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Westlake Legal Group > Posts tagged "Gambling Commission"

Richard Holden and James Wild: Ministers must bring gambling regulation into the 21st Century

Richard Holden is MP for North West Durham. James Wild is MP for North West Norfolk. Both were elected in the 2019 General Election and are members of the Public Accounts Committee.

A day at the races. A night out at the dogs or the bingo. A flutter on the Grand National at the bookies.

Most common of all, checking that pink ticket you got from the corner shop and maybe, just maybe you’ll become a multi-millionaire – and if not at least you are helping support good causes.

For most people, our interaction with the gambling industry is part of destination or event-based gambling. We only do it when it’s part of a social activity or its based on a specific event at a specific time – like the Friday night Euromillions draw.

But, behind the façade of a flutter, Labour’s mass liberalisation of gambling in the 2005 Gambling Act transformed the industry into something else. The Act opened-up “casinos in the High Street” with the £100-a-spin Fixed Odds Betting Terminals, four per bookies office, that took years to be reigned back down to a £2 stake (as part of the consultation the Gambling Commission recommended the stake be lowered to £30 or less), and opened the door to online casino gambling.

At the same time the Gambling Commission, which the Public Accounts Committee (PAC) report at the weekend is largely about, was formed.

During the passage of the 2005 Act those opposed to gambling harm became side-tracked in a totemic focus on the wrong target – the possibility of so called ‘Super-Casino’ – an easily understood enemy.  But Parliamentarians didn’t focus on the much more dangerous parts of the Act, which allowed FOBTs on every high street and casinos on every mobile phone. Opponents went for the wrong target: a destination casino has more benefits and fewer downsides than what was allowed by the rest of the Gambling Act.

More money is now staked online that in all the physical bookies, casinos, and on-course bookmakers combined. The gambling industry has adapted much faster than almost any other business to the changing world. With net income (staked monies minus winnings) of £11.3 billion in the UK, it’s big business.

Together, we led the questioning of the Department of Digital, Culture, Media and Sport (DCMS) and the Commission as part of the hearing into gambling harm being held by the Public Accounts Committee (PAC), to which we were both elected as newbie MPs. As we dug around this matter, with constituency cases that had helped focus our minds on specific issues, what we found shocked us.

There are 395,000 problem gamblers in the UK. The effects can be devastating: damaging mental health, causing family break-ups, and even contributing to suicide. As MPs we’ve heard personal accounts of the impact of problem gambling on constituents and their families. A problem gambler will likely cause problems for their immediate family, extended family, and friendship group as debts accumulate, money is borrowed, and promises broken.

It shouldn’t be like this. It doesn’t have to be like this.  We can have sensible regulations that reflect the reality of modern gambling and that protect the vulnerable.

But the Gambling Commission isn’t doing that job effectively or efficiently. It is behind the curve. Too slow to deal with FOBTS or making sure people could withdraw funds from online accounts. Too slow on gambling on credit. It doesn’t measure the impact of the action it takes and has no target to cut levels of problem gambling.

Too often the industry, with public, media and political pressure ends up leading on so-called ‘responsible gambling’ measures before the regulator has even got out of bed.

Some of this is down to how the Commission is funded.  Bizarrely, it gets less funding if there are fewer but larger gambling companies – and we’ve seen massive mergers recently. So the Commission gets £19m a year to regulate a sector clearing the thick end of 1,000 times that in gross profit. We’ve got analogue regulation for an industry that’s undergone a digital revolution.

PAC recommended several key steps, the most important of which is to get the review of the Gambling Act, promised in the Conservative Party manifesto, underway as soon as possible.

Online fixed-odds betting urgently needs reviewing too – controls need to be at least as clear as those in betting shops. Loot boxes, gambling advertising on children’s computer games, 16- and 17-year-olds being able to gamble hundreds a week via a loophole for lotteries, unlimited roulette available in the isolation of your bedroom but no-where else… all raise questions.

