Igaming Focus: Industry warning — reputation really does matter By Jake Pollard, CDC Gaming Reports November 9, 2021 at 8:00 am Having a good reputation is a valuable asset: U.S. gambling brands can just look to the UK to see what happens when an industry loses public opinion. Attending the event “Reputation Matters: UK Gambling’s Future at Stake” this week was a sobering reminder of how the gambling industry is perceived by the public and politicians on my side of the Pond. That the reputation of the UK gambling industry is at a very low ebb is a fait accompli these days and the reasons for this state of affairs are numerous: operators’ slack corporate practices, inattention to detail and industry infighting among them. The upshot is that the UK government is now reviewing the UK Gambling Act and is under pressure to impose restrictive regulations which could lead to significant regulatory changes to online gaming. These could include deposit and stake limits, affordability checks for players and potential bans on advertising and sports sponsorships. These potential regulatory changes would come on top of a gloomy outlook. Commenting on UK prospects for 2022 during his group’s third quarter results, Peter Jackson, CEO of FanDuel parent company Flutter Entertainment, warned that next year was likely to be negative for the UK sector, whether new regulations came in or not. “It’s hard to imagine the market in the UK will experience any real growth next year,” he said. Steady as she goes For all the doom and gloom, however, there is also expectation that the government’s new gambling regulations, whenever they are published, will not alter the landscape as dramatically or negatively as some might have feared. So far so good on the regulatory front, one could say. On the reputational front, however, things are very different and the industry is perceived by both the public and politicians in an overwhelmingly negative light. And yet, even in this regard things are not as clear cut as they might seem. Polling company YouGov presented data that was highly instructive during the Reputation Matters events. For example, its corporate index showed that even though William Hill was the only gambling name in the index, it ranked 63rd out of 64 companies when it comes to concepts of ‘fairness’ and being ‘proud to work for’. But equally, while 46% of respondents worried about the impact of gambling on some members of the British public, only 18% of them thought gambling should be banned. When it comes to politicians, YouGov’s finding showed that while 51% of UK members of parliament surveyed believed the industry “takes advantage of the public”, 67% of them agreed that some gambling firms were “more responsible than others” and 41% of them disagreed (against 33% who agreed) that they were making no attempt to improve their reputations. The YouGov data overall is not positive about the industry and shows that its main brands are not “spontaneously liked by the public” or that regulations are not tight enough, but this is also balanced out by the fact that there is “no desire to ban gambling completely”. And as the MPs’ responses show, nearly three quarters of them agree that some firms are more responsible than others. There were many more such findings that mixed concerns about the overall social impact of gambling with personal beliefs about the role of regulation, choice, personal freedom or how the industry could address some issues in a more constructive way. What the data also points to is people’s inherent sense of fairness: yes, some gambling companies do not respect regulations or don’t adhere to their own corporate and social responsibility claims, but equally that is not a reason to ban gambling completely and some operators are trying to be responsible. U.S. read-across What does this mean for the U.S. market? The read-across is clear, even if the regulated U.S. industry is much younger than the UK’s and the statistics so far do not tell a story of public angst and poor perception for the gambling industry. Oliver Rowe, director of business and reputation research at YouGov, says only 50% (vs. 69% UK) of U.S. respondents agreed that “gambling firms don’t take the issue of problem gambling seriously” or that just 22% in the U.S. (vs. 57% UK) agreed that “government should do more to protect gamblers”. Rowe said that both the U.S. and UK “have similar levels of gambling participation, in terms of proportion of the public that bets regularly or even irregularly, but attitudes around problem gambling and gambler protection in particular differ quite substantially and this will have to be monitored closely by the industry.” The past week has also shown how industry personalities and CEOs such as Barstool Sportsbook’s Dave Portnoy and Jason Robins at DraftKings can dominate the headlines and effectively “become the story”. With regard to Robins (despite what he wrote on Twitter he is not in the same bracket as Jeff Bezos or Elon Musk), it isn’t difficult to imagine how retail investors or consumers with little knowledge of OSB and its business model might view such statements. Meanwhile Barstool parent group Penn National Gaming’s shares dropped 9% as a result of the group’s missed Q3 forecasts, but this turned into a 20% drop in the wake of the article published by Business Insider about Portnoy’s alleged treatment of women. The analysts at Wells Fargo said the 20% drop in share price “may seem harsh”, but gambling is a highly-regulated industry and such stories invite “unwanted scrutiny and become a major distraction” for both management and investors. Just as important, “timing is also not ideal given recent concerns on excessive USSB marketing/promotions and calls for more responsible gaming.” For many years the UK industry ignored the warning signs (over FOBTs, player protection or AML) and stonewalled many of its critics. The good news for the U.S. industry is that it seems to be fully aware of the risks of not behaving responsibly and there is a clear desire to ‘do the right thing’ when it comes to CSR and RG. Still, actions speak louder than words and the statistics will bear out whether U.S. operators have been true to their word. But the risks are real and U.S. operators must get the balance right, especially when taking account of the competitive pressures at play; in the end, an edifice can come crashing down much quicker than seemed imaginable previously.