Starting in the middle of this deck, just how poor is trust in gambling companies? At 33% in the Gambling Commission’s survey for 2017, public trust levels appear to be somewhat lower than the average for business in general (43% as measured by a different survey, the 2018 Edelman Trust Barometer) but in roughly the same postcode as the Government (36%) and the media (32%). Interestingly, given how much of the gambling industry is online these days, trust appears significantly higher than for social media (24%). On balance then, gambling is not exactly in great shape in the trust stakes but perhaps not so very far out of kilter with large institutions in general.
Context needs to be considered when interpreting statistics – and yet the well-documented erosion of public trust in institutions in the post-crash era (i.e. from around 2008) is hardly ever mentioned when the Gambling Commission survey results are cited (indeed, some of the industry’s harshest critics seem blissfully unaware of their own public trust issues).
Nevertheless, the trend it highlights ought to be a matter of deep concern given that trust is the bedrock of any gambling transaction. If we believe the roulette wheel is rigged, the deck is stacked or the bookie is likely to do a runner, we are unlikely to punt. For this reason (let alone the threat of regulatory intervention), we must do better.
However, simply exhorting the industry to “do better” is not much help. In order to tackle any problem, we must understand its roots – and it is on this point that illumination is required.
For a start, it may be instructive to consider what has changed over the course of the last decade that might have brought us to this low pass. The answer, for much of the land-based industry is that all too little has changed – which is why in a growing number of countries customers are disappearing. In Britain, a handful of larger casinos have been built but – with the possible exception of London’s Hippodrome – none of these are likely to register on the national consciousness. At the same time, arcades and bingo clubs have continued to recede from view. It seems plausible that – lobbying activities aside – the major contribution of these sectors to falling trust is simply a decline in relevance and so advocacy.
The situation could hardly be more different in the remote sector. There have been major advances in hardware and software that – along with ingenuity in product design – have enhanced the betting and gaming experience. Participation rates have grown, and in many jurisdictions the sector now captures a sizeable share of gambling expenditures. There have also been significant increases in advertising for online betting and gaming (as part of wider expansions in marketing).
On the face of it, the factors that seem most likely to have affected public trust in the last decade reside mainly in online gambling. In Britain, these have included complex or opaque T&Cs (including some catastrophic examples of sharp practice); a slow response from bookmakers to allegations of “unfair” account restrictions; patchy dispute handling; non-payment (by many but not all) of domestic gambling duties; and heavy – and at times insensitive – marketing. To this list of remote issues we might add the mismanagement of the FOBT mess by retail bookmakers, industry in-fighting between operators and trade associations and the social media empowerment of the gambling concern lobby.
A quick review of the Parliamentary record appears to support this view, with British political concerns heavily concentrated on remote gambling and betting shops. In the decade from July 2008 to June 2018, 22 written Parliamentary Questions (‘PQs’) submitted to the Government concerned casinos and 16 were about arcades. The number for bingo clubs (74) is higher but the majority of these PQs were supportive calls for a reduction in duty. Over the same period, there were 174 written PQs concerning online gambling and 327 about licensed betting offices (mainly on the subject of FOBTs).
The intention here is not to suggest that the remote and betting shop sectors are at fault; but it is important to understand the changes in market dynamic that may have contributed to the collapse in trust. It seems plausible that increased visibility of gambling along with a shift in activity from ‘softer’ forms to ‘harder’ – both of which reflect consumer demand – have played significant roles.
There is of course one wrinkle with this analysis. If the main causes of falling trust do lie in remote gambling and retail bookmaking, why is it that these sectors have enjoyed such commercial success over the last decade? The Gambling Commission’s own research cites reputation as being the number one factor when choosing who to gamble with. The simple fact is that those sectors that have attracted the greatest political and media concerns have also thrived the most over the last decade. Surveys reflect what people say; transactions tell us what people actually do.
The industry must of course bear responsibility for its fall from (relative) grace. Even if some have done more damage than others, all licensees must accept collective responsibility for not doing more to identify and address the trust issue earlier. However, it would be wrong to blame gambling companies alone.
