Friday 19 December 2014

Time for gambling to embrace uncertainty



By Dan Waugh, Principal Consultant, Regulus Partners

One of the fundamental characteristics of gambling is its simplicity. Its rules are constant and its outcomes unambiguous – there are no shades of grey between red and black – only the occasional hint of green. We win or we lose and we are left in no doubt as to why.

Perhaps this basic law of gambling has conditioned those who work in and around it to expect the same thing from real life. This at least would explain the reaction from many parties to the publication of the Responsible Gambling Trust’s suite of reports into harm and B2 gaming machines (aka FOBTs).

There was a palpable air of dissatisfaction when the research was presented and discussed at last week’s Responsible Gambling Trust Harm Minimisation Conference. The bookmaking industry had been hoping for exoneration; its critics for vindication. Neither side got exactly what it wanted.

The reports – which drew on an unprecedented array of machine and player data – contained a trove of insights into how people behave in relation to gaming machines. It was fascinating, thought-provoking, stimulating stuff.

Damningly though, it wasn’t simple or conclusive. There was no instant gratification; no unarguable implications for policy. Instead – as is the nature of good research - there were further questions for the data and the call for more and different data to be assessed.

If there were feelings of disappointment with this outcome, its roots lie in the curious compact which spawned the research. Quite simply, the research was part of a Westminster fudge – a means of dealing with political concerns not wholly related to the subject matter. The RGT’s acceptance of its role within this fudge was presumably the price it was willing to pay in order not simply to justify the expense of the project – but more critically to add political weight to calls for the gambling industry to provide access to its data.

While Derek Webb’s Campaign for Fairer Gambling has drawn attention to concerns of harm in relation to B2 machines, it seems probable that the main societal (and so political) issue is far more visible and visceral. The way that machines have changed the economics of the betting shop (combined with the passing of the old demand test) has led to their clustering on Britain’s high streets – sometimes with the same operator running several shops within spitting distance of one another.

At the same time that the shops have become more visible, their character has also changed. The shift from over-the-counter bets on horse-racing to machine play has eroded the betting shop’s perceived value to communities. Indeed, some of the most damaging attacks on the industry have come from those who loved it best – from the ranks of customers and employees.

The question of maximum stake sizes is at best tangential to these concerns – indeed there may be some validity to the claim that a reduction of stakes on B2s (in isolation) might lead to an increase in clustering.

Then there is the matter of lobbying by the rest of the land-based gambling industry, who seem opposed to the B2 principally because they cannot have them (or in the case of casinos, that they alone cannot have them). There is perhaps a degree of envy here but more powerfully a sense of affronted logic.

The maximum stake sizes on the main machine categories in Great Britain proceed as follows: 10p for D, £1 for C, £2 for B4 and B3, £5 for B1…..and oh, £100 for B2. It is the position of the stakes on B2 in relation to the other machine categories (and the phenomenal success of these machines) that irks here. It is this which underpins the BACTA position that if machines with £100 maximum stakes aren’t harmful, then all licensed gambling operators should be allowed them.

The logic is simple to grasp – but it is only logical viewed through the prism of industry self-interest. Government is unlikely to see that the answer to the FOBT issue lies in their further expansion. It may be ‘unfair’ but life – as with gambling – is unfair.

It is difficult to believe that B2 machines would have been encompassed within the Gambling Act 2005 had the framers of the legislation known then what we know now – but the genie escaped from that particular bottle some time ago. As Professor Peter Collins wrote in 2003: “It is always easy to relax regulations and increase the availability of commercial gambling opportunities, it is extremely difficult to cut back the supply if it is decided that, for whatever reason, there is too much gambling”.

The fact that the research did not provide the resolution that some had hoped for need not negate its value – if we are prepared to engage with it in a spirit of honest inquiry. This means resisting the urge to draw selectively on its findings in order to support pre-existing positions (and critically being mature enough to know that absence of evidence is not the same as evidence of absence). It means being prepared to embrace uncertainty and ambiguity; to ask questions in order to feed curiosity rather than as thinly veiled means of making statements or scoring points (as happened all too often at last week’s conference).

It also means ensuring that research is used appropriately, rather than being harnessed to the needs of politicians. It will be interesting to see whether the pleas of NatCen’s Heather Wardle are heeded - to institute a long-term programme of progressive research in place of these large-scale but ad hoc studies.

Carl Sagan, the astrophysicist wrote: “It seems to me what is called for is an exquisite balance between two conflicting needs: the most sceptical scrutiny of all hypotheses...and at the same time a great openness to new ideas. Obviously those two modes of thought are in some tension. But if you are able to exercise only one of these modes, whichever one it is, you’re in deep trouble.”

Consumer behaviour in relation to gambling isn’t rocket science but it is complex. The RGT research offers the entire gambling industry a glimpse of the shape of things to come. How the industry embraces this new age of disclosure and regulatory data-driven policy-making is likely to influence its ability to stay out of further trouble.

1 comment:

  1. I do look forward to and enjoy reading Dan's blogs, they are insightful and thought provoking. I do agree with him that there is a sense of uncertainty within the gambling industry and in my opinion this is based principally on the consistent 'bookie bashing' (and importantly how the industry responds) and, perhaps what may be more impactful to the industry, is the upcoming General Election in May.

    My sense looking at the gambling industry, is there is an opportunity at the moment being afforded to it following the RGT conference. Even Matthew Hill from the Gambling Commission said the industry needs to 'look at itself and use the data from the research wisely'. This and Dan's blog got me thinking of the parallels between the National Lottery and other forms of gambling.

    Ask most people, they think the Lottery is a cause for good in the UK because of all the funding it provides to community groups up and down the Country. According to Wikipedia 28% of lottery revenue goes towards good causes, along with all the unclaimed prizes. Obviously the land-based gambling industry cannot give way such a high percentage of revenues from gambling, as its cost base is far higher than Camelot. However increasing their funding allocation to the Responsible Gambling Trust and directly funding community organisations working with problem gamblers may help to soften the criticism and actually help to bring about more certainty for the industry. Any uncertainty that does exist has been created by the industry itself I feel and by some of its practises.

    An example of these practises would be the ‘clustering of betting shops’. I get the commercial model and would say it is similar to coffee shops or charity shops clustering, it’s a demand driven market. But with gambling being a risky activity and all the scrutiny the industry it is under, why doesn’t a leader step forward and propose something new and bold such as publically stating that their company will have only one betting shop in a town and % of their profits will go to good causes (a decent %, not the minimum or a tokenistic amount).

    The practises that have led to the uncertainly within the industry, can in my view be ‘undone’ just as they way they were created. Then perhaps as Dan says the damaging attacks on the industry that have come from those who loved it best could also be turned around.

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