Steve Donoughue: We’ve got five years to save Britain’s gambling industry

By Gambling Insider

This article originally appeared in the November/December edition of Gambling Insider magazine: Steve Donoughue, who oversees Britain’s foremost gambling licensing & compliance advisory service, tells Gambling Insider his thoughts on the Gambling Commission and the impending review of the Gambling Act 2005. The writer's views are personal and not necessarily representative of the publication as a whole.

Pushing through the market square, 

So many mothers sighing. 

News had just come over, 

We had five years left to cry in.

In 1972, David Bowie released the opening track of his seminal album, The Rise and Fall of Ziggy Stardust and the Spiders from Mars. Called Five Years, it introduced the overarching theme of the record: an impending apocalyptic disaster that would destroy earth in five years.  

It might seem a bit hyperbolic, but with the current pandemic crisis, increasing tensions between  America and China, China and India, Russia and the rest of Europe, Brexit and global warming, that this almost 50-year-old song still can serve as a cautionary tale. But my argument is that Britain’s gambling industry alone has five years to save itself before the forces of prohibition gain victory and we become akin to how Ukraine was, with a thriving gambling industry, but almost all of it on the black market. 

You may ask how could such a proud nation as the UK, which once had a gambling industry and regulatory environment the rest of the world envied and wished to emulate, stray so far away from the basics of sensible regulation that encourage operators to operate in a licensed and taxed marketplace. The answer is the rise of populism, the ascent of poor leadership, the acceptance of radical ideology and dogma and a rejection of liberal values such as a belief in the scientific method and the need for evidence and the freedom to do what you want without harming others.

My belief that we only have five years left is based on the fact that the government has started the wheels moving on their review of the Gambling Act 2005. As of late September, the Gambling Minister, Nigel Huddleston MP, called in stakeholders to discuss how the review will be shaped. There have even been reports in the press that No. 10 will be leading the review. 

Why five years? Because that is how long it took for the last review of the gambling laws, the Budd Review, to be initiated, completed, published and turned into legislation, as the Gambling Act 2005, which received Royal Assent 7 April, 2005. Previous reviews took even longer to be turned into law. So if the government decides on a full review, we can expect a new Gambling Act in about 2025. 

Bizarrely, we have less to fear from a review than we do from what the Gambling Commission may conjure up in the intervening time. If the Budd Review and previous Royal Commissions are anything to go by, they generally give gambling a fair hearing. There is an independent panel of the great and good appointed, usually with little knowledge of gambling but with reputations to preserve. They thoroughly examine the evidence before them and consider all views. As chapter three of the Budd Review, The Central Dilemma, shows us, this often leads to differing views among the review panel, but usually they come out with quite a sensible compromise. 

In a number of cases the review panellists show up the lies, misinformation, twisted reasoning and falsified data so often deployed by anti-gambling groups. This is something that’s been completely missing from the reports that were published over this summer, such as those by the Gambling Related Harm All Party Parliamentary Group and the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry. This could be due to the preponderance of overtly anti-gambling MPs who wrote those reports. We must never forget that there is a large anti-gambling lobby in Parliament.

"The cornerstones of the Commission’s approach to problem gambling are the customer interaction policy and affordability, neither of which comes with any clear guidance, explanations or details of how they should be implemented. Operators are expected to just develop systems themselves, at enormous cost, and hope they fulfil what the Commission is trying to achieve."

And this is my point, we know that politicians have become more populist and more prone to voting for an ideology rather than with what the evidence shows. We take it as a given that the anti-gambling groups driven by grief or revenge, militant academics seeking more grant money, and activist problem gamblers wishing to pass the blame for their own actions will all bring gallons of emotion but teacups of evidence to the debate. With an independent panel providing a review based on evidence, facts and logic, this industry has at least some hope of emerging in 2025 some way intact. But considering the industry’s reputation so blackened by the fixed-odds betting terminals debacle, mostly due to the land-based industry’s short-sightedness, this is only a faint hope that the conspiracist concerns of the populist politicians will be solved.

Our biggest problem, however, is the regulator who seems determined to destroy what it was set up to protect. It's a historical fact that the regulator has had difficulties in its relationship with the industry. The Commission has adopted a Stalinesque approach, demanding that every utterance be considered of regulatory importance and moving away from issuing clear and concise regulations.

The cornerstones of the Commission’s approach to problem gambling are the customer interaction policy and affordability, neither of which comes with any clear guidance, explanations or details of how they should be implemented. Operators are expected to just develop systems themselves, at enormous cost, and hope they fulfil what the Commission is trying to achieve. It is arguable that the Commission doesn’t really know what it is trying to achieve as with all regulations brought in, there is no testing to see if they have worked or not. Even the considerably prohibitionist Public Accounts Committee and National Audit Office picked up on this in their highly critical reports on the Commission published in February and June 2020.

