The recklessness of responsible gambling

By Dan Waugh, Partner, Regulus Partners

Perhaps it’s the contrarian in me, but at a time when the gambling industry is keener than ever to demonstrate its CSR credentials, I find myself turning against responsible gambling.

To be clear, I fervently believe in the need to tackle problem gambling, based upon a combination of research, education, intervention and treatment. It’s just that I struggle with the increasingly common invitation to “gamble responsibly”.

I have four inter-related problems with the notion of ‘responsible gambling’ as a consumer message.

First, I suspect that very few people actually wish to gamble responsibly. Indeed, part of the thrill of gambling is that it feels in some way irresponsible. Gambling offers a recreational way to break taboo without breaking any laws or (in most cases) causing harm. It is a small act of rebellion against societal norms – and who ever heard of a responsible rebel?

If I’m right about this, then there’s a good chance that the invocation to “gamble responsibly” will fall upon deaf ears. This is a shame because others have already done a good deal of the legwork here. In 2009, Paul W. Smith, the director of corporate social responsibility at the British Columbia Lottery Corporation launched GameSense (gamesense.bclc.com) as a way of promoting healthy and informed attitudes towards gambling through engagement with the consumer on his terms rather than the operator’s (interestingly the campaign’s references to gambling were often oblique).

My second (related) point is that as words of advice go, “gamble responsibly” verges on the facile. It has a directness that harks back to a bygone age of advertising where consumers where instructed rather than influenced; but whereas we might be expected to know what to do with the motto “Drink Beer”, it’s not at all clear what we are meant to do or not do with “gamble responsibly”. One might suspect that the aim here is less about influencing positive behaviour and more about being seen to be responsible; but it’s just as likely to be down to lack of thought and insight.

Beef number three with “gamble responsibly” is the implication that it is the consumer rather than the operator who determines whether the gambling is responsible or not. The question of whether problem gambling arises from the gambling or the gambler is long contested – and the truth is likely to lie between the two. Clearly, adults need to take responsibility for their own actions but this certainly does not absolve the gambling industry of its own duty of care. The danger with “gamble responsibly” is that it lets the operator off the hook too easily.

My fourth and final issue with the notion of ‘responsible gambling’ is that it suggests that there is such a thing as irresponsible gambling, which we must assume is a proxy for problem gambling. The implication is that people who get into difficulties with gambling (often as a result of deep emotional distress) are behaving irresponsibly.

There are undoubtedly a large number of people (let’s take the readership of the Daily Mail as a yard-stick) who consider problem gambling to be a form of degeneracy rather than a mental health disorder. By promoting the idea that problem gamblers are irresponsible we may well reinforce these stigmas. This will not only make it harder for sufferers to seek help but may also make matters worse for them by inducing feelings of shame (which may in turn lead to harmful behaviour).

As someone who believes that the words we use reveal our intentions, I see this as being much more than a matter of semantics. We should applaud those who are trying to promote healthy attitudes towards gambling but good intentions need to be married to insight – and simply telling people to “gamble responsibly” seems unlikely to lead to harm reduction.

Perhaps it’s time that we reframed ‘responsible gambling’ in terms of the industry’s duty rather than the customer’s and allow gamblers the pleasure of being a little bit irresponsible again. 

Responsible gambling - compulsion or conscience?

By Dan Waugh, partner, Regulus Partners

A few months ago, I found myself discussing with one of Britain’s leading authorities on gambling, the recent flowering of harm minimisation initiatives. I asked her whether she thought it mattered that this appeared to have come about largely as a result of political sabre-rattling. She answered that it was progress that mattered rather than the path taken to get there.

While I understood her perspective, I wasn't sure at the time that I fully agreed with her – and the trumpeting of several more responsible gambling projects in the meantime has served only to deepen this doubt.

From where I stand, the question of whether the gambling industry is driven to tackle problem gambling through intrinsic or extrinsic motivation is critically important. I hold this view for two reasons: first, that intrinsic motivation leads to better solutions; and second that those solutions will be more sustainable.

If the problem of problem gambling is considered to be primarily a matter of perception then the solutions will be more about style than substance. Responsible gambling programmes founded on considerations of political necessity (whether this be defence against regulatory intervention or the pursuit of liberalisation) are likely to be characterised by highly visible, functional and tangible measures designed to demonstrate that ‘something is being done’.

