The gambling industry and problem gambling

What does the gambling industry have to say about gambling, and what measures are being put in place to make sure they’re taking a more active role in helping problem gamblers? Dan Waugh is a partner at gambling consultants Regulus. He previously worked as a director at the Rank Group – which is the UK’s leading operator of casinos and bingo clubs…

Dan – Placing bets on betting websites is perfectly legal. I don’t think the activity is to stop people doing it. The focus of activity has to make sure that people are doing it, they’re fully informed of what they’re doing, and the protections are in place to prevent vulnerable people from suffering harm.

James – How do you answer the challenge that the relevant demographic here when it comes to the gambling industry are these problem gamblers? A huge amount of their revenues are derived from people who suffer harms related to gambling, and so it’s not in their interests to address gambling related harms, and we need to force them with stricter regulations?

Dan – I would say any industry that is not focused on the wellbeing of its consumers will not last as an industry for very long. I think it’d be incredibly shortsighted and misguided if the industry was focusing on problem gamblers. I don’t think they are, and I think we’ve seen various claims about the proportion of revenue that comes from problem gamblers. I think they are demonstrably unreliable. We would expect some people with problem gambling to spend more than the average, but I think the idea that the industry is dependent upon revenues and problem gamblers is unsupported by any hard data.

James – According to research from the University of Liverpool, when it comes to online gambling, 86% of profits come from 5% of customers. And I put it to you that those are people who are likely to be suffering from harms of gambling and it is not necessarily in the industry’s interest to deal with problem gamblers, they are very reliant on them to make themselves viable businesses.

Dan – Well, that figure is from a very high quality study of about 140,000 online betting accounts. It relates to online sports betting alone. An important point has to be made here when you’re looking at these distributions which is that, unlike most other activities, a meaningful proportion of people who bet will end up in profit. And in that particular study, I think 23% of the accounts they studied were actually in profit over the course of the year, so that automatically skews the distribution. I think from memory it was about 83 pounds a month to be included in that top 5%, so I don’t think the fact that a large proportion of revenues are coming from a small proportion of customers is necessarily an issue. A bigger issue is whether the industry is generating large amounts of revenue from people who are experiencing harm. I don’t think that study at the University of Liverpool would be able to inform you one way or the other about that.

James – Okay. But let’s talk about the people who are daily spending hundreds or even thousands of pounds using online betting websites. What’s being done to curtail that and to stop the related harms?

Dan – So, under the regulations, online operators have a requirement to monitor customer activity in order to identify potentially harmful behaviour. The government has consulted and the Gambling Commission consulted on bringing in what are called affordability checks. Thresholds will be set across the industry which indicate at what levels operators have to interact with consumers.

James – What are the proposed thresholds on those affordability checks?

Dan – Yes, the proposed thresholds are that anybody spending more than 1000 pounds within a 24 hour period, or more than 2000 pounds over a 90 day period, would be subject to extra checks to ensure that the money they were spending was theirs and was affordable.

James – So they kick in at 1000 pounds a day, 2000 pounds across 90 days, would this just be for that one particular website the customer is using or is this tracked across all betting sites? So, to put it another way, could someone lose 900 pounds across three days on three different websites, which I would argue is a strong sign of problem gambling, and slip through the net of these checks?

Dan – Yes, that could certainly happen. The operators’ checks take place at the level of the operator. If somebody’s betting with Paddy Power and also betting with William Hill, the operators wouldn’t see the full picture. That’s certainly the case. I don’t know whether necessarily somebody spending 3000 pounds across three operators is necessarily a sign of problem gambling. It would certainly indicate elevated risk. This is the only form of consumer activity where these tests are applied, so there’s always got to be a balance between these things, and generally consumers don’t like providing things like bank statements and tax returns in order to spend their money. So I think it’s important to recognise there is a balance here, and this is quite a unique system that’s being proposed.

James – There really seems to be no shortage of gambling companies and ways of gambling out there. Half the Premier League teams have one company or another on their shirts as of fairly recently, and with all the signup offers that are very attractive to new customers, that’s why I wanted to raise this point.

Dan – I think all bar one maybe of the Premier League sponsors are overseas gambling websites that nobody in this country would use. They’re being marketed to people in Asia or Africa. Also, the Gambling Commission is taking action as a result of the government’s white paper on things like sign up bonuses. So the idea that there is no regulation around this stuff or ‘it’s very light touch regulation’ started to change somewhat, and if you look at the full range of measures that are coming out of the white paper, I think the environment for the gambling consumer is changing into a very much more restrictive one. These things should be borne into mind when you’re thinking about what is appropriate regulation and what are the balances between protecting some people and allowing freedom to others. You could, for example, make a similar argument that pub companies should track alcohol consumption because some people do experience negative consequences in that domain. So I think we’ve always got to balance what is appropriate and proportionate in a free society.