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Home In-depth Industry self-regulation: myth or reality

Industry self-regulation: myth or reality

ANALYSES 02 Aug 2022
9 min. read

A traffic light showing when pedestrians may cross.

In our conversations with industry stakeholders, many have admitted that the way the gambling industry operates today is diametrically opposed to the way the industry operated a decade ago. Player acquisition has been replaced by a more pragmatic and sobering approach whereby achieving long-term business goals is entirely predicated on protecting consumers.

This thesis is championed by the most prominent figures in the industry, but then again, gambling companies are not "trusted" enough to self-regulate. This beg the question why?

Self-regulation has become a bit of a myth, but then again, there are those who do their best to ensure that consumers are protected because, make no mistake, self-regulation is only measured in terms of problem gambling and gambling-related harm.

Both are still unacceptably high for lawmakers and the people whose family members have suffered because of gambling, which is what makes the topic so sensitive and important at the same time.

In 2019, a number of industry companies, from William Hill to Flutter Entertainment to Entain (then known as GVC Holdings), to bet365 vowed that they will do more to self-regulate, citing investor interest in this. So business interests can also beget a positive change, but can we first try and define what we need by self-regulation – fact vs. reality?

Media and Public Perception of Self-Regulation

In an article published in 2017 and published in The Guardian, the media cited data by the UK Gambling Commission with 78% of respondents saying that they fear there are too many opportunities to participate in online gambling. According to figures quoted by the media, people who thought that gambling should be discouraged continued to grow and hit 55% in 2016.

The numbers have stayed mostly the same since then. The UKGC’s data indicated that during the pandemic, the percentage of people who advocated for keeping gambling less prominent in society rose to 63.4% in 2020 but fell back to 58.9% the year after in 2021. People who agreed with the statement that "gambling was dangerous to family life" dropped from 74.5% to 69.9% between 2020 and 2021.

The numbers that reflect on public perception are interesting, precisely because 22.1 million people gambled in the United Kingdom in 2021 according to official Gambling Commission data, which demonstrates an interesting dichotomy. On the one hand, the people who gamble (defined as having gambled at least once in the surveyed period) are skeptical of gambling and they believe that it should be reduced.

So, even though a market such as the United Kingdom is fairly mature and busy when it comes to gambling, people there still perceive gambling negatively. Despite all of this, companies have remained committed to bolstering their consumer protection mechanisms, but relying on what they describe as an "evidence-based approach."

How Can Self-Regulation Happen in the Gambling Industry?

No doubt, all big companies in the sector are committed to self-regulation and protecting consumers. While mistakes (mostly from older days) continue to surface, the leaders in the sector have broken away from any obsolete business models.

To convince the public, lawmakers, and the families of victims of problem gambling, though, the industry must act and address practices that are questionable and raise worry or are backed by what they themselves describe as evidence.

For example, The Behavioral Insight Team published a media release in which it outlined easily fixable weak points industry operators still hold on to, even though they can be changed quickly. For example, BIT discovered that opening an account at gambling operators took much less time than closing one down.

Several of the biggest operators in the UK had a minimum withdrawal amount. Some lacked age verification prior to registration. All of these practices may appear as minor flaws to the overall offer, but they are easily addressable if there is will. Of course, there is no evidence that all of them would lead to a safer gambling industry, but some of them might.

The fact that you can register without verifying your age first at some operators according to BIT is serious enough to mandate a closer look. But there may be a reason why some issues remain unfixed. There are other innovative ways to do this.

The UK can draw from the example of Australia where a pilot program was launched to notify gamblers about the amounts won and lost on gambling. Another excellent opportunity for gambling companies to demonstrate goodwill and act.

Should All Self-Regulation Be Guided?

Self-regulation is a fantastic idea and for the most part, operators have been able to achieve a lot over the past years. They enacted a whistle-to-whistle ban, preventing gambling advertisements from being displayed during sports events before the 9 pm watershed.

The Betting and Gaming Council (BGC), a mouthpiece for the industry, said that this alone has led to gambling ads seen by children dropping by 97% - clearly a significant figure. The measure was backed by the four biggest companies in the sector, and then by everyone else. It’s important to note that this was a voluntary measure that nobody forced onto the operators, and it was a commendable one.

However, gambling advertisement is generally looked down upon, so the gambling industry sensed that. A survey by the Royal Society for Public Health (RSPH) published in 2021 indicated that an overwhelming majority of the British public wanted a complete ban on gambling advertisements.

The Premier League is currently looking into a similar arrangement whereby teams will voluntarily sever ties with gambling sponsors, even though this could have significant financial considerations for them. Yet, the Premier League is not the gambling industry.

The broader issue here, though, is not whether gambling advertisement is slotted in particular hours of the day. It’s about how to best approach the topic of self-regulation while considering stakeholders’ interests but putting consumers’ well-being and safety first.

To achieve this, self-regulation will need to be guided and yes, companies can still address some issues on their own. They can be self-regulated in making sure that they ask for age verification, that they make the closing of accounts quicker, or that even all money can be released without any minimum withdrawal limits. These are the acts of good that will inspire public trust and demonstrate that self-regulation works on some levels (but not all).

The reason why it doesn’t work all the time is that gambling companies are competitors and dialogues between them will always be perceived with a degree of mistrust by the public. These dialogues are clearly important, though, as they make certain good practices in the industry possible.

But to regulate in a cardinal way, any regulatory framework should emanate from the central government, or in this case, the Department of Digital, Culture, Media and Sport which has delayed the White Paper set to re-regulate the industry. The Augean proportions of regulating the gambling industry have stymied even lawmakers who have been hard at work over the past several years. So, how is the industry regulated in this context?

Wrapping Up: Self-Regulation Still Possible

All in all, self-regulation is possible, but this is the moment we need to approach this statement with pragmatism – much like gambling companies changed their attitude toward customers over the past decade.

Self-regulation is not so much acting beyond one’s business interests, but rather aligning those with consumer protection needs. Yes, the BGC has hailed the fact that the problem gambling rate has remained at 0.2% - but this is no cause for celebration as people continue to struggle.

There have been numerous studies that people from deprived areas are impacted disproportionately. Those are real concerns that need to be addressed. Every year, there are hundreds of suicides registered in the United Kingdom that result directly from gambling addiction and gambling-related harm. Self-regulation would be finding a way to make sure that this does not happen.

Self-regulation is also about working with government and NGOs that have proof of some standards being overlooked. Of course, there are difficult topics to address – affordability checks may be invasive, and they threaten to disrupt channelization but is this really the case?

If so, this brings us to our second point before wrapping up – the government and gambling opponents should do their best to listen to empirical evidence and not try to sway opinions based on prejudice or scoring political dividends. Clearly, issues with gambling persist, but as long as the government pushes in a way that is not based on objective realities, companies may be less determined to act on their own.

Therefore, all self-regulation should happen in the context of a clear-cut regulatory framework and a dialogue of mutual understanding. For the people who have suffered because of gambling, the White Paper in the UK cannot come soon enough. Whether it hits its mark will depend on how willing all parties are to listen to each other and address public concerns.

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02 Aug 2022
9 min. read
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