This approach has a number of drawbacks. Hastily assembled solutions designed (whether by the industry or government) to ameliorate social concerns run the risk of being ineffectual or even damaging in terms of problem gambling (the law of unintended consequences). Even where the merits of a particular measure are clear, there is the question of trade-offs – could the time and money involved have been better spent on other, more effective interventions?

At last year’s Responsible Gambling Trust Harm Minimisation Conference, Professor David Forrest raised the question of whether more subtle, ambient measures (such as encouraging sociability) might be more effective in combating problem gambling than the development of technological interventions like pre-commitment. Yet amidst the debate that has enveloped the industry this year, this question has been ignored.

The key to more effective customer protection in gambling has to be greater understanding of the problem – and this means research. In 2003, Professor Peter Collins wrote: “We need research into all aspects of the causes and consequences of problem gambling, which will include careful monitoring of whatever regulatory, prophylactic, and therapeutic measures are adopted to combat problem gambling.”

More than a decade later, progress has been disappointing. We should acknowledge that the field of problem gambling studies is both relatively young and incredibly complex, involving a range of disciplines (including psychology, sociology, economics and neuro-science) which are just as likely to vie for precedence as work together towards holistic solutions. Efforts are also hamstrung by vested interest, where parties hope not so much to learn from research but rather to gain support for their respective positions. Lastly, research is often undertaken without the active support of the industry itself and so misses the insights that might be gained from close observation of customer behaviour. Once again, motivation is critical. Research entered into collaboratively and in a spirit of honest enquiry has to be the bedrock of effective harm minimisation.

The second reason why intrinsic motivation is so important is that it will drive longer-term and more sustainable solutions. Where the alleviation of political pressure is the aim, the energy behind responsible gambling programmes can be expected to dissipate as scrutiny subsides. This would not be so bad if political pressure declined in line with the incidence of harm. However, this is not the way that politics works.

It is not simply with gambling companies that we should be wary of motivation. Politicians, civil servants and regulators may be just as susceptible to favour expediency over effectiveness – and in such cases it is the vulnerable and damaged who lose out.

The difficulty with all of this is that it’s far more straight-forward to compel adherence to a set of rules than to hope that companies will care enough to address the issue without carrot or stick. Yet the examples of some companies (often owner-managed businesses, who benefit from long-term perspectives and proximity to the customer) who approach problem gambling as a matter of conscience rather than compliance should give us hope.

My solution is two-fold. The first part is to bring the human face of problem gambling into the boardroom by requiring the directors of our largest companies to spend time with front-line organisations like GamCare and the Gordon Moody Association. By shifting the issue from the abstract to the real, we may make responsible operation a way of doing business rather than a brake on commercialism.

The second is to establish a proper forum for the gambling industry to come together with the research community, the regulator and the treatment providers to take a long-term, informed and collective approach to dealing with harm. Gambling has a veritable alphabet soup of organisations (formed with the best of intentions) set up to promote responsibility but the linkages between them are often obscure and the areas of intersection contested. As yet there is nothing that is truly comprehensive.

Ironically, the dictates of conscience are likely to lead to a better future for the industry as public trust is more likely to be engendered by considered attempts to reduce harm than by knee-jerk and transparently cynical responses to political pressure. 

Dot com risk: grey markets and black swans

By Scott Longley, Editorial Director, Regulus Insights.

'To expect the unexpected shows a thoroughly modern intellect' - Oscar Wilde

The 9% share price fall that prompted Playtech to issue a stock exchange statement late last week was only the most recent example of how listed gambling companies suffer more than most from the financial market phenomenon of risk on/risk off.

This is the theory that in the wider market asset price movements are driven by the level of risk tolerance on the part of investors. The more dangerous or unstable the global political or market environment is perceived to be, the more investors are likely to gravitate towards safe haven investments. However, if the background mood music is tending towards the benign, the greater the likelihood that investors will chance their arm in an effort to generate greater returns.

With gambling companies, though, whether land-based or online it is specifically the decisions of legislatures and regulatory bodies that are more often the trigger for dramatic share price reactions.