The Gambling Commission needs to prove, and sharpish, that it’s up to the job. It needs proper research into problem gambling, targets to reduce it, and to measure the effects of the actions it does take. All we really know at present is that since the regulator was formed, public confidence that gambling is fair has fallen from about 50 per cent to around a third of the population.

Finally, individuals must be able to get redress through the regulatory regime when companies fail to meet social responsibility obligations. A proper Ombudsman for gambling is required. The fact that the most vulnerable only really have legal recourse (not much use if you’ve got no money) is absurd.

The deck is stacked against problem gamblers and in favour of the gambling companies, many of which have clearly used the lockdown to further cash in on coronavirus. It’s time for sensible, conservative action to protect the vulnerable and allow the majority a safe flutter.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Luke Eales: Will there be a radical overhaul in the Government’s approach to gambling?

Luke Eales is Founder & CEO at Seven Star Digital.

With the nation hunkering down for what might be a long-haul lockdown, there’s been increasing alarm over online gambling habits getting out of hand.

And it’s an issue that straddles party lines. Labour MP Carolyn Harris, a vocal advocate of stricter limits on how gambling sites operate, recently wrote in The Guardian that such companies are “using our newfound isolation to their own advantage”, and “where quarantine has meant a downtown for many businesses, gambling companies may see this period as a huge opportunity to increase their profit margins.” 

In early April, a group of MPs across the political spectrum – including Tracey Crouch, the former sports minister, and Tory big beast Iain Duncan Smith – wrote a letter warning that “people are at home and are severely restricted, with access to mini-casinos on their laptops or mobile phones”.

The MPs called for a moratorium on gambling advertising, an enforced end to online casino “VIP” schemes, and introducing a £2 limit on slots game wagers.

Interestingly, just a few months ago the target of official ire was the very organisation tasked with controlling the online casinos and betting sites: the UK’s Gambling Commission.

The regulatory body found itself in the crosshairs of the National Audit Office, with the publication of an NAO report which dropped some damning findings about the extent of the gambling problem in Britain.

The raw statistics were disconcerting (1.8 million people at risk of becoming problem gamblers, tens of thousands of children with gambling habits), while the report pulled no punches when it came to emphasising the shortcomings of the Gambling Commission. 

“The Commission is clear in describing its overall aim to make gambling safer but has not sufficiently clarified how it is pursuing this aim,” the report stated, bemoaning the lack of a “detailed, measurable success criteria against which to judge progress”.

It also highlighted the creaky, inflexible nature of funding for the Commission, which is paid for with gambling license fees that are set through government legislation decided every four years.

“The way that gambling regulation is funded does not allow the Commission to change licence fees,” the report said, “and makes it more difficult to invest in new skills to quickly address changing risks.”

The NAO was particularly scathing about the “specific skills gaps” among members of the Commission, singling out “crypto-currency and addictive technologies”. Translation: the GC simply can’t afford to invest in recruiting the kinds of experts who can understand and assess the finely-tuned data analytics and algorithmic wizardry deployed by the gambling sites.

This is surely the inevitable consequence of a gulf in finances. The Commission’s annual budget of £19 million means it’s ill-equipped to tackle an industry that raked in more than £11 billion last year, and has the deepest possible pockets for advertising.

After the report was released, Harris went on the offensive, calling the Commission “not fit for purpose”, comparing the gambling industry to “the wild west” and even calling for the resignation of the Commission’s chief executive, Neil McArthur.

It should be said, however, that the regulators aren’t as utterly de-fanged as this public finger-pointing might lead casual observers to believe.

The Gambling Commission has slapped hefty fines on some of the biggest names in gambling for various misdemeanours.

This year, for example, online casino Mr Green – owned by William Hill – was made to pay up millions for failing to implement safeguards for customers (in one case failing to intervene when a customer lost more than £50,000).

On top of that, the Commission has enforced a ban on players using credit cards to gamble, in the wake of research revealing that 22 per cent of people who use credit cards to lay bets online are classed as problem gamblers. 

