Maybe seems to be the hardest word

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Maybe seems to be the hardest word

Maybe seems to be the hardest word

“Be hard-headed about the facts, skeptical about slick answers and magic bullets, modest and honest about what we know and understand, and perhaps most importantly, willing to try ideas and solutions and be wrong…” – Abhijit V. Banerjee and Esther Duflo

The process of re-regulation in gambling inevitably involves competing interests and ideologies; and a wide array of solutions to problems perceived and real. The more political the discourse is permitted to become, the greater the risk of intellectual intolerance and a failure to establish consensus; and through this the chances of bad policy formulation. In this article, we explore the potential of open-mindedness, honest inquiry and a willingness to meet in the middle to resolve increasingly bad-tempered and dysfunctional debates over the future of regulated gambling.  

Among the things that we lose as we age – our innocence, our hair, our marbles – we also cede some of our capacity for inquiry. Incessant questioning is a necessary – if at times irritating – evolutionary instinct in children (as they seek to understand the world around them); but its diminution is probably essential to survival in an adult world where decisions must be made and sanity kept in check. Critically however, it seems often to be the case that the more complex (and vexed) the problem, the less willing participants are to question what they believe or think that they know.

The preference for certitude over curiosity and the precedence of the statement over the question is to be found the world over in policy debates on gambling – a subject that excites emotion in large measure – whether on sports betting in the United States (regarding for example integrity issues in College sports); the enforcement of product restrictions (in France, the status of RNG products online); or the legitimacy of gambling advertising in any number of jurisdictions.

The recent hullabaloo in Britain over the Gambling-related Harm All Party Parliamentary Group’s interim report on remote gambling provides a useful illustration. It is easy to criticise the APPG’s report – it is riddled with inaccuracy and makes only the barest of gestures towards objectivity – but it is wrong to think that such flaws render its conclusions (largely borrowed from others anyway) invalid. This is because its principal thematic recommendation is simply a call for formal assessment of apparent legislative anomalies; and opposition to review smacks of incumbency and defensiveness.

In particular, the out-of-hand rejection by some industry participants of an examination of maximum stakes, prizes and speed of play online (and the basis of variance from land-based equivalents) seems unsustainable precisely because this most basic of questions has never been formally addressed by British policy-makers and legislators (although the Budd Report in 2001 did recommend that “as far as possible, there should be parity between online and off-line gaming”). The absence of assessment is itself anomalous. Notably, the industry’s rejection has failed to dent the Labour party’s preferred position (indeed, it may have encouraged it), which has put ‘gambling limits’ in its General Election manifesto.

Whether operators like it or not, the fact that there is no maximum stake on online slots games warrants examination. It does not matter how wealthy the individual or how robustly affordability is checked – the absence of any upper limit whatsoever is likely to be unsustainable unless it can be demonstrated that there is just cause for this exemption. The only way that just cause may be established is through testing and analysis. The question of speed of play appears even more clear-cut. Quite why an online slot game needs to be faster than the 2.5 seconds permitted on its land-based equivalent is beyond the understanding or comfort of many legislators and industry observers – particularly as speed of play poses risks regardless of wealth and affordability. Again, a case for the defence can and should be made – but with evidence, not an a priori opinion held more out of concern for revenue impact than a deeper understanding of the issues.

The reasoned response to the APPG’s call for a review and an indicated preference for a £2 online limit is not “no” but “maybe”. We may understand why operators would mistrust a review process (especially given how the APPG has deported itself) but the way to ensure fair play is through engagement rather than rejection.

It is worth remembering that the APPG is not alone in deeming online limits a worthy subject for scrutiny. Under its former Deputy Leader, Tom Watson the Labour Party also made the case for review, identifying the need to create a more complete framework of technical standards for online games – but sensibly refraining from stipulating levels (a rare case of the horse and cart being aligned in a manner conducive to locomotion). The Gambling Commission has recently made noises to suggest that it considers online limits to be a legitimate area for examination. Simply telling these influential stakeholders that they are wrong is unlikely to prove very persuasive. Other jurisdictions, such as Belgium, Spain and Norway have implemented or are looking at statutory limits for online gaming. Operators ought not to assume that there is any divine right to the commercial freedoms permitted under the old ‘Point of Supply’ licensing regimes – and kicking against enquiry is more likely to usher in ‘extreme’ solutions than not, in our view.

One of the great mistakes of UK betting shop operators during the FOBT saga was their failure to conduct any live trials of lower machine stakes or other meaningful solutions (or to engage effectively with those researchers who wished to run such tests). The result was that the reduction in maximum stakes from £100 a spin to £2 a spin became a political rather than a scientific decision (a decision that has had negative knock-on effects across the UK industry, including a rise in remote gaming duty and now the pressure to harmonise online stakes at the same level). The dearly departed Association of British Bookmakers lamented the lack of evidence-based policy-making on FOBTs; but the dearth of evidence was at least in part the fault of the sector it represented. Given that A/B tests to assess consumer responses to different limits ought to be even simpler online (and often more insightful given the opportunity for data capture), a refusal to experiment is a mistake that operators must not repeat – in terms of providing a meaningful evidence base and getting ahead of politicisation.