In the online gaming sector the passing of UIGEA in 2006 by the US Congress was perhaps the most dramatic example of investors being caught out by a legislatory act of shock and awe. But the wider industry can point to other examples of business-defining government interventions, such as the Russian authorities moving to ban casinos back in 2009, or even the loss of S21 machines from land based gaming venues in the UK in 2007.

Rather like living on an earthquake fault line, regulatory tremors are a fact of life for all gambling companies. Playtech’s Malaysian troubles, and William Hill’s recent contretemps with the Philippines’ authorities, demonstrate that regulatory issues can strike anywhere at any time, and rarely with any direct warning.

Yet even to characterise reactions to regulatory developments, as shocks, is arguably an error in interpretation. The analogy de jour for unexpected legal or regulatory jolts is that they are somehow black swan events; something so out of kilter with the ordinary run of business, that it is hugely unpredictable. Yet there is an inevitability about legal proscription and regulatory limits when it comes to offering gambling services.

Whether it is the slow crawl of online regulation across Europe, the advent of the UK Point of Consumption (PoC) regime, the issues surrounding machine gaming in UK betting shops, the recent news from further flung jurisdictions such as South Africa, Singapore or Malaysia, the direction of travel is all too clear: more elements of gambling are being noticed and either regulated, or seeing bans tightened and enforced. This process also gives the lie to the oft misused term ‘market liberalisation’; while it is legally true that a ‘banned’ market which regulates ‘liberalises’, if grey market operators are already in the market the commercial outcome is not ‘liberalisation’ but restriction and tax.

The steady march of gambling regulation makes grey market cash flow seductive but dangerously unpredictable. Exposure to it can also limit regulated market opportunities. Companies and investors could be increasingly facing an impossible choice between regulated legal clarity but little profit. Or dot com cash flow with significant potential volatility.

Dot com volatility is made more acute because no enforcement action has taken place in any given jurisdiction, and the likelihood of action taking place in the future is somehow more unlikely. The history of online gambling consistently contrives to disprove such optimistic hypotheses.

According to industry lore there was no likelihood of enforcement of anti-gambling laws being applied to online operations directed into the US. That was until July 2006, when the Chief Executive of Betonsports was arrested on charges of violating the Wire Act.

Likewise, industry sages confidently predicted there was no prospect of European authorities resorting to similar such extreme measures. Then the French authorities arrested then co-chief executives at Bwin, Manfred Bodner and Norbert Teufelberger in Monaco in late 2006. The same Gallic plod persuaded the Dutch authorities to detain then Unibet boss, Petter Nylander, at their behest in Amsterdam’s Schiphol airport in 2007. And, of course, PokerStars and Full Tilt were untouchables as far as the US authorities were concerned – until Black Friday in April 2011 when suddenly they weren’t

In Europe the steady ratchet of the introduction of PoC regimes across the continent has been accompanied by the drip, drip, drip of operator market exits, the issuing of blacklists and the occasional prosecutorial threat. The approach of playing the regulated market game while also deriving revenues from grey markets, and hoping for ‘liberal’ interpretations of European law is becoming increasingly untenable.

Moreover, this process of the closing down of regulatory arbitrage opportunities is now global. The comfort blanket of Asia, has been promoted by some – including the odd City scribe – as an essentially riskless market where the likelihood of any crackdown by the authorities on offshore operators is supposedly very slim.

This is an example of applying inappropriate ideas about risk to a complex legal, regulatory and operating situation. There are few listed entities that knowingly take money out of China; but there are some, and there are a lot more private entities that ply their trade far and wide across Asia.

If it looks like a swan, hisses like a swan, and is black like a swan then it’s probably a black swan: Investors and operators alike should not be surprised if it turns round to bite.

Never mind bet now, what about act now? - Looking into the recent ASA review into gambling company advertising

By Scott Longley, Editorial Director, Regulus Insights

‘From those wonderful folks who gave you Pearl Harbor’ (Proposed advertising slogan for Panasonic that came from a brainstorming session and title of book on the heyday of Madison Avenue advertising by Jerry Della Femina)

If there is some good news for the UK’s gambling companies from the Advertising Standards Authority (ASA) review into gambling advertising published late last week, it is that the market research undertaken as part of the process did at least find some evidence of the success of advertising in persuading consumers to bet more often. Yet while this may provide some comfort to gambling’s marketing executives, the true significance of the report is the support it is likely to give to those calling for tougher advertising controls for the industry.

