1. Licensing Objectives
1.1 The Gambling Commission annual report on Gambling Participation in 2018: Behaviour, Awareness and Attitudes asked respondents if they agreed strongly or slightly with the statement that “gambling is conducted fairly and can be trusted” (see Table 6, Page 43). In 2009, 50% of total respondents agreed, with 60% of people who had gambled in the previous 12 months and 30% of non-gamblers in that period agreeing. By contrast, in 2018 only 30% of total respondents agreed, with 34% of people who had gambled in the previous 12 months and 25% of non-gamblers in that period agreeing. These are dramatic declines, particularly among gamblers themselves.
1.2 In the same report, respondents were asked if they strongly or slightly agreed with the statement that “gambling is associated with criminal activity” (see Table 7, Page 44). In 2008, 41% of all respondents agreed, with 39% of gamblers and 47% of non-gamblers concurring. In 2019 there was a slight decline to 38% of total respondents, with 36% of gamblers 41% of non-gamblers concurring. The 2014 Advertising and Licensing Act should have given more comfort to the public that gambling was not associated with crime, yet it does not appear to have had any impact.
1.3 Over the past ten years there has been a convergence between gamblers and non-gamblers for both these statements, indicating that these perceptions are both representative and realistic.
1.4 The report fails to ask respondents to agree strongly or slightly with a statement such as “There is adequate prevention of harm to young and vulnerable people”. The Gambling Commission must have known as long ago as 2009 that this question would have elicited a negative perception.
1.5 To what extent the public and the Gambling Commission have different attitudes could depend upon a difference of interpretation in understanding the meaning of the Act’s objectives compared to the public’s expectation of the standards of regulation.
1.6 In respect of the “fair and open” objective, the historical view of the Gambling Commission has been that if the customer can see the rules, and can see the house advantage where applicable, and that wagering has taken place under those rules then the premise of “fair and open” is satisfied. This is the premise that the gambler should not cheat the operator and the operator should not cheat the gambler.
1.7 When the Competition and Markets Authority (CMA) investigation into gambling operators was introduced, many assumed that some operators could lose their licenses. Despite the CMA finding that consumer protection law had been breached, no punitive action was applied to operators by either the CMA or the Gambling Commission. Whilst there has been an upgrade in the required standards, there are certainly breaches continuing which remain unpunished.
1.8 An objective should be something that sits above and beyond a legal standard. As existing consumer protection law was being breached, then by definition the objective was not being delivered.
1.9 In respect of the “no association with crime” objective, the historical view of the Gambling Commission was that the crime had to occur inside the gambling activity itself. As such the Gambling Commission has taken an interest in preventing money-laundering and protecting the integrity of sports betting. Beyond that, however, the core interpretation remains the premise that the gambler should not cheat the operator and the operator should not cheat the gambler.
1.10 This narrow interpretation means that the two objectives of “fair and open” and “no association with crime” become a tautology. There are already laws related to money-laundering and sports-fixing, so again the interpretation of the objective does not exceed other laws and cannot be a rational interpretation.
1.11 Criminal damage to betting shop FOBTs was a result of an addictive product being accessible to a vulnerable demographic in poorly-supervised premises. Based on conversations with the Gambling Commission around 20% of FOBTs were being damaged annually, an association between gambling and crime. The Gambling Commission did not interpret it that way, so bookmaker reporting of incidents was not made mandatory. This meant that there was no collation of this evidence which indicated FOBT gambling harm.
1.12 The murder of a betting shop manager and a serious sexual assault of a betting shop manager occurred when both were lone working. The perpetrator in each case was an FOBT addict, pointing to an association of gambling with crime. But again, the Gambling Commission did not look at it that way. At a public event, when I raised these incidents, a Gambling Commission executive stated that these were not “part of the risk” – meaning the regulatory risk of the actual FOBT gambling.
1.13 In general, the Gambling Commission does not investigate the overseas activities of its licensed operators. An operator may be able to obtain revenue from a so-called grey market, claiming there is some legal ambiguity that does not explicitly prohibit the activity. But if the activity is illegal than operators accessing those jurisdictions are engaged in money-laundering, legitimising what are technically proceeds of crime.
1.14 The most notable example is the operation of FOBTs in Northern Ireland (NI) in contravention of the NI 1985 Gambling Act. In this instance, an intranet server based in Great Britain, as licensed and approved by the Gambling Commission, is providing results to machines located in NI. If this is illegal then it is “gambling associated with crime”.
1.15 The prevention of harm to the young and the vulnerable is an undeliverable objective. If there was even partial achievement of this objective, then there would be evidence of a decline in problem gaming and at-risk gambling rates. There would be evidence that young people were less involved in gambling and there would be less take-up of self-exclusion.