Ideological opposition to even consider the question of limits sits uneasily with claims by some operators of a zero-tolerance approach to gambling disorder and harm. Meanwhile, the idea that the development of other initiatives (affordability testing for example) will negate the need for online limits smacks of an ‘operator knows best’ mindset that the industry has not yet earned the right to claim. That multiple trials of game safety design are taking place is undoubtedly positive; that these experiments do not consider the most basic structural characteristics of stake and speed may stretch credibility.

By the same token, it should be acknowledged that the industry’s critics on the APPG are just as culpable of stunted curiosity. Its report does not make a compelling case for a £2 maximum stake online and in jumping to a conclusion that pre-empts analysis the group’s members appear guilty of trying to influence events rather than letting the facts speak for themselves. Meanwhile, the valid risk of leakage to a black market (with its attendant social and economic damage) is left unexplored despite ample opportunity to do so during the inquiry. The call for a review is sensible; the proposal that limits should be reduced to just £2 is unsupported by evidence or any sense of curiosity about how this would affect recreational consumers or the secure channelization of gambling activity.

It is likely that a deficit of trust and a desire to control outcomes underpin the absence of curiosity amongst participants of all stamps. The sad fact is that the policy debate on gambling regulation in Great Britain, as in a growing number of other territories, is being conducted against an ideological and at times breath-takingly dishonest backdrop. The failure of those in positions of regulatory-political leadership to create conditions of trust and an environment for scientific debate means that operators are justifiably wary.

The challenge for governments and regulators is to de-politicise as far as possible the question of gambling re-regulation. Political agitation is at times necessary in order to focus attention on problems that need fixing; but it is unlikely to lead to coherent and balanced policy-making. For that we need calmness; intellectual and moral tolerance; and scientific rigour and curiosity to prevail.

Legislative review ought not to be a one-way street. There are aspects of gambling regulation that appear to work against the best interests of the customer at large, that frustrate the legitimate ambitions of industry and may indeed result in negative unintended consequences. Analysis and experimentation should be used for progressive as well as reductive purposes. If for example, land-based casinos or betting shops wish to modernise their product offerings, there ought to be a mechanism that permits trial and assessment (the failure of both the British Government and the casino sector to review the effects of the very limited expansion of casino gaming under the 2005 Act is particularly disappointing). Dogmatic opposition to the notion of positive reform prevents operators from being able to adjust products to consumer tastes and thus results in restriction effects (an economic and social cost of excessive regulation). Those who reject on principle any expansion of gambling in fact seek prohibition through obsolescence. Small-scale tests could be used more widely to help free up regulatory and legislative paralysis where matters of both positive and negative well-being are at stake.

Like it or not, we all need to accept that gambling legislation in jurisdiction after jurisdiction is going through a necessary process of review. Legislative frameworks designed around the licensing of venues are belatedly being forced to adjust to accommodate the challenges posed by digital technology. The most that we can hope for is that review is conducted in a coherent, coordinated, scientific and tolerant method; and to accept that none of us has a monopoly on wisdom. Resistance to this course is not only futile but likely to result in poor outcomes.

In his book, ‘The Undoing Project’, Michael Lewis describes how the psychologist and Nobel Laureate in Economics, Daniel Kahneman approaches scientific theories by asking “what would it take to make this a good idea?”. The application of Kahneman’s philosophy to disagreement – first identify the common ground and then ‘trade’ differences – has much to recommend it within the gambling debate. Responding to uncomfortable proposals with an open mind – to adopt the principle of ‘strong opinions, loosely held’ – is a sign of wisdom.

In practical terms, we recommend that licensees consider four questions regarding how they might engage more effectively in addressing a growing number of political and public policy issues:

  1. Are the concerns raised by critics valid, however impractical or misguided their proposed solutions might appear?
  2. How can operators use data, insight and evidence to enrich (rather than close down) debates on these matters?
  3. Are the counter-solutions proposed evidence-based, tested and proportionate?
  4. How can a given gambling sector or licensee work effectively on the issues identified with similar licensees in other jurisdictions or domestic licensees from other sectors? (to assist effective learning at least as much to stop setting fire to one’s neighbour’s house…)
These shouldn’t be difficult or taxing – but following them might just allow gambling to regain some credibility in the eyes of lawmakers and the public and so re-join a debate it is in danger of being excluded from.

Further reading – see our 2016 article on the critical importance of embracing fallibility: https://reguluspartners.com/index.php/2016/11/15/the-great-gambling-review-fight-for-your-right-to-be-wrong/