In conducting its review – the first since the restrictions on gambling advertising were relaxed in 2007 – the ASA commissioned its own qualitative research and also added some questions on gambling advertising to the most recent Gambling Commission data omnibus survey in order to obtain some quantitative insights.

The evidence from this second element of the research is illuminating. While an overwhelming majority (90% of respondents) claimed that gambling ads had not prompted them to gamble, the survey did find that there was a higher tendency (20%) among those who had placed an in-play bet to be prompted by a free bet or other promotional offer.

Moreover, there was a “notable spike” among the 24-34 age group where 44% said they had been prompted to gamble by a free bet or promotional offer.

So at least the industry has confirmation that free bet offers work, and is particularly efficacious among a certain age group and with a particular product.

But that’s as far as it goes for positives. Because unfortunately for the industry the evidence that is accumulating around free bets offers and promotional offers means that it has become an area which the ASA is now targeting for further scrutiny.

The review points out that no specific action will be taken as yet - but the industry is at now on a warning with regard to ads in this area.

The ASA review said it would be taking a more proactive approach to this area after the qualitative and quantitative research undertaken as part of the review found that free bet offers and promotions were “likely to appeal to younger people and prompt them to gamble”.

Of the 398 cases in the last year, complaints over free bet offers were the most prevalent. The review said the ASA and Committee of Advertising Practice (CAP) had already conducted a “large amount of work” on this issue and that it will “remain a key priority”. The review continued: “If we spot a problem we’ll be more likely to seek a published ruling so that gambling marketers know where the line is drawn and why.”

This isn’t the only area where the ASA will be more proactive. Specific in-play advertising also came under greater scrutiny in the review, and in particular ads where according to the market research carried out for the review there was perceived to be a link between betting and ‘toughness’.

We don’t need to be advertising gurus to know which ads might be being referenced here. The review goes on to relate one story from the market research of a ‘male, family-stager from the 24-44 age group’ who said of a Ray Winstone ad for bet365: “Ray Winstone is your archetypal geezer – he has respect, he’s no nonsense, strong, firm, direct.”

Such testimony is great news for Winstone’s agent when it comes to negotiating future endorsement and advertising deals but not much good for anyone else. Though the review noted that research participants could “mostly only speculate about the potential effects of bet now advertising”, it went on to say that there was evidence that these ads did have an impact on the group of male gamblers who “confirmed they were motivated by this type of ad”.

As part of its next steps, the ASA said: “We’ll be more proactive on issues relating to social responsibility, especially around ‘toughness’ in ads and particular appeal to children, finding ways to continue to source data to inform our decision-making.”

The focus will now move to the CAP review that is due presumably in a matter of weeks. This will be looking into the rules and regulations that already apply to gambling to see whether they need to be amended or updated.

But with the ASA signalling more intense oversight, it is now more likely than not that industry practice on advertising will have to change. Prior to the publishing of this review, the main operators were already well aware of the disquiet among advertising and gambling regulators over free bet and promotional offer advertising.

The newly-formed Senet Group has already instigated a voluntary code which stops its members from conducting this type of advertising before the 9pm watershed. But at present only William Hill, Ladbrokes, Coral and Paddy Power have signed up to it, and of course this code does nothing about the ‘toughness’ complaint.

It should also be noted that the ASA review included data on the amount of complaints notched up by the individual firms which prove that the four companies mentioned were together the biggest offenders as far as cases of complaints were concerned.

In fact, it is worth commenting that while William Hill (190), Ladbrokes (184) and Coral (82) all feature in the top 10 of most complaints, Paddy Power tops the lot with a whopping 243 complaints since 2006, a total which outgunned even the 206 complaints received by the ASA about gambling ads generally. The old maxim that “All publicity is good publicity” often invoked in defence of advertising controversy, may be coming back to bite.

Department of mischief or not, this is not the best advertising accolade that we’ve ever seen. If the Senet Group is going to have more impact, it should perhaps look to its own members to follow the ASA lead and look more proactively at stoppering the flow of complaints about gambling advertising at source. It might well come to be seen as the best piece of advice that their respective marketing departments have ever received.