1.16 Regrettably, DCMS and many in the gambling establishment rely on an outdated interpretation of data. The fact that problem gamblers gamble at more than one activity is irrelevant. A better understanding would be generated by learning the degree of involvement by activity. Statistics of GamCare call data from the 2017-2018 annual report detail information by activity on page 11. This data is based on respondents providing the three main activities, showing results that are less extreme than would be the case if only the single main activity was reported.
1.17 In 2014-15, online gambling accounted for 45% of responses, rising in 2017-18 to 53% of responses. It is inconceivable that the growth of online gambling has not resulted in increased gambling harm. Each activity of betting online at 16% and casino games online at 13% is far higher than betting offline at 9% and casino games offline at 5%. Slots online at 14% is far higher than slots in any offline environment other than betting shops at 18%. Once the FOBT stake reduction has taken effect, online slots will be shown to have more responses than all offline slots.
1.18 Looking at bricks-and-mortar gambling venues, the highest response was betting shops at 33% compared to the next highest: casinos at 6%. Again, this is a reflection of FOBTs.
1.19 The most serious example of abuse of data by DCMS and many in the gambling establishment is the notion that less than 1% of the population are problem gamblers. That may be true for any one year, which is the methodology of the surveys. However, Nat Cen research into betting shop loyalty card gamblers showed a significant interchange between problem gambling, at-risk gambling and non-problem gambling over a period of a couple of years. This shows that gamblers can move in and out of problem or at-risk groups.
1.20 The question should therefore be: How many are going to be problem or at-risk gamblers at some time in their lifetime? All of us will experience trauma at some time and will be at our most vulnerable. If we have never gambled, it is unlikely that we will be harmed by gambling. However, if we are gamblers, our propensity to be harmed becomes higher when vulnerable. A gamble may not be dangerous, but frequent engaged gambling is dangerous. There is an analytical basis to postulate that around 8% of the population could be problem gamblers at some stage in their lifetime.
1.21 The Gambling Commission interpretation of “young people” has historically been children up to 16 and, in part, those aged 16 to 18. However, in the context of gambling, and with the now-established knowledge that brain development of the risk-reward functionality is generally an ongoing process until around age 25, then anyone under 25 should be considered young.
1.22 The Gambling Commission interpretation of “vulnerable” has historically been those with learning difficulties, those with mental health issues and those suffering from substance abuse. With access to credit and debt now being so prevalent and with reference to events of a traumatic nature, a broader interpretation would be more rational.
1.23 In summary, even by narrow Gambling Commission interpretations there has been failure to deliver the objectives of the Act. By applying broader more rational interpretations, it is clear that this failure has led to dangerous consequences and harm among the population.
2. Changes to the Act
2.1 Redefining the objectives is essential. The language of “fair and open” should be redefined as “honest and transparent”. The obligation for operators be to honest and transparent should extend beyond the act of gambling itself. It should apply to terms and conditions and to marketing. It should apply to dealing with complaints, whether by gamblers or employees. It should apply to relationships with the media, regulators and parliamentarians, whether directly or through trade bodies, public relations firms or lawyers. In this type of environment, the debacle of the ABB quoting from a confidential KMPG report, based on self-serving assumptions generating misleading conclusions about FOBT stake reduction, would not arise.
2.2 The “no association with crime” objective should be extended further than its current state. Operators should not be allowed to profit from alleged “grey areas” or from the proceeds of crime. Victims of crime, whose losses have been passed through gamblers to operators, should be able to obtain compensation from operators.
2.3 Harm prevention is impossible to deliver, as is harm minimisation. Harm reduction seems to be the best phraseology. But it feels as though more is needed. An admission that gambling is dangerous and that anyone can be harmed by gambling would be a start. Getting this objective right will be the most difficult part of changing the Act.
2.4 More immediately achievable changes to the Act would be to incorporate the Gambling Commission Licensing Conditions and Codes Practice (LCCPs) where appropriate. These LCCPs have been structured through consultations based on Gambling Commission recommendations. Enshrining the LCCPs in law would help with all aspects of enforcement.
2.5 Content control is a very useful tool in addressing harm control. The anomaly of FOBTs has now been addressed through stake reduction, but the anomaly of content disparity between online and offline needs addressing. Speed is a dangerous gambling factor. Online games should not be played at a faster pace than offline games. Casino table games are generally recognised to be played at around 50 to 60 decisions per hour. Restricting the speed of online casino table games to one decision per minute makes sense.
2.6 Given content on offline machines is subject to stake limits, there is no justification for the same content online to not be subject to stake limits. Parity of slot content stake limits and slot content speed across offline and online is essential. Reviewing the speed-per-spin across all slot content should be considered.
