Contagion By Andrew Tottenham, Managing Director, Tottenham & Co April 10, 2019 at 2:45 am Four recent pieces of news from around Europe are all related, although they are about events in four different countries. Firstly, the Mayor of Riga, Latvia, not content with the closing of gaming halls (arcades with casino style slot machines) in the Old Town of Riga, has now demanded that most gaming venues in Riga be closed, excepting those in 4-star and 5-star hotels. In Latvia, casino and gambling hall operators require two permissions in order to open a venue. One is a license from the State regulator to say that you are an approved operator; the other is a premises license issued by the municipal authority, the latter valid for five years. The Mayor is asking the City officials not to renew premises licenses and so if the Mayor gets his way, over a five year period all targeted gaming venues will have to close. How did they get here? It’s a familiar story. There was no ability within the law to limit the number of gambling venues, so they popped up everywhere. At last count there were five casinos and over 120 gaming halls in Riga, a city with a population of 640,000. In all of Latvia in 2017, there were seven casinos and over 300 gaming halls, generating over €200 million of GGR. The two biggest operators in the country are Novomatic and Olympic Entertainment, who stand to lose a significant part of their business there. Will it stop at Riga or will other cities follow suit? Secondly, a city councilman of Bucharest, Lucian Iliescu, is proposing that all gambling and betting halls that are located on the ground floor of apartment buildings should be closed and moved to a gambling area outside of the city. Currently, the only restriction on land-based gambling operations is that they should not be near educational, religious or cultural institutions. According to news site G4media.ro (https://www.g4media.ro/salile-de-jocuri-de-noroc-de-la-parterul-blocurilor-ar-putea-fi-exilate-la-marginea-bucurestiului-intr-un-cartier-al-jocurilor-de-noroc-in-capitala-sunt-1-250-de-asemenea-sali.html), there are about 1,250 gaming and betting halls in the city and 13,000 countrywide! Interestingly, the national regulator, ONJN, came out against the initiative, saying that the loss of jobs and taxes could be substantial. In 2017, Romania collected €275 million in taxes from gambling. Thirdly, the Mayor of Voluntari, a town on the edge of Bucharest that is really a suburb, is holding a referendum at the end of May to decide whether gambling should be allowed within the town limits. He wants to close the 30 or so gambling halls in his town of 43,000 people. And finally, although only partly related, in the U.K. Paddy Power and BetFred were forced by the regulator to withdraw two games that they had introduced on the day that the £2 maximum bet limitation on FOBTs came into force. They had created a game which was a hybrid; it involved betting over the counter on the outcome of a virtual wheel. There are no limits on the size of bets made over the counter, so, perhaps, the person who dreamed this up thought they were being very clever by devising a cunning method to thwart the new regulations. Or maybe they were just trying to draw attention to the ridiculousness of regulations that limit bets based on type and location. Whatever their reason, the idea blew up in their faces. The regulator blocked the new games, and the news media were unanimous in the contempt they showed for both companies, further undermining any public and political support the gambling industry might have left. Neil McArthur, the Chief Executive of the Gambling Commission is on a roll, and he is not going to stop. It is open season at the moment, with gambling machines in arcades, bingo halls and casinos and online gambling all being reviewed. I wouldn´t be surprised if further limitations are introduced, for example on stakes and prize limits, or the acceptance of credit cards. These could seriously impact the industry. What links these four pieces of news is that unless the industry starts to really take notice of public opinion and addresses the concerns of the public, it will be in for a nasty shock. Paddy Power and BetFred have created more political and public support for further restrictions on the industry in the UK. And at the moment, it is hard to argue that gambling machines in bookmaker premises should have a £2 maximum bet when there are no limits on the same types of games on mobile phones. Or that people cannot gamble on credit but should be able to continue to use credit cards to gamble online. The Romanian gambling industry may think that the calls for moving or closing gambling venues are just populist moves by politicians, and that nothing will come of it. They should talk to the industries in Latvia, the Czech Republic, Slovakia, Italy, and Germany. They too started with one politician coming out against the amount of gambling that was freely available, and saw things snowball from there. Experience in other countries shows that trotting out the old chestnuts of job losses and reduced tax collections does not cut it any more. Operators need to show that they can be trusted, which is hard to do when some make a mockery of regulations designed with the intention of reducing harm. Unfortunately, it’s not just about the bad actors, because many responsible operators are getting caught up in this. Legislative and regulatory restrictions are non-discriminatory – they impact all operators, and increasingly regulators are happy to act across all sectors. The industry, and I include all sectors of it, needs to get ahead of the curve, otherwise look out for more closures and operating restrictions in yet more cities and countries.