BackgroundGambleAware is an independent UK charity tasked to fund research, prevention, and treatment services to help to reduce gambling harms. The charity asks all those who profit from the gambling industry in Great Britain, whether or not they hold a licence from the UK Gambling Commission (UKGC), to donate a minimum of 0.1% of their annual Gross Gambling Yield (GGY) directly to GambleAware. In addition, GambleAware receives a proportion of monies derived from regulatory settlements resulting from UKGC enforcement action against licensed gambling operators.This voluntary “RET” (research, education, and treatment) donation-based system was agreed after the Gambling Act 2005 came into force and is underpinned by the Gambling Commission’s LCCP Social Responsibility Code Provision 3.1.1.(2).Donations do not have to be made to GambleAware. Operators can choose instead to donate to other organisations that research into the prevention and treatment of gambling-related harm, develop harm prevention approaches, and identify and fund treatment for those harmed by gambling. Those other donations are not reflected in GambleAware’s figures.In January 2017, the Responsible Gambling Strategy Board estimated that GambleAware would require a minimum of £9.5 million in voluntary donations in 2018/19, plus running costs, to implement its commissioning plans.At the beginning of May 2019, GambleAware announced that it:
- had in fact received voluntary donations totalling £9.6 million during that period, plus an additional £7.3 million from regulatory settlements agreed between the UKGC and licensed operators against whom it had been taking enforcement action, and
- would require a minimum of £10 million during the 12-month period ending 31 March 2020 in order to meet its existing commitments, as a result of which its guideline for gambling industry donations for the current 2019/20 year would remain a minimum of 0.1% of annual GGY.
Is 0.1% of GGY enough?In its announcement, GambleAware said that its response to the UKGC’s National Strategy to Reduce Gambling Harms, which had been published the previous month, would require “a significant step-up in funding from April 2020”.It was not just GambleAware that was asking for more. When launching the new strategy on 25th April, the UKGC confirmed its continuing support for a statutory levy to replace the voluntary donation-based system, its Chairman saying that: “no-one will be able to plan properly to deliver this strategy if prevention and treatment continues to be funded by voluntary contributions from industry or regulatory settlements following licence breaches”. He will have had in mind the evidence of cross-party support for the Labour Party’s September 2018 proposal to introduce a mandatory levy equivalent to 1% of each gambling operator’s GGY – a tenfold increase from the current 0.1% – in order to develop “a truly ‘world class’ RET framework”.Industry responseIn December 2017, in what at the time seemed like a knee-jerk reaction to calls for imposition of a mandatory levy and growing concerns about the risks of harms associated with online gambling, the Remote Gambling Association called on the UK Government to introduce a statutory levy to replace the current system of voluntary funding for RET.Explaining this change of stance, its then-Chief Executive, Clive Hawkswood, said: “There has been much to commend in the voluntary funding system, but if we are to combat problem gambling to the best of our ability and to minimise gambling related harm, then now is the time for change and for a fresh start. We are all disappointed that the current system has been the subject of so much criticism and has struggled with fundraising, but we need to put that behind us …. A statutory levy will ensure the right funds are raised in a fair and open process and, crucially, that they are allocated in a way that is transparent, independent, and achieves measurable benefits”.Parliamentary, public, and media criticism of the UK gambling industry mounted throughout 2018. In February of that year, the UKGC advised the Government that “the [RET] funding requirement is likely to increase significantly as we gain a better understanding of appropriate treatment provision, and of what an effective education and prevention programme would look like. There is a strong case for implementing a statutory levy if the industry cannot provide what is needed voluntarily”. In December 2018, the then-Minister for Sport and Civil Society, Mims Davies, warned: “if it turns out that the voluntary system is not capable of meeting current and future needs, we will look at alternatives. Everything is on the table”. In April of this year, in what was widely perceived as an effort to stave off the risk of a statutory levy being introduced, GVC Holdings PLC, the global sports-betting and gaming group and owner of Ladbrokes and Coral, announced an increased investment on its part in RET, stating: “Having been the first and only operator to commit to doubling spending on RET (Research, Education and Treatment) to 0.2% of UK gross gambling revenue in 2019, GVC has today committed to raising this to 1% by 2022 – ten times the current minimum requirement”.Then, on 2 July 2019, it was announced that following discussions with Government, five of the UK’s leading betting and gaming companies – William Hill; Bet365; GVC; Flutter (formerly known as Paddy Power Betfair); and Sky Betting & Gaming – had agreed to:
- increase tenfold over the next four years the funding they give for treatment and support for problem gamblers, equivalent to approximately £60 million in total
- work with Government departments and providers of existing services, including the National Health Service, to determine how best a cumulative total of £100 million might be deployed to support increased provision of counselling and other support services for problem gamblers
- increase safer gambling messages in their advertising, support dedicated campaigns, and review the tone and content of all their marketing, advertising, and sponsorship,
- report publicly on progress on all of their commitments in their annual assurance statements to the UKGC, including confirmation of the payment of the 1% voluntary contribution, and
- continue to share data to protect problem gamblers from experiencing further harm.
