This commentary appears in the Igaming Focus Issue #4, published June 29, 2020.
As igaming gains traction in the U.S., the famously liberal UK seems to be adopting an increasingly cautious attitude to online gambling.
In a report from the UK’s Gambling Related Harm All Party Parliamentary Group (APPG) last week, it was recommended that new controls should be applied to the industry. These included a ban on lucrative in-play betting, a total prohibition on advertising and £2 stake limits on online slots.
These are extreme recommendations in a climate where it is generally believed that the greater the controls placed on the industry, the greater the risk of pushing punters to offshore and illegal operators.
While consumer protection is obviously a cornerstone of any gambling legislation, so is the prevention of criminal infiltration of the industry. Limiting the range of products players can access (particularly in a market that has grown used to them) is likely to create a black market.
While the proposed measures may be excessive, the air of caution is unsurprising. Politically, the UK has swung to the right over the last decade and anti-gambling campaigns appear to be gaining airtime, both in parliament and the press.
That said, Labour’s liberalisation of the industry in 1997 pretty much created open season for online operators. Their affiliate-marketing programs, which by comparison are unlawful in the U.S., helped to push their products to the furthest reaches of the Internet.
Ultimately, a gulf has emerged between those who see greater regulation as restricting the free market and those who argue the prevention of gambling-related harm is a greater priority.
What is interesting about the APPG’s report is that, while it is a cross-party initiative, it was funded by the same individual who financed the campaign to cut stakes for fixed-odds betting terminals in 2018: millionaire former pro poker player Derek Webb.
As an industry insider and games designer himself, Webb has unparalleled insight into not only the working of the industry but the mechanics of the games. He is also a shareholder in Galaxy Gaming, to which he sold his company, Prime Table Games, for $23m in 2011 and, with it, proprietary rights to his successful modern casino game 3-Card Poker.
Some perhaps more cynical critics of his persistent lobbying to curb parts of the market in which he is not active have suggested that Webb is more fuelled by his interest in the land-based casino industry than his desire to reduce gambling-related harm.
However, for many years, the industry has operated in an unhelpfully adversarial rather than a collaborative relationship with its critics.
The us-and-them nature of the debate meant that for a long time, operators kept their heads down and carried on, rather than publicly discussing the measures they had in place to protect customers or admitting there were flaws that needed fixing.
That tide has started to turn in recent years, with high-profile operators such as GVC backing calls to withdraw sports shirt sponsorship and primetime gambling advertising. It appeared to mark a phase of more open dialogue.
At ICE London earlier this year, the UK’s former deputy leader of the Labour Party, Tom Watson, addressed the industry in an opening plenary session in which he appeared to extend somewhat of an olive branch from the side of reformers.
“I’m no prohibitionist, hell-bent on saving souls and closing down the bookies”, he argued. “What I want is a system of regulation which protects the vulnerable, sets sensible boundaries, allows reasonable rewards for the industry, encourages innovation, and lets you get on with your business.”
As deputy leader of the opposition, Watson had been spearheading a review into the gambling industry in the UK, but his resignation in late 2019 left that work hanging in the balance.
The APPG’s report states early on: “We are not against gambling or as some have said ‘prohibitionist’, this is to debase ours and others concerns”. But on the whole, it distinctly lacks the conciliatory tone of Watson’s January speech.
Rather, it claims that its inquiry was launched in response to the significant growth of the igaming industry over the past decade. The Gambling Commission (GC), it argues, “is not fit for purpose”, although in the same breath, it also advocates for the regulator to set affordability limits.
It cites the GC’s submission to the UK’s National Audit Office, which reports that licensed gambling operations in the UK experienced 57% growth over the 10 years to 2018-19, while, the yield from licensed online-gambling operations increased from £1bn to £5.3bn in the 10-year period from 2009 to 2019.
For an emerging market, the UK’s lesson is two-fold: Igaming is undoubtedly lucrative and relentlessly controversial. It is fair to say that the UK’s gambling legislation, based as it is on decades-old law, has not kept pace with technology and does need reviewing in light of the explosion of online gambling activity since 2007.
That is where the U.S. has an advantage. It can now see the pitfalls the UK could never have predicted.