Governments must accept a large chunk of the blame for the mess we are in. In Britain, the seeming inability of central Government to make and implement policy decisions without ministerial resignation along with the Department for Culture, Media and Sport’s predilection for long-running and often inconclusive reviews has allowed issues to fester, fostered controversy and encouraged in-fighting.
It is also to the British Government’s discredit that for so long it was happy to farm out the regulation of remote gambling to offshore jurisdictions.
It took 20 years from the launch of the first online casino until mandatory domestic licensing for remote operators was introduced into Great Britain in 2014. In 2001, the Budd Report recommended licensing on the point of consumption – yet this was discarded by legislators. Malta, Italy, France, Spain and Belgium (to name a few) established Point of Consumption regimes before Britain got there.
The decision to allow the remote sector to grow up largely in offshore restrictions (especially after 2007 when the new Gambling Act made domestically-based operations possible) is the root of a number of issues that have tarnished gambling’s reputation. Point of Supply licensing (which typically involves importing benefits and exporting costs) creates a different set of regulatory incentives compared with Point of Consumption regimes. This in turn affects levels of oversight, licensee behaviour and ultimately consumer outcomes.
The spate of high-profile licensing breaches and voluntary settlements for remote operators since 2014 stems directly from the British Government’s laxity as companies have struggled to make the transition to the new regulatory reality.
For its part, the Gambling Commission has spent the last four years trying to clean up this mess. Tough regulatory sanctions for licensing breaches have been a necessary component of this process (although as the scale of settlements rises, care needs to be taken to ensure transparency and proportionality). The regulator appears to understand that damage to reputation stings every bit as much as financial penalties – chief executives don’t enjoy having their names dragged through the press on such matters. While the short-term effects of licence reviews may be to damage the industry’s image, they are essential to rebuilding public trust in the long-term.
What is less helpful is blanket criticism of all operators for the failings of some, low levels of recognition for progress where it is being made (although there are some positive signs that this is changing) and the apportionment of market failings solely to the industry. These behaviours distort public trust in gambling and can strain relations between the regulator and those they regulate – to the ultimate detriment of the consumer.
There is a sense that operators are now coming together in order to rebuild public confidence in their industry. Success in this endeavour will rest in part on the level of support and encouragement as well as critical challenge from governments, regulators and other stakeholders.
This is true in all jurisdictions including those where the reputation of the industry has been visibly tarnished in recent years (e.g. Australia, Great Britain, Italy, Ireland and Spain) and those where significant changes to market supply (e.g. the USA) may in time lead to problems if not addressed head on. The approach should also be multi-jurisdictional – not simply because common problems require common solutions but also because reputation is a matter that respects no borders.
It is critical that we get this right. In many jurisdictions, the low trust card is being played in order to justify restrictive regulatory agendas without too much consideration for the interests of gambling consumers.
The advertising debate is a good example of how this is playing out across a number of markets. It is precisely because the evidence base for curtailing the promotion of gambling (based on concerns of harm and effects on children) is so slight that the debate often falls back on the more nebulous question of public opinion. The gambling industry is sometimes complicit in this, backing regressive changes to legislation in an attempt to staunch the flow of negative sentiment. This is entirely understandable from a risk management (and self-preservation) perspective – but the idea that gambling regulation should be determined by what is claimed by some to be the public will, creates a dangerous precedent.
So what should we do about all of this? First, gambling firms must accept (as many are now doing) that there is indeed a problem with what the public at large thinks about the industry – and to commit to addressing the issue, rather than debating whose fault it is. Second, it is critical that regulators and governments work with licensees to better understand issues around trust and to ensure that their efforts are geared towards addressing rather than perpetuating the problem. Third, this has to be about more than virtue signaling and trammeling consumer behaviour – because stopping the ‘bad stuff’ only takes you so far. Rising to the question of what greater good the industry can contribute to society (in terms of consumer enjoyment and economic vibrancy) is where the real challenge lies.