud, businesses should be free to cater for those choices. “Budd” recognised, however, that as with other activities which have an unusually high propensity to lead to highly destructive addictive behaviours amongst a minority of vulnerable consumers, commercial gambling needs to be regulated so as to take account of this special need for consumer protection.

The most important of these special regulations derives from the principle that if you are going to permit high stakes, rapid action gambling, this needs to be permitted only in a small number of large venues rather than a large number of small venues. This would have led to something like what the Scrutiny Committee recommended or what the then Government finally recommended which included permitting the construction of 8 casinos with unlimited numbers of unlimited stakes and prizes machines (as is the norm for casinos everywhere else in Europe, North America, and Australasia). Unfortunately this legislation was high-jacked and eviscerated during “wash-up” week for purely party political reasons and because the relevant minister was in the middle of being diagnosed with cancer when he was asked whether the government should accept the Opposition requirement that the number of such normal (rather than “super”) casinos be reduced to one – subsequently reduced to none by the Brown Government.

This not only meant that the regenerative casino project for Blackpool which MPs overwhelmingly supported had to be scrapped. It also meant that high stakes gambling now migrated to thousands of betting shops which, unlike a small number of large casinos, are impossible to regulate properly so as to minimise gambling-related harms. Consequently, a significant number of such harms occurred which could have been avoided. This was only finally remedied last year.

There is a related principle in respect of high-stakes, high-prize gambling. This is that the number of venues (casinos) where such gambling can take place should be limited. This partly to reduce the temptation to gamble on impulse since a visit to a casino is more likely to be a planned outing rather than a casual visit made on the spur of the moment en route to the shops or returning from work. Ideally, the limited number of casinos will be located to attract spending by foreign tourists or from richer gamblers to poorer employees. However, how gambling is delivered within the limited number of casinos permitted should be left to market forces – table-to-machine ratios, size of stakes and prizes etc. In short all casino machines should be “Categorty A” machines” as they are in every casino everywhere else in the world and without there being any significant difference in problem gambling rates. Given, however, the peculiar nature of British casinos which, as a consequence of the unwise design and implementation of the 2005 Act, are most licensed under the 1968 law and are only permitted B1 machines there is no case at all for limiting the number of these machines to 20 per casino. This substantially limits consumer choice creating queuing for the available machines and otherwise effectively forcing player to play table games – often electronically relayed live roulette – which are no more or less dangerous from a problem gambling point of view than gambling machines but are much more popular internationally with customers, especially women. If only small reforms are politically possible the number of permitted machines should be increased to about 100.

The main problem for Government is that, on the one hand, there are a large number of people who, for whatever reason, think that the less gambling there is in society, the better. These people then tend grossly to exaggerate, aided and abetted by a sensationalist media, the scale of problem gambling and propose remedies which are designed to cause maximum damage to gambling companies, regardless of whether they will have any benign effect on the incidence of problem gambling.

At the same time, gambling companies have a vested interest not only in minimising the extent to which they are regulated but also in maximising the onerousness of regulations imposed on their competitors.

It was this moral outrage masquerading as a concern to protect the vulnerable combined with extensive lobbying for continued oligopolism by the existing industry which prevented “Budd’s” original and estimable concern with the interests of ordinary citizens from being implemented either in policy or in practice. It would be a good idea to shake the dust of the original All-Party Scrutiny Committee’s report.

9 September 2019