This week, Olswang and Regulus Partners co-hosted Sir Alan Budd, one of
Britain’s foremost economists and the man who chaired the 2001 Gambling Review
Body (whose report gave rise to the Gambling Act 2005). Sir Alan recounted his
experiences from that time, explaining the processes, pitfalls and issues
arising from the eventual legislation – and in so doing offering valuable
lessons for any future review.
Here is our
summary of his hugely informative and insightful perspective.
Sir Alan Budd
started by making the often overlooked point that government policy was at that
time often generated by committees of people “of a certain class” without much
experience, knowledge or even interest in the subject of their considerations.
Luckily for gambling, Budd took a keen interest in the subject and could bring
an economist's training to bear. The appointment of the Gambling Review Body
was precipitated by three forces; a sense that gambling legislation was “in a
muddle” (with different acts for different parts of the industry); there was an
untested perception of greater permissiveness since the key legislation of the
1960s; and the nascent but clearly emerging issue of online gambling needed to
be dealt with.
It was Budd's
view, which guided thinking, that good gambling legislation should be about both
enabling and protecting the consumer – and he referred to the need to find a
balance between the two as his ‘central dilemma’.
The Gambling
Review Body was not interested in the profitability of gambling companies, high
employment or in moral judgements on the simple desirability of gambling. Yet
while the committee received around 200 operator submissions, undertook
numerous meetings with industry and conducted site visits, they received little
in the way of direct testimony from ‘the consumer’. Thus they considered the
behaviour of ‘Punters’ through the prisms of observed experience and research
(mainly the British Gambling Prevalence Survey, the Family Expenditure Survey
and their own ONS participation survey). Critically, however, the principle
that (proportionate) harm reduction trumped the freedom of the majority was
enshrined from the start. While the committee included taxation within its
terms of reference, it was not mandated (nor indeed equipped) to opine on
fiscal policy.
Budd
recommended that the legislation should be flexible and enforcement simplified.
The regulator (we owe to Budd the
creation of the Gambling Commission) would ensure that principles were
followed, the sector behaved responsibly and technological changes were adapted
to. This was largely followed, though with the significant caveat of machines
stakes and prizes, which was reserved by DCMS. Other advice not taken or fudged
was to ensure that remote operators were licensed in the UK (now fixed), that
the NHS should be mandated to address problem gambling and that ambient
gambling should be removed (first clubs were protected, now the Greene King
case is challenging the licensing principle of ‘primary purpose’).
The immediate
success of the ‘Budd Report’ was that the vast majority of its recommendations
were enshrined within the Gambling Act. The longer-term effects are more
difficult to ascertain but gambling legislation in 2016 is undoubtedly simpler
and more flexible as a result of the ‘Budd Report’; choice has been extended
significantly for adult gamblers; strong controls are in place to restrict
crime; problem gambling rates have remained relatively stable; and remote
gambling has flourished without giving rise to the scale of public health
issues feared at the time.
No discussion
of this episode would have been complete without reference to the political
controversy that swirled around Budd’s proposals for resort casinos. The
dilution and final extinction of plans for destination gambling was, it seemed,
an example of how moral judgement (often disguised as paternalism) can trump
considered analysis. Sir Alan noted Professor Peter Collins’s assertion in ‘The
Great British Casino Shambles’ that this represented “typically British
political decision-making”.
In the
round-table discussion which followed Sir Alan’s opening remarks, it was
recognised that the Gambling Commission today has considerable flexibility
under the framework provided by the Gambling Act, but that this framework is
much tighter on the supply and shape of land-based gambling than it is on the remote
sector. It was acknowledged that there has been a recent shift in industry
perceptions on and engagement with ‘Responsible Gambling’; and that in time
this may pave the way for less defensive modes of engagement on legislation and
regulation. Happily, the vexed subject of FOBTs only made a brief appearance,
with the standard arguments being rehearsed; though there was some recognition
that perhaps the Gambling Act had 'unintended consequences' of proliferating high
stakes gaming and putting casinos at a relative disadvantage. Given the
increasing evidence (supporting both sides) and increasing harm mitigation
initiatives, it was suggested that a Triennial Review would be helpful to
tackle these issues.
More broadly,
a view emerged that under the Gambling Act, remote gambling was less heavily
regulated and faced fewer constraints than its land-based counter-parts (a bias
largely reinforced in the tax code) - despite Budd having recommended
casino-style regulation for ‘online gambling’. Moreover, it was suggested that some
of the current regulatory friction was being generated by land-based operators
rubbing up against the confines of restrictive (possibly anachronistic)
licensing regimes.
While the
idea of a new gambling review was met with caution, the discussion posed an
important regulatory question - whether the Government is happy to preside over
a legislative regime that encourages and accelerates channel shift from
land-based to remote gambling. There are clear benefits to this shift, notably
the greater levels of data and technology-driven harm prevention measures that
can be deployed; but there are likely to be problems too.
Perhaps most
significantly, our breakfast briefing with Sir Alan Budd served as a reminder
of a period when benefits to the consumer (both in terms of their enjoyment and
risk of harm) were placed explicitly at the heart of government thinking and
policy on gambling.
