The white paper – Proposals to update UK gambling legislation (V)
We continue to publish extensive extracts from an important project subject to public debate by the British Government, the so-called White Paper.
By Dan Iliovici, Vice-President ROMBET
Benefits of gambling
Gambling can be sociable, can help tackle loneliness and isolation, can enhance the enjoyment of other activities, and can be a valuable pastime in its own right, although quantifying these benefits is inherently difficult.
There are also economic benefits to having a well regulated industry to service this demand.
The gambling sector also contributes significantly to other industries, including sport, advertising and racing. (…)
Gambling can also contribute to tourism, for instance to seaside towns across the country, or high-end casinos attracting wealthy overseas visitors who spend across a number of other sectors while in this country.
Additionally, some gambling products enable charities and other non-commercial organisations such as sports clubs to raise valuable funds.
After this clarification, we continue the detailed presentation of the document.
Evidence
17. Given the Review’s focus on ensuring our gambling laws are fit for the digital age, it is unsurprising that a significant amount of evidence was submitted in response to the remote gambling questions in our call for evidence. Key evidence as it relates to our policy proposals is discussed in more detail below, but a number of overarching themes emerged across the submissions.
18. Firstly, there was significant discussion of the existing controls and the majority (including industry stakeholders) presented evidence that current protections could and should be further improved.
19. Operator responses largely put this in the context of the recent changes which have been introduced through voluntary industry codes or Gambling Commission mandated action. For instance, many discussed the significant changes to their harm detection systems since the Commission updated its customer interaction requirements and guidance1 in July 2019, and others mentioned measures like the ban on credit cards in April 2020. Most industry submissions pointed to recent Gambling Commission data (which has since been updated) which suggests a decline in the population problem gambling rate, as evidence that the incremental changes are having the desired effect. They therefore make the case for continued changes, but cautious ones which fully evaluate the spate of recent measures before proceeding.
20. Conversely, many outside the industry submitted evidence on the harms which individuals had suffered in spite of the existing controls, which they argued were therefore ineffective. In their view, significant new controls are needed to curb the risk of harm presented by certain features of online gambling including industry practices.
21. In particular, some of the evidence submitted by academics, treatment providers and those with personal experience of harm argued that the current data-led system of personalised monitoring and interventions to prevent harm is not (for all its theoretical promise) currently delivering on the government’s objective of keeping customers safe as it is by definition reactive. A number of individuals submitted evidence including case studies which showed that signs of harm can be missed and that individuals are permitted (and occasionally encouraged) to continue gambling.
22. To support this position, many respondents cited the Patterns of Play interim report2. This included data on operator interactions, showing that just over 3% of online gambling accounts spent over £2,000 in a year, but only 35.5% of these were subject to any safer gambling interaction (such as an email or pop up message), and just 0.84% received a safer gambling telephone call. These individuals may not have been spending more than they could afford, but many respondents felt operators should have been doing more to check.
23. The account data used in this report came from 2018/19, and it does appear that operators’ use of play data has improved since then, although we note that Gambling Commission enforcement activity has continued to find more recent failings. One major operator’s evidence reported a threefold increase in the number of customer interactions compared to two years ago and increased positive impact from their interventions (according to their own evaluation). Many operators were confident that their current and increasingly sophisticated harm detection algorithms would have prevented ‘historic cases’ where harm occurred without sufficient action. Some contended the models can now even identify and prevent harm before it occurs, but this is hard to verify. Operators broadly argued in favour of these tailored controls, rather than measures which may limit the enjoyment of gambling for the majority of players who suffer no ill effects and may (if curtailed in their gambling) turn to unlicensed operators.
24. How gambling operators use the data available to them was also covered by campaign and consumer groups, with some levelling specific criticisms regarding data governance and processing. In addition to failing to identify those suffering harm, respondents identified wider practices which might be detrimental to consumers, such as the profiling of customers and the restriction of winning accounts. This was part of a broader sentiment across some respondents that consumers needed to be better empowered in their dealings with remote gambling products and companies.
25. In addition to submissions to the call for evidence, we also received advice from the Gambling Commission*1, which emphasised the importance of measures to prevent harm throughout the remote customer journey, and committed to build on recent work to improve protections.
Losses and harms across online gamblers
● Most online gamblers have relatively modest losses. The Patterns of Play research commissioned by GambleAware found that between July 2018 and July 2019, 21% of accounts made a net gain, 60% lost less than £200, 13% lost between £200 and £1,000, 5% lost between £1,000 and £5,000, and around 1% lost more that £5,000 (see Figure 5 below). This suggests most customers do not spend above levels which would be usual in other leisure sectors, although personal circumstances on whether these losses are acceptable will vary.
● This distribution means that operator revenue is predominantly derived from a relatively small cohort of high spending customers. The range of estimates submitted to our call for evidence suggest that (ignoring accounts which net win), around a quarter of Gross Gambling Yield is derived from 1% of accounts, approximately 60% comes from the highest spending 5%, and around 75% from the top 10%, although this varies by product. Some submissions pointed out that a reliance on a high spending minority is not unusual in other sectors (such as air travel) and that higher than average spending on gambling is not in itself evidence of harm as discretionary income varies significantly across individuals.
● Nonetheless, this is a potentially concerning pattern in a sector with a known addiction risk, and where a key manifestation of that addiction is high spending. In responses to our call for evidence, estimates of the Gross Gambling Yield derived from harmful gambling varied significantly, as they have in previous evidence such as that reviewed by the knowledge exchange GREO in 2019, which found estimates range between 15% and 50%. A recent survey of UK gamblers estimated that moderate-risk and problem gamblers (collectively comprising 14.1% of the sample population) accounted for 43.5% of overall gambling spend but more for certain product types. While there are real complexities that make it difficult to pinpoint a precise figure, the weight of the evidence suggests that those being harmed by gambling are overrepresented among those with high gambling spend. Therefore, a general shift in the economic model of remote gambling away from a reliance on a high spending minority is likely desirable to achieve the government’s objectives and create a more sustainable industry.