The impossible dream - the evolution of remote betting platform choices

By David Loveday, Principal Consultant, Regulus Partners

‘To dream the impossible dream, that is my quest.’ The Impossible Dream, The Man from La Mancha, 1965

The gambling industry is a something of a ‘glass half-full’ business; as shown in the evolution of its technology:

A decade ago betting systems were simple and predominantly focused on horseracing and dogs. Now they have evolved into masterpieces of transactional scalability producing excellent performance figures.

Multi-functional systems encompassing sportsbook, account and wallet are complex and high-performance pieces of technology; however, in spite of this gambling business executives have a tendency to focus on the negative aspects of their own systems rather than looking in to why the elements work better for a competitor.

The technology we see today has ‘stood up to the job’ and grown with the times and needs of punters and operators with few exceptions. For example, at the turn of the decade when high volume in-play betting was in its infancy, most systems were unable to cope with this new demand; yet it is now basic functionality. Not everybody would agree, but I would strongly argue that the deliverers of gambling technology have out-performed in their task and long may this continue.

So in light of this what kind of system would the average online gambling Chief Executive dream of having at their disposal? What are the realities and what are the options?

I would say it is a fair assumption that most CEOs would want as system that:

·         Outperforms the competition

·         Is developed and IPR-owned by their organisation

·         Is flexible enough that new functionality can be developed and added on swiftly

·         And the costs of running the system would decrease every year

Of course, this wish list falls into the category of the impossible dream.

SAW (sportsbook, account, wallet) systems are immense pieces of software, heavy in code and complexity. They can’t be re-engineered in a stack and layered model. Interdependencies are common and they will only get bigger. The bigger they get the more they cost, and when they don’t fully support the objectives of the business, then tensions rise as the systems are inevitably the heartbeat of the company.

My view, from experience, is that operators are unlikely to get exactly what they want when it comes to SAW functionality and this could mean that companies could head down one of four possible routes to get something of that original shopping list:

1.      Build your own

A small number of companies have built their own software from scratch, and have delivered good systems and performance as a fortunate result, however, I am sure that no one now lives under the misguided impression that this is easy.

SAW systems are huge, complex and in constant need of TLC. The cost of maintaining these systems will only ever increase and the moment you take the foot off the investment pedal they fall behind.

As for attempting this feat in the present climate, I think it is fair to say the investment and logistical demands on any operator with serious hopes of achieving the home-grown option are immense – as is the requirement  for suitably large levels of profitability to achieve a return on investment.

2.       Mix and match systems

Most operators have followed this route, sourcing individual components from a plethora of suppliers, while perhaps building some of it themselves.

This approach requires a lot of supplier management and there is always the danger of said suppliers playing the blame game when things go wrong. That said, using skill and ingenuity most operators that have chosen this road have reached their destination.

Would they like to do it all? Perhaps. But as with option one, questions arise over whether it is optimal for a gambling company to morph by stealth into a technology outfit.

3.       One-stop shopping

It is now possible to buy almost everything you need from a number of the big suppliers.

This route solves the problem of accountability, but does so by passing a lot of control to the supplier. Is this is good thing? Possibly for some businesses, but certainly not all and questions like this can open up lively debates within organisations.  However, one thing is certain - the underlying issues of cost and complexity don’t go away.

4.       Beyond white-labelling

This is the approach that I find the most interesting:

Bookmakers are, by nature, tribal and territorial, and while the online industry was growing fast this was a sustainable position. But given the multiple regulatory issues the industry is currently facing, most notably Point of Consumption tax in the UK, it might leave some organisations thinking the unthinkable and looking once again at collaboration.

There are a number of companies which have built excellent systems and technology, and it is well within their technical grasp to host their competitors on their architecture. All the tenant would need is a new shop window.

The cost savings would be significant and the hosted operator would be left to focus on their core competencies as well as naturally being part of a bigger liquidity pool.

Though many will see some of the above sentiments as a heresy, the sobering reality is that in the UK the Point of Consumption Tax and other cost increases will force all operators to drive efficiencies wherever they can. Sacrifices will have to be made and the possibility of reducing operating spend to preserve customer marketing means that we could come to see 2015 as the true beginning of the era white labelling. 