The Commission has also been focusing on the issue of VIP schemes. This has been a hot button issue of late, with an investigation revealing how disproportionately important so-called VIP users – ie, players who habitually bet and lose big amounts – are to the revenue streams of online casinos.

One such operator told the Commission that the paltry two per cent of its customers with VIP status are responsible for 83 per cent of the deposits made on the site. This is why the operators have set up VIP schemes to keep these big spenders sweet with bonuses and rewards, including free flights and football tickets.

Harris was characteristically vehement in her response, saying, “these practices should be banned to protect problem gamblers and stop the transfer of money from vulnerable addicted gamblers directly into the pockets of the online gambling industry.” 

The Gambling Commission hasn’t gone quite that far, but it has now spearheaded a ban on gamblers aged 25 and under being allowed to join VIP schemes.

Even customers who can join the schemes will be required to pass a vetting process relating to their capacity to spend, while rewards will have to be backed up by audit trails laying out the precise decision-making that went into them, guaranteeing accountability.

This agreement has been made thanks to cooperation with gambling industry leaders, but what else is on the horizon?

The Gambling Commission has firmly stated that “while some progress has been made, this work must now go further and faster, in particular around using demographics and behaviours to indicate risk.”

Such talk paves the way for greater restrictions, not just on incentives and advertising, but on game design itself.

The Gambling Commission has already explicitly spoken of tackling game features such as turbo buttons and split screens, which are “associated with potential loss of control”. 

Such measures are sure to be welcomed by the many MPs who signed the letter urging curbs on the industry during the Covid-19 pandemic.

There’s also a sense of anticipation regarding a long-promised review of the Gambling Act 2005 by the Department for Digital, Culture, Media and Sport.

Another, separate review of the same Act is already being undertaken by Parliamentary All Party Betting & Gaming Group, whose members are convening by Zoom (naturally) to discuss how the Gambling Act should be updated to reflect the immense technological advances that have taken place since the mid-Noughties.

When these reviews are concluded and new legislation is put through, there may literally be game-changing consequences for the gambling industry in the UK.

The casino operators themselves have to a large extent been cooperative.

As mentioned above, operators have worked with the Gambling Commission to implement changes to the VIP schemes.

The industry body, the Betting and Gaming Council, also recently published an action plan to protect customers in the social distancing era, pledging that its members will boost safer gambling messages and intervene if customers start spending too much time and money on sites. 

But regulators can also expect some push back.

Last November, Kenny Alexander, the CEO of gambling giant GVC – owner of Ladbrokes and Coral – warned that calls for online stake limits might backfire, saying:

“If they put a £2 limit on online casinos, the day after that, virtually the same amount of people who used to stake more than £2 will go to the black market.”

Warming to his theme, he said: “They’ll play at sites in Costa Rica, they’ll play at sites in Curacao, they’ll play at sites that may not be licensed anywhere. These sites will not be paying taxes… they will have no interest in responsible gaming, no interest in protecting the player.” 

As an example, Sweden’s new legal gambling regime is fairly restrictive compared to the UK; black market share there is far higher than was hoped, with online casino channelisation as low as 72 per cent.

Illicit online gambling is indeed a very real problem, with a report by PwC showing that the unregulated market in the UK was worth a startling £1.4 billion, with almost a quarter of a million gamblers regularly using such sites. 

With the effects of the pandemic exacerbating concerns on both sides of the fence, debates about new regulatory measures are sure to be intense.

The Gambling Commission may want to be seen to be more particularly bullish in the wake of the somewhat chastening NAO report, while the review of the Gambling Act may embolden campaigners and law-makers to take a hard line against the industry.

On the other hand, gambling firms are increasingly waking up to the need to take real initiative, with the recent decision to halt TV and radio ads during lockdown being generally well received by the often-hostile media.

How this all shakes out will have huge reverberations not just on these shores, but globally.

The UK is still the world’s largest regulated gambling market, and the eyes of many international regulators are firmly on us.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com