The then-DCMS secretary Oliver Dowden launched the Gambling Act review on 8 December 2020, aiming to rework “gambling laws to ensure they are fit for the digital age as committed to in the manifesto”.
Since then, there have been three new gambling ministers, two DCMS secretaries, a collapse of government and a new prime minister in Liz Truss. The manifesto pledge on which the review’s mandate is based was written in a world before the Covid-19 pandemic transformed British politics, a now radically different world, often jokingly termed “the before times”.
The long-waited product of this process is the Gambling Act review white paper, the Whitehall document which will aim to point the way to legislative reform by recommending a number of specific policy changes. So far, it has faced four significant delays in its release – most recently and dramatically as a downstream consequence of the collapse of Boris Johnson’s government.
Amid the delays there were rumours, reported in The Guardian, that the government may abandon gambling reform altogether in a shift to a more pro-business, anti-regulatory agenda.
This seems to be off the cards for now, but with the government once again seemingly on the brink of collapse, facing threats from without and within, any concrete predictions beyond the latest emergency are hard to calibrate. As reported last week, iGB understands that the white paper is currently due in a few weeks – but to paraphrase Rab Butler, a few weeks is a long time in politics.
Into this mess of delay and confusion both industry and the public are attempting to guess where the dice will fall and make adjustments accordingly.
Divining entrails
How is the industry thinking about the prospects of reform? Charles Cohen, founder of gambling financial compliance services business the Department of Trust, says that industry can be divided into two camps.
“It’s a two-speed response right now. There are some people who have taken the view that they’re just going to do nothing and wait and see what happens,” says Cohen.
“We’ve heard that there’s not much hiring going on in compliance teams. Some operators are trying not to spend any time really thinking about what they might have to change. They’re just sort of knuckling down to do what they need to do to stop being fined by the GC.
“But every day that goes past, there seem to be new fines. And I’m not sure how sustainable that is, that head-in-the-sand approach.
“On the other hand, there are operators who are looking forward to it and thinking that something like this is going to happen and even if this exact thing doesn’t happen, it’s clearly the direction of travel for regulation.
“And therefore [they say], ‘we need to get ahead of it’ and those are the people that are starting to make changes in their operations.”
Many large operators seem to be falling into the latter camp. 888, Entain and Kindred all reported falls in UK revenue in their Q2 reports attributable to more stringent social responsibility measures, which they said should mean the blow from the review itself should be lessened.
“We’ve always been clear that we are in favour of a new gambling white paper,” says Entain director of corporate affairs Grainne Hurst.
Hurst framed reform as an opportunity to tackle the growing black market.
“Obviously we need up to date regulation for the digital age, which we haven’t had for a few years. But we also think it’s a really good opportunity for the government to look at tackling things like the black market, which we know in the UK from a recent report has doubled in both size and scale.”
Tightening oversight
Regulatory penalties and settlements imposed by the Gambling Commission have also intensified as the UK enters the crucible of reform, leaving some operators frustrated.
“Some of them feel like they’ve managed to get away with it, particularly when they relate to historic things that people don’t do anymore,” says Cohen. “They feel that it wouldn’t happen to them.
“But I think in general the impression that I get is that people are frustrated by the fact that they feel like they’re doing absolutely everything they should be doing and yet they are still getting into difficulties. They’re still getting penalised, and the audits and inspections are becoming more and more difficult to satisfy.”
Entain recently paid a record £17m regulatory settlement negotiated with the GC related to historic AML/CTF and social responsibility failings. The operator said that such historic failings would not have occurred under the business’ current responsible gambling system.
“We have said that they were legacy issues and we entered into the regulatory settlement,” says Hurst. “But during the process we’ve been putting in a number of robust new policies and procedures to make sure that those things are not able to happen again in the business today.”
“We’re putting our money where our mouth is and we have made the changes and know that this won’t happen again which we’ve absolutely done. I think people are really proud of the progress we’ve made in the last few years, especially on our Advanced Responsibility and Care (ARC) programme, because it genuinely is industry leading and is working in real time to protect players.”