This was taken to the extreme recently, when the arguably-illegal Covid-19 regulations were imposed in May without any consultation as required by s24(10) of the Gambling Act 2005. A series of bullet points have hamstrung the industry and increased the regulatory burden by at least 100%. This was predicated by the un-evidenced belief that the Covid-19 lockdown would cause a massive increase in problem gambling. What little research the Commission conducted showed a minuscule increase in gambling by a small customer demographic. Subsequent research has shown no evidence of the foreseen tsunami of problem gamblers. Considering the Commission has not rescinded the emergency regulations, a cynic would think that it was the Commission using the opportunity of the pandemic to increase the regulatory burden. It is also important to note that if the Covert Human Intelligence Sources (Criminal Conduct) Bill currently progressing through Parliament passes, then the Commission is free to break the law as often as it likes. 

However, where the Commission really shows itself as the biggest danger to the future of a licensed and taxed gambling industry is its introduction of Experts by Experience and the proposed new rules to be imposed on VIP schemes.  

The key to the folly of Experts by Experience is in the name. The suggestion that someone is an expert in anything, just by experiencing it, is clearly ridiculous to anyone brought up in the enlightenment tradition of the scientific method. That may be because the concept of lived experience comes from postmodernism, which rejects the idea of scientific fact in favour of the nebulous concepts of the primary importance of language, feelings and beliefs.  

Obviously there is merit in letting gamblers have a voice, but this would logically imply a representative panel of 99 happy, normal gamblers and one problem gambler, not the group of activist problem gamblers the Commission has allowed to have a major part in the policy decision making process. The last time I looked, the nuclear regulator did not have Greenpeace making nuclear policy nor do we have alcoholics deciding licensing laws. But this will get worse as the Advisory Board for Safer Gambling, an on-the-face-of-it body of eminent academics that advise the Commission on problem gambling, are the ones not only promoting this hare-brained dogma but recommending that problem gamblers be involved at every stage of gambling policy. Anti-gambling, if it wasn’t clear already, will be blatantly at the heart of our industry’s regulator.

The Commission’s proposed new regulations for VIP schemes expect an operator to ascertain from a new member of a VIP scheme the following:  whether they are experiencing poor physical or mental health, physical or cognitive impairment, suffering side effects from injury, medication or addiction, and whether they are experiencing financial difficulties, are suffering from domestic or financial abuse, have caring responsibilities, are experiencing a life change or sudden change in circumstances, and whether they have a higher-than-standard level of trust or high appetite for risk. In short, the gambling industry must recruit an army of trained psychologists and convince their potential VIPs to spend hours on the couch with them before they bet one solitary pound. This is even before the financial declarations that would be needed on a scale greater than that needed for preventing money laundering. 

So why would the Commission introduce such rules, which are so obviously impossible to implement? 

My suspicion is that after adopting a national health approach to problem gambling, the Commission just wants to reduce the number of gamblers. Technically, a national health approach to anything is about reducing its frequency. The other national health approaches are on drugs, alcohol, smoking and knife crime. The Gambling Commission sees all gambling having the potential for harm, so by reducing the amount of gambling, you theoretically reduce the amount of harm. This isn’t based on any evidence and ignores research into the genetic and psychological causes of problem gambling. It just blankets all gambling as toxic and a cause for harm.

"Obviously there is merit in letting gamblers have a voice, but this would logically imply a representative panel of 99 happy, normal gamblers and one problem gambler, not the group of activist problem gamblers the Commission has allowed to have a major part in the policy decision making process. The last time I looked, the nuclear regulator did not have Greenpeace making nuclear policy nor do we have alcoholics deciding licensing laws."

My belief is that the Commission realises that after 20 years, the number of problem gamblers hasn’t changed, while the amount of gambling has doubled. This would imply that the number of platforms for gambling doesn’t actually cause problem gambling at all, it’s either genetic or psychological. The Commission doesn’t have the levers to pull to reduce problem gambling numbers; it can’t rewire the brains of the broken. But its political masters and the moralising press are constantly hounding it to reduce numbers. 

So why not impose a regulatory regime that just allows for recreational gamblers, the guys gambling £25 a week or so? As we all know, the more robust a gambler, the higher the likelihood that they will turn into problem gamblers (albeit in no way certain). So introduce mandatory loss limits at a very low level, as already imposed in Sweden, and make operators undertake intrusive investigations about every aspect of a gambler’s life if they want to gamble more, thus ensuring they venture off to the black market. 

The result is that the number of gamblers and the amount gambled is reduced massively and everyone loves the Gambling Commission again. No one mentions the millions of gamblers pushed onto the black market, unprotected, unregulated and untaxed, because by its very nature, you can’t count accurate numbers in the black market. You would think this would lead to an increase in the number of problem gamblers. So all the Commission will do is clamp down further, send more to the black market and the vicious circle continues.

So in theory, we have five years left for a sensible review of the gambling laws to take place and hopefully give balanced proposals for a new regulatory regime. In reality, in five years’ time, the industry will be at a tipping point, where the arbitrary, un-tested or evidenced and ever-increasing regulations that the Commission will come out with to save its own institutional skin will mean it will have destroyed its very purpose of keeping the majority of Britain’s gamblers in a safe, well-regulated and taxed environment. The populists in the press, Parliament, academia and prohibition groups will all declare victory as this industry burns.

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