Sin Tax Error: resisting reasonable gambling taxes risks a much worse outcome

By Paul Leyland - Principal Consultant, Regulus Partners

“Friends and neighbours complain taxes are indeed very heavy and if those laid on by government were the only ones we had to pay we might more easily discharge them; but we have many others and much more grievous to some of us: we are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly.” Benjamin Franklin

The Gibraltar Betting and Gaming Association, having failed to overturn the UK remote Gambling (Licensing and Advertising) Act, is now attempting a Judicial Review of the forthcoming remote Point of Consumption taxes through the Finance Act.

I think this is a mistake for pretty much the same reasons as those articulated in a previous blog: http://regulusp.blogspot.co.uk/2014/09/point-of-consumption-licensing-beware.html. However, there is a deeper industry issue here which needs to be addressed if it is to be listened to.

The gambling industry at various points supports two conflicting and often almost disingenuous lobbying positions:

·         We pay a lot of tax, therefore we should not be over-regulated

·         We are in a highly competitive sector so we cannot support any/more tax

There is an obvious confusion here to lawmakers and other outsiders, that one part of the industry pushes that paying taxes provides lobbying power, while another part is determined to avoid any material tax footprint. The confusion is added to when both views are expressed by the same company depending upon which division is speaking.

Businesses are not necessarily consistent and they rarely claim to be philosophers. However, in attempting to be pragmatic they open up a very significant practical problem…

In the first instance is it logical that any company has a de minimis tax footprint? Certainly it maximises profit but it is highly unfashionable among government and voters (not to say ethically questionable). If a company busily manufactures widgets, or even financial products, then it might take the view that ‘as a company like any other’; it will take its chances unless or until tax law catches up with it. From a purely corporate governance perspective, this a reasonable risk to run so long as it is disclosed and transparent.

But gambling companies are not like other companies. And not for any moral reason. Or even because they are especially esoteric. But because they are specifically regulated.

The problem for gambling companies is that the same governments that regulate gambling businesses also set the tax for them (increasingly online as well as land-based).

Like it or not, governments can, should, and do regulate gambling.

All gambling companies; black, white or ‘grey’, exist somewhere in a legal, regulatory and fiscal matrix. If they try too hard to avoid tax and regulation they will simply invite governments to ensure that they fail. If the fight becomes public, it is likely to become political. If it becomes political, there will a premium on the politicians becoming vindictive – with the blessing of the voting public.

As Professor Peter Collins put it: "Almost everywhere in the world, where gambling is not primarily an export business, gambling - like alcohol and tobacco - is subject to abnormal rates of taxation, so that government itself has a substantial economic interest in a profitable gambling industry."  

But surely taxes mustn’t be too high?

Undoubtedly, but when making this argument, gambling companies would do well to understand the tax footprint of ordinary companies, rather than assuming that paying a specialist tax gives them a special lobbying position: contrary to some industry assertions, most forms of UK gambling are not materially more heavily taxed than the wider corporate economy, and are much more lightly taxed than most ‘sin’ excises (tobacco, alcohol, fuel).

Moreover, the role of regulated gambling needs to go beyond paying tax to form an effective lobby; Collins again: “Throughout the United States and almost everywhere else in the world, the gambling industry is expected to contribute special economic benefits to the jurisdictions in which it operates. This may consist of promoting earnings from tourism, funding good causes, or paying abnormally high taxes over and above normal corporate, personal, and property taxes.”

More specifically, ‘tax lobbying’ is only logical if at least two of these four statements are true (and probably all four if anyone is to listen in a politicised environment as we currently have in the UK):

1.       Gambling taxes have a higher tax footprint than that of the ordinary consumer pound (including net VAT and factoring in heavily sin-taxed products such as tobacco and alcohol)

2.       There is a material risk that high taxes will create a significant black market which regulation cannot mitigate

3.       Sensible tax rates are driving investment, employment and providing a safe public utility

4.       The taxes generated are more valuable from an economic perspective than the social harm and/or political pressure caused by allowing the activity in the first place

The problem that the UK gambling industry faces (including its offshore remote sector) is that, on the whole, it does not score well on any of the above points, and is (very) poor at communicating when it does get it right.