Checking affordability
Affordability checks are one of the most keenly watched provisions of the white paper. Hard affordability checks – that is to require consumers to upload bank statements and other proof of income before they gamble – have been treated like a red line by some in the industry.
Matt Zarb-Cousin, director of Clean Up Gambling and co-founder of self-exclusion system Gamban sees affordability checks as the standardisation of a current system which is unfair to both consumers and operators who play by the rules.
“Affordability checks are supposed to happen anyway – and there have been Gambling Commission sanctions around affordability checks because limits have been imposed on customers that have been inappropriate and checks haven’t taken place after a certain level of losses. That’s seen to be unacceptable,” says Zarb-Cousin.
“Now, what we were trying to do is standardise that process, because if you are an operator, and you are doing the right thing, what you think to be the right thing, another operator is basically doing a lot less and not being as compliant. Then unless the Gambling Commission takes enforcement action – which we know is sporadic, it’s retrospective and can be seen as the cost of doing business – then you’re at a commercial disadvantage, just by being compliant and doing the right thing.
“What’s really been a shame in this whole process is that debate has been a bit undermined by mud-slinging from the industry’s representatives. Really there should have at least been an attempt to engage constructively with the substance of what we’re trying to do. And instead we’ve had kind of very broad-brush critiques that are centered on just very abstract concepts of freedom and personal liberty.”
Cohen, on the other hand, sees the problem as much a technological problem as a regulatory one.
“So this reminds me a lot of what happened in the early 2000s when the last Gambling Act mandated ID verification before account opening,” he says. “A lot of people won’t remember this, but what used to happen was it wasn’t a requirement, and so typically you’d only really ask for proof of ID at the point where somebody wanted to make a withdrawal or a large deposit.
“With affordability checks, people assume they’ve got used to the idea that a quite hard affordability check means scanning bank statements and wage slips and getting letters from accountants and all that kind of stuff.
“What happened in the early 2000s was it became a requirement. Technology was developed, systems were automated – it became frictionless. Nobody even talks about it anymore. Exactly the same thing will and needs to happen for affordability and I call it financial KYC. Because it’s more than just affordability, it’s also about RG. It’s also about AML. It’s also about fraud. And if operators can efficiently conduct financial KYC without creating a huge barrier to players then this problem will be solved.”
Hurst also stated that frictionless affordability checks are key for Entain.
“The key thing around affordability is that it has to be proportionate,” says Hurst. “We’re fully supportive of the concept and the principal, but it needs to be workable and it needs to be proportionate and it needs to not penalise customers, the majority of whom play with us safely and sustainably as part of their leisure activities. And the key for us is that it has to be a frictionless process.”
Reforming gambling
Updating UK gambling regulations for the digital age has now been a goal for years – with no easy end currently in sight. The next stage of reform will necessarily be about balancing competing interests, to ensure that operators and players both are protected.
“The goal of gambling reform really should always be to have a healthy functioning market, so healthy for operators and healthy for players. And there needs to be a balance in all these things,” says Cohen.
“The smart operators understand that ignorance is not a strategy. Not knowing your customers’ financial position isn’t a sustainable approach. The question is how much do you need to know? Or should you know?
“And some sort of rule-making is necessary in order to really give them guidance. So, I look forward to either the white paper or the consultation because that’s what we need to clear this up.”
For Zarb-Cousin, who has in the past spoken candidly about his own past difficulty with gambling, gambling reform is a chance to build a better way of doing things for the entire sector.
“I’m not campaigning against gambling, which is a misconception. So, in spite of my own addiction, I’m interested in how we better regulate gambling. I don’t have any kind of animosity towards the sector.
“I just want to get this right. I think we can get to a point where the business model isn’t so extractive and destructive. I believe passionately we can get to that point, that’s why I campaign for certain regulations to be put in place.”
