Tottenham Report: Welcome to Topsy-Turvy Land By Andrew Tottenham, Managing Director, Tottenham & Co May 4, 2022 at 10:00 pm ICE, this year, was a slightly muted affair. The online industry was well represented, but land-based suppliers and consequently land-based operators were few and far between. However, some of the periphery networking events (drinks and canapes, etc.) did have a good concentration of representatives from this sector. A number of us “oldies” got together at one of these events, reminiscing past times. We chatted about the industry today and where it stood vis-a-vis public perception and regulatory/legislative change and where it was over 20 years ago. We laughed at the optimistic naivety of those in the industry who had not gone through the experience of the birth of the 2005 Gambling Act with their expectations of the current review. In the UK in March 2002, the government´s white paper, “A Safe Bet for Success,” was published, hot on the heels of the Budd Report, a sensible, dispassionate review of gambling in Great Britain containing recommendations for modernisation of the industry and some proposals for reducing the harm caused by gambling. At first reading, the white paper appeared to be a mainly prudent paper, with many good proposals, some that my clients and members could live with and a few zingers that needed to be changed. The government asked for responses to the white paper from interested parties and received more than 5,000 submissions. In the middle of 2003, taking into consideration (or not!) the responses it had received, the government published the Draft Gambling Bill. Then started the parliamentary process. The draft bill was to be scrutinised by a cross-party committee of 16 members of Parliament and Lords, including a very able chair, John Greenway MP. A great deal of work had gone into the Gambling Bill and much was to be admired. That said, some industry sectors declared all-out war, because it contained a tightening of regulation. We blithely call it “the gambling industry,” but in truth, it is not a cohesive industry at all. It is five warring fiefdoms, each hell bent on protecting its own territory and inflicting pain on the competing sectors. A loosening of regulation in one sector is always seen as encroachment and unfair competition by another. We too were optimistic (and with hindsight, entirely naïve): The government was engaged and open to suggestions, the scrutiny process was a rational procedure, and most of the members of the committee appeared to be quite sensible. I and my industry colleagues believed that if we put forward judicious and coherent proposals, they would be listened to and mainly adopted. I had the opportunity to present evidence to the scrutiny committee three times, once as a representative of Caesars Entertainment, which was interested in the resort-casino opportunity, and twice as the chair of an online-gambling industry group, the internet Gaming, Gambling and Betting Association (iGGBA). Some members of the committee were engaged, asking intelligent questions and making salient points. Others appeared to be entirely disinterested. I am not a supporter of an unelected upper house, but I did admire the work of the Lords on the committee. They took the time to understand the industry, what was being proposed, and the impact it could have. We did not always agree, but they did put in the effort. Looking back at some of the testimony I gave on behalf of iGGBA, I was surprised that many of the things we proposed are only now being mandated and, perhaps, if they had been mandated at the time, the UK industry would not be in the position in which it finds itself today. One part of my testimony about a code of practise for the remote industry is an example. “A 50-point code we negotiated with our members tries to mitigate some of the risks that might be associated with remote gambling. The type of things we are talking about are loss limits and periods where players can self-exclude themselves for periods of time. If they have been playing for two hours, a popup will come on screen and it will say, ‘You have been playing for x number of minutes. Do you wish to continue playing?’ And they actively have to do something to continue. Those are the types of things our members have put in place.” The land-based casino proposals got caught up in a fight between the existing industry that didn´t like the proposals at all and the “interlopers”, large well-capitalised foreign operators, some of whom wanted to carpet the country with as many “resort-casinos” as possible. The existing casino operators enjoyed an oligopoly under the 1968 Gambling Act; the number of casinos was more or less fixed, so each operator knew that competition was unlikely to increase. The new proposals brought in a whole new landscape. The British Casino Association found itself in Topsy-Turvy Land. Having argued for years against the 24-hour cooling-off period and a loosening of the restriction on the number and type of slot machines allowed in casinos, the Association did an about face and started to argue against them, knowing these would be unpalatable to the “interlopers”. Each industry sector was hastily lobbying MPs and Lords, trying to make their case. The Minister at the time, the late Tessa Jowell MP, who had no natural empathy for the gambling industry, saw this piece of legislation as a poisoned chalice and hoped it would just go away. The legislation had been hurriedly written and had to comply with building-planning (zoning) law. Caesars was pointing out that as the legislation stood, any leisure facility with the same use class and 500 square metres (approximately 5,400 square feet) or more could be turned into a slot machine shed. Imagine the number of health clubs and tennis centres that could convert almost overnight. At this point, Minister Jowell wanted to understand what the proposals on the size of casinos and number of machines could mean and sent her civil servants out to measure her local supermarket to get a sense of the size of the floor plate. She was dismayed to learn that something as small as her neighbourhood Sainsburys would fit the size requirement for being converted to a casino. The Act that was passed did not prove to be a good piece of legislation for most industry sectors. I learnt that Ministry and parliamentary processes are not rational; the Act that eventually gets passed is not necessarily a good piece of legislation nor is it a sensible compromise for all of the competing positions. Some bits of the original bill got through, some got amended, and others were struck from the final wording. What was supposed to be a sensibly worded piece of legislation, finely balancing the interests of one sector with another, turned into a dog’s dinner. One sector did quite well. The bookmakers found themselves being regulated by the new Gambling Commission, but they did get four FOBTs per betting shop. They could have had none. The arcade sector got nothing. The remote sector was legitimised and had a fairly loose framework of regulations. The land-based casinos got 16 new licenses (no resort-casinos), but the size requirements, combined with the table to slot machine ratios, make most of them uneconomic. Many of these new licenses are still to be granted due to a lack of applicants. After enactment, it was possible for anyone over the age of 18 to play slot games with a £1 million pound prize (or more) on their smartphone at a licensed online casino, but once they walked into a brick-and-mortar casinos, they had to stop playing on their phone and the only slot games available on the 20 machines in the casino have a maximum prize £10,000. So, if you are expecting the current review of the 2005 Gambling Act to lead to rational new regulations when they are published in the next few weeks, I suggest you look at what happened in 2003 to 2005. It is an entirely unpredictable process where anything can and will probably happen. Welcome to Topsy-Turvy Land!