On behalf of all five operators, William Hill Chief Executive Philip Bowcock expressed his hope that “this begins a new era of cooperation within the industry and between the industry and experts, charities, Government and the regulator to promote safer gambling and minimise the risks”.Will it be enough?Tom Watson, MP, the Deputy Leader of The Labour Party, thinks that more is needed. Following the announcement by the “big 5”, he said: “the gambling market is broken and it’s up to the Government to fix it. We don’t just need a voluntary patch, we need a full overhaul of the rules and regulations”.Other Parliamentarians have expressed concern that the announcement by the “big 5” has let other operators off the hook. The UK Government has disagreed, stating that the position is “quite the reverse: it demonstrates that if those five companies can do it, so can others. It is important that all others across the industry look carefully at the proposals and that we hold them to account for producing a similar commitment”.Whilst larger operators – both online and land-based – may be able to withstand such an additional financial burden, already narrow profit margins for smaller operators are likely to be further eroded. For some, their continued commercial viability will come into question, particularly in light of ever-increasing compliance costs as further regulatory restrictions hit home. Cue consolidation, lesser choice for customers and, potentially, the stifling of innovation in the UK market.What else next?I think it can be confidently predicted that, for at least the next three months, the UK Government will have higher priorities than addressing issues of gambling policy. However, dependent on its result, a snap General Election might well foreshadow a very harsh crackdown on UK licensed gambling operators in the future, including introduction of a statutory levy.In the meantime, let me comment on three other major issues looming on the regulatory horizon.The first is advertising. The 1st of August is the implementation date for the “whistle to whistle” ban on all TV betting adverts during pre-watershed live sport (starting five minutes before the event begins and ending five minutes after it finishes) and the bookmaker Paddy Power has introduced the concept of “sponsorless shirts” with its controversial “Save Our Shirt” campaign. However, considerable threat remains of further restrictions being compulsorily imposed on gambling advertising in the UK unless the tide of public opinion turns the industry’s way.The second is gambling with credit cards. The UKGC has recently announced that it will be holding a twelve-week consultation beginning mid-August on the issue of gambling online with credit cards, stating that “gambling with borrowed money is known to be a risk factor for consumers, so we think there is a need for action. This consultation will help us decide what that action should be”. I am not alone in believing that, unless a good convincing argument otherwise is advanced in response to the forthcoming consultation, such a ban is likely to be imposed.The third is affordability. Some major online operators seem to consider a more important battleground than credit cards will lie in the area of affordability checks which, if mandated, will require limits to be set on customers’ spending until such checks have been satisfactorily conducted. Although the UKGC has yet to formally commit to imposing a requirement for affordability checks, I fear that this could happen on the back of the inevitable forthcoming changes to customer interaction requirements, unless operators take heed of the UKGC’s warning in this year’s Enforcement Report. The warning: that operators should “revisit their framework on [social responsibility] triggers and consider their customer base and their disposable income levels as a starting point for deciding benchmark triggers” on the basis that this “would help ensure vulnerable customers are identified as early as possible and interacted with appropriately”.With increased future RET donations impacting the bottom line, I am sorry to say that each of the above (and whatever else the regulator has in store) is likely to cause severe financial headaches for an industry already considerably under storm.dc@cliftondavies.comwww.cliftondavies.com