More profoundly, lobbying should be designed to persuade, not to negotiate: gambling’s negotiating position with government is very weak indeed (small, limited popularity, controversial). More dangerously, overstating its negotiating position can become counterproductive.

The gambling industry needs to show that it is prepared to pull its weight both fiscally and socially if it is to have a voice with its most important stakeholder: the government of its customers. The GBGA might not be overly concerned that there is a contemporaneous review of UK gaming machine regulation in betting shops. It might be equally unmoved by the fact that next May there is a UK General Election, in which two major parties are already setting their stall in a manner not exactly friendly to gambling. But then the GBGA is not directly responsible to the UK government. Many UK-facing operators are (or soon will be), however. Those operators may look at 2014 not as some annus horribilis but as the last of the good old days and a chance to build bridges wasted… If they keep supporting attacks on the hand that feeds them they may very well deserve it. 

Getting on with Government: the Importance of Being Earnest

By Dan Waugh, Partner, Regulus Partners

"Life is never fair, and perhaps it is a good thing for most of us that it is not." Oscar Wilde

Life isn't fair. One would have thought that gambling more than any other industry might understand that fact - but sometimes you have to wonder.

Over recent years most parts of the Britain’s regulated gambling industry have felt cause to bemoan the “unfairness” of government interventions. In 2007 it was casinos (duty increase) and bingo clubs and arcades (slot machine restrictions); in 2009 it was casinos and bingo clubs (duty again). In 2014 and 2015 it’s the turn of betting shops and remote gambling (in both cases increases in duty payments and the potential for regulatory restrictions). The claim to fairness is also evoked by those seeking further regulatory relaxations (more slots, higher limits etc).

Amidst all the nickel and dime industry grumbles, one occasionally hears the call for government to set out a vision for the industry - a consistent and coherent framework that will enable us to understand the purpose of policy. For those of us in gambling, this appears entirely reasonable. Behind all the legislative detail, we reason, there must be a grand plan from government - an idea of how it perceives the role of gambling in Great Britain and how it will shape this. We form a legitimate part of the country’s leisure retail and entertainment industries and we deserve to know what the big idea is.

There are however a number of problems with this view. First, gambling is not simply another part of the leisure market - for reasons of substance and perception, society judges that gambling is different from say restaurants or cinemas. This context is important when we consider how much government feels it needs to care about us.

Second, government has expressed a vision for gambling in Great Britain. It underpins the Gambling Act 2005 and expresses a desire that gambling be conducted in a manner that is fair, transparent, free from crime and equipped with safeguards to protect the vulnerable. True - this is more an expression of what gambling should not be rather than what it should be - but it is a fairly clear articulation of principle.

Third, and crucially - it is not actually the role of government to articulate a more positive vision for gambling. It is up to the industry itself - and in recent years it has not done a particularly effective job of this.

Of course, there is no single body that is empowered to speak for gambling as a whole - but the behaviour of the main players suggests that for many senior executives the goal they are aiming for is simply to make the inherent human desire to gamble as profitable for their companies as can be. Recently this has been tempered by a re-balancing towards harm minimisation; but the over-riding image we are left with is of an industry trying to get rich quick without causing too much damage - hardly very uplifting.

We are left without any real sense that anything truly valuable (or even interesting) is being built - a process of extraction rather than construction.

There are of course exceptions. What Simon and Jimmy Thomas have built at The Hippodrome starts to reframe the question of why gambling might be an industry that government should support rather than simply control; and of course there are plenty of examples from overseas markets where governments have been able to contextualise a positive role for gambling companies within the highest levels of state policy.

We in Britain do need a vision for gambling if we are to escape the cycle of boom and bust (or liberalisation and repression) but we should not rely for this on either government or the regulator; nor does it play to the strengths of business school graduates or compliance officers. In order to carve out a better place in society, gambling needs to rediscover its entrepreneurial roots and its desire to entertain; only then will we manage to excite policy-makers to want the same things that we want.

We may find it difficult to put past injuries behind us - particularly when some of the wounds are still so fresh - but the time for lamentation and brow-beating is past. Now is the time to inspire.