Bad beat: How the gambling industry is lobbying hard against online betting reform
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Howard Reed is Director of Landman Economics.
Gambling harm is a real problem in the UK. A third of a million of us are problem gamblers. On average, one problem gambler commits suicide every day.
For many, years the gambling industry has been pushing against greater regulation of gambling, fearing reduced profits. In the 2010s the industry lobbied to try to stop the reduction in the maximum stake on Fixed Odds Betting Terminals in betting shops from £100 to £2 (the change eventually happened in April 2019).
So the industry’s main lobbying focus has now shifted to online gambling, which is less regulated than betting shop gambling, with an outdated regulatory structure based around the Gambling Act 2005 (passed before smartphones existed).
With the UK Government about to conduct a review of the Gambling Act which will focus on updating the regulatory framework for online gambling, the Betting and Gaming Council (BGC) – the lobby group for the gambling industry (notithstanding calling itself the “standards body” in its press releases) has been mobilising against tougher regulation. In the latest the BGC claims that there is a “danger of complacency” about the threat from unlicensed and illegal gambling operators.
Behind the spin
The BGC’s claim is based on a report it commissioned from PricewaterhouseCoopers on the scale of unlicensed online gambling in the UK. All gambling companies offering services to consumers based in Britain are required to have a licence from the UK Gambling Commission (UKGC – the industry regulator).
The PwC report (a follow-up to an earlier report from 2019 which was never made public) uses two research methods to look at the extent of illegal unlicensed gambling in the UK. One is an analysis of the results from Google searches for gambling-related terms showing how many unlicensed gambling websites show up in the results. The other is a survey of just over 2,000 active online gamblers in the UK.
The results from the Google search analysis show that unlicensed operators were less likely to turn up in search results in 2020 than in the previous survey in 2018. However, the survey results suggest that the share of online gambling stakes going to unlicensed operators has increased from 1.2% in 2018 to 2.3% in 2020.
While this looks like a substantial increase, it is important to note that the 2020 survey was conducted in November and December, with betting shops closed for most of the period due to Covid-19 restrictions – resulting in a substantial increase in online gambling as it was the only option available. PwC’s interpretation of the survey results does not take these unusual circumstances into account.
In any case, 2.5% is a relatively small share of the market. The UK Gambling Commission – the regulator for the gambling industry – already has a range of tools to tackle unlicensed gambling including blocking payment processing for unlicensed operators and ‘geo-blocking’ UK consumers from illegal gambling sites.
High stakes
The under-regulation of the 97.5% of licensed online gambling is a bigger concern. Online gambling needs limits on stakes and speed of play to bring it into line with gambling in betting shops and reduce the danger to punters.
Instead, the BGC is lobbying against tougher regulation of stakes and speed of play – essentially trying to ensure that the licensed online gambling market will more closely resemble the unlicensed market which they (correctly) characterise as unsafe.
In its forthcoming review of gambling regulation, the UK Government needs to put safety first for online gamblers with a tougher regulatory framework which is more consistent with the £2 stake limit for gambling machines in betting shops.
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