Policy for Applause

I’m the Founder and one of the Trustees for a charity whose focus is the reduction of gambling harms, but all too often I feel like an imposter in this space. Why? Because I’ve not come from a lived experience background. And I’m not an academic in the field. And I haven’t headed-up a responsible gambling team. In fact I came from, and still do, work within the industry.

It doesn’t matter that my job for over a decade has been managing consumer complaints against online gambling operators. It doesn’t matter that I’ve had a very clear look at the consequences of gambling addiction. It doesn’t even matter that for the first 3 years of BetBlocker I did the user support myself and spoke to vulnerable people on a daily basis.

And this is only exacerbated when I find myself actively disagreeing with policies that are being put in place with the stated intentions of reducing gambling harm. Policies that a lay person may find to be innocuous, or even beneficial, and that some voices within the sector have lobbied hard for.

One topic that falls into this category is arbitrary stake limiting, like the ￡2 (under 25s)/￡5 cap being put on slots games in the UK.

However I’ve recently read posts from Jordan Lea and Robert Mabbett , two people whose views I have a great deal of respect for, that closely align with my own.

Strong Opinions Don’t Trump Data

The UK government’s introduction of ￡2 limits for under 25s and ￡5 limits for 25+ is, in my opinion, not simply ineffective, but actively harmful regulation.

From what I can see, figures have been plucked from the air more because they sound tough and conservative in press releases than because of any actual evidence supporting these specific figures being optimal in any way for achieving a reduction in harm. My gut instinct is that there will be a correlation between higher betting and gambling harm, but policy should be based on more than gut instinct. It should be based on data.

Public consultations aren’t data. They don’t make effective policy. They take a measure of public opinion, which isn’t the same thing. Worse still, they are all too vulnerable to both asking leading questions (i.e. steering the responses to the answers the consulting party has already decided on) and over participation from extremely polarized parties (measuring the strength of view at the ends of the spectrum while ignoring the less entrenched views in the middle).

Picking arbitrary numbers at random and using public consultations to justify deploying them is lazy policy making. But what makes it bad policy is the complete disregard for the real world market forces at play that is evident in the structure of this approach.

What makes me say this? The black market.

What is Good Regulation?

Good regulation is hard to achieve. It is a 3 legged stool. It has to protect vulnerable consumers, it has to ensure that the market caters to the demand of regular consumers and it has to ensure that the industry can thrive. These objectives are not all aligned. In fact they are often directly at odds with each other. To support one of these objectives, the regulator often has to undermine another. Finding the balance between them is not easy.

When you get the balance wrong, especially when you fail to meet the needs of consumers, it is almost inevitable that a black market will be created, illicitly and illegally meeting the market demand that your regulated market failed to cater to.

The UK alongside several other countries has a booming online gambling black market. Partially, this is being driven by addiction. Addicts looking to get round restrictions put in place to prevent them reaccessing gambling find a home in the black market.

But this is also being driven by poor regulatory policy within the UK. Take a look at this survey conducted on the Casinomeister forum last year:

The results are striking. Almost half of players who are asked for Source of Wealth information, something that the UK has now required at substantially increased frequency to protect against gambling harms, will simply stop playing with the gambling operator and move on. Another 15% actively avoid licensed casinos to avoid these checks.

On the surface, requiring operators to check if players can actually afford to lose the money they’re playing with seems a sensible policy that will reduce gambling harms. But players broadly HATE these checks, finding them obtrusive and invasive. This isn’t some minor inconvenience. The public generally strongly disapprove of these checks and they vote with their wallets, taking their money elsewhere.

When the product that the licensed markets deliver is unappealing to consumers, the black market wins. This is a classic example of failing to get the regulatory balance right, prioritizing protecting the vulnerable minority to an extent that is extremely off-putting to the majority of consumers and consequently negatively impacting the industry.

Worse still, the most vulnerable to harm are the least likely to be protected by this policy as they’re the most likely to invest time trying to get around any restriction that is put on them. If the licensed market puts additional barriers in their way, the path of least resistance is straight to the black market.

Repeating the Same Mistakes

The new stake limits that are being imposed fall afoul of exactly the same issue. What proportion of players that show no or limited signs of any gambling harm like to place wagers of higher than ￡2/￡5 per spin? I don’t have this data to hand, but I’d be willing to take an educated guess that a substantial proportion, if not the majority of players, exceed these limits. When the regulated market can’t provide the experience that consumers want, we’re going to drive more consumers to the unregulated market.

And then we have the question of whether the policy actually protects the people it’s intended to. Based on years of experience working for BetBlocker, those with the biggest problems with addiction will try hardest to get round the blocks that BetBlocker provides. If this behavior pattern transfers, and there’s no reason to think it won’t, those at the greatest risk of gambling harms will be the most likely to find an illegal operator that won’t impose these wagering limits.

This is policy deployed to appease those that are most vocally critical of the gambling sector rather than policy genuinely intended to make the industry better for consumers. It sounds good in headlines, but it will frustrate the healthy consumer, curtail the success of the industry and it is highly questionable whether it will significantly improve the lot of vulnerable players.