2.7 Young and vulnerable gamblers are more likely to be impressionable and attracted by bonus sign-ups and offers of credit. This model encourages participating at higher stakes over longer sessions during a short time, encouraging addictive exposure. These misleading promotions should not be allowed.
3. Regulation Standards
3.1 The history of gambling licensing is that acquiring a gambling license is a privilege but once obtained then operating becomes a right. This was designed to keep organised crime out of gambling but is an outdated model. If there are adequate laws, regulation and enforcement, then obtaining a license could be regarded as a right but the operation should be seen as a privilege. This reversal of understanding makes the morals, ethics and integrity of the operation more important than the process of acquiring a license.
3.2 Remote gambling undermined regulation. Regulators from offshore locations exhibited at trade shows competed against each other, with lax regulation and low tax being the attractions. A willingness to assert the false legal opinion that gambling was where the server was, rather than where the gambler was, provided the excuse for non-compliance with laws in any jurisdiction accessed.
3.3 In the 2005 Gambling Act, the mistake was made to allow white-listed jurisdictions to access British gamblers. It was not until the 2014 Licensing and Advertising Act that UK licensing was required. But with too many licenses already operating there was no time to conduct adequate due diligence on white-listed operators.
3.4 Affiliates have never been subject to regulation, meaning there is minimal control over social media marketing. Discontinuing affiliate relationships would be a positive step.
3.5 The white-listed jurisdictions set up the principle of white-label licensing whereby one licensed “wholesaler” could offer a number of brands sitting under one license, sometimes even with different operators. This method is of no benefit to the gambler and should be discontinued.
3.6 The Gambling Commission has no covert or overt ability to guarantee that operators are not offering “unfair” games. Many investigations start with recognition of money-laundering, where other agencies also have an interest, such as the CPS. Comparatively few investigations start due to reporting of gambling addiction losses.
3.7 Increasing licensing fees, providing extra investigative powers to the Gambling Commission and stricter impositions of fines, including personal fines on responsible executives, would make a significant difference. Requiring all GB licensees to physically have a complete presence in GB would eliminate much of the long tail of more troublesome operators and enable the Gambling Commission to improve enforcement standards.
3.8 Age verification standards have been pitifully low. Remote operators have been able to accept deposits and wagers from individuals without positive identification until withdrawal. This is one of the worst legacy standards of the white-listed jurisdictions, and should have been eliminated in 2014.
3.9 Local authorities have felt powerless in the battle against bookmakers and FOBTs. Providing local authorities with the same power over gambling premises that they exercise over alcohol-sale premises would help to eliminate the residue of violence, drug-dealing and anti-social behaviour in and around betting shops. It would also help with reducing the widespread problem of underage access in betting shops.
3.10 It is difficult to compare different jurisdictions due to historical and cultural differences. For this reason, an alternative comparison methodology is preferable. Thinking about how gambling regulation in the UK would look if allowing legal gambling for the first time today, and comparing that with current regulation, should highlight many of these existing failures.
4. Duty of Care
4.1 Legalising gambling makes sense if it eliminates illegal gambling and provides employment opportunities. Offline poker, bingo, casino table games and race and sports betting should therefore be legal.
4.2 Offshore remote gambling, particularly having avoided UK gambling tax for many years and particularly in respect to unlimited stake slots, is hard to justify. Where there is a socio-economic cost and burden that outweighs any theoretical socio-economic benefit there is no justification.
4.3 The more dangerous the gambling activity, the more harm is caused. It is of paramount importance that there is a functioning duty of care. The state has approved the activities and has allowed the regulator, its advisors and an industry-funded research, education and treatment model to flourish. The state is at fault for the quantity of harm that has been caused.
4.4 It is easy to say the duty of care should lie with operators, but that is an unreliable solution given the current business model employed, combined with the duty of remote gambling operators to their shareholders. Operators will use NDAs, documents stamped with “Commercial Confidentiality” and hire expensive lawyers to avoid duty of care obligations. Persons harmed by gambling are usually far too resource poor to take on operators through the court system.
4.5 There may already be a legal duty of operator care, but it has just not been established yet in case law as the right judge has not yet been presented with the right evidence. Similarly, there could also be a legal duty of care by the state.
4.6 It is preferable if the state recognises that frequent and engaged gambling is dangerous and that it has a duty of care. This needs to be exercised diligently and effectively through dramatically improving oversight of operators. Stronger enforcement, larger fines, personal exposure and possible criminal charges are needed to change the culture of an abusive remote gambling sector.
4.7 The state should not have any role in the promotion of remote gambling or any desire that the remote gambling sector should thrive. The state should not have any reservations in taking on the vested interests of the remote sector and its commercial supporters.
5 September 2019