Perrin Carey, independent analyst and former chief risk and compliance officer at Stride Gaming, speaks to Tim Poole about how the gambling industry can truly change its culture. This interview was originally published in the July/August edition of Gambling Insider magazine.
Following a ruling from the Gambling Commission, supplier Playtech paid a £3.5m ($4.4m) fine to charity for social responsibility failings. Its subsidiary, operator PT Entertainment Services, originally escaped the fine having been closed since the original offence. The case in question saw customer Chris Bruney take his own life and leave a suicide note attributing his decision to problem gambling. Instead of intervening at any point, however, PT Entertainment Services allowed Bruney to deposit vast sums, encouraging him with further bonuses as he lost £119,000 in the five days leading up to his death.
The example showed that, despite much technological advancement within the field of responsible gambling, the industry can never truly progress in this area without a genuine change in mentality. For Perrin Carey, a compliance professional with over 15 years’ experience in the field, this means a shift in focus towards risk management. Gambling Insider caught up with Carey to discuss one of the most important issues facing the gambling industry.
The tragic case of Chris Bruney prompted you to comment on our LinkedIn post sharing the story. Can you tell us more about how you view this side of the gambling industry?
With this very sad and sensitive case that has come to light, the reality is it won’t be unique. That’s the tragedy of all of this. There are and will be many cases which are unreported, unidentified, undisclosed. There are many reasons for that. I worked in the industry, not for a huge amount of time – 16-17 months – and drafted in to support Stride and their operating company Daub Alderney. But I brought with me experience within other industries – not just financial services but international education and immigration. We talk in this industry about social responsibility, and I’ve thought long and hard about what that actually means, and whether or not it actually drives change.
My personal opinion is that it probably doesn’t; it doesn’t come at this issue from the right angle. My view is the angle this should be coming from is absolutely from a risk management perspective. This isn’t about carrying out social responsibilities; this is fundamentally an ethical, moral and risk management-orientated issue. Organisations across different industries have to consider not only the risks their customers pose to them – AML (anti money laundering), CFT (combating the financing of terrorism) – but the stack of risks that go back in the other direction. This is why I don’t like, and I don’t mean to discredit it, the aspect of ‘we’re acting socially responsibly’. The real question is are you mitigating the risk you pose to your customers? Drill into that question and then come up with some clear, evidence-based data, decision-making and actions that demonstrate that mitigation.
The other side of the social responsibility concept I struggle with – and all industries do this – is how it’s used from a perspective of ‘look aren’t we good because we’re socially responsible?’ It’s your absolute moral and ethical obligation. This isn’t about being good because you are socially responsible. You, as a business, have to manage and mitigate these risks. You have to do that in an absolutely clear, transparent and robust framework. If you’re not doing that, you’re not performing your fundamental and core obligations. You’re accountable, not just responsible, for what you do as a business in this world.
How is the gambling industry faring with risk management at present?
My experience is that – and this is a personal view – because we’re living in the gambling space under this concept of social responsibility, it isn’t emphasising the need for risk management. We haven’t really addressed the fundamental questions and therefore the fundamental outcomes we expect. Until that happens, I don’t think you’re going to see any real change in the outcomes. Let’s learn from the tragedy. Because, if we don’t learn, there will be others. It’s got to be about absolutely drilling into the risks, understanding how we’re monitoring those risks. Looking at the data our operators have on their customers, we should be investing millions into this as an industry. It needs to be more substantial, though I know there are efforts ongoing within the UK, some of them being led by non-profit contributory organisations, others by the regulator and others by the industry itself.
This brings me onto what I see as the centric change that needs to occur, which centres around culture. If you can’t change culture, you won’t get a shift towards true risk management. If you don’t change culture, you won’t move away from a shareholder-centric model of approach. So long as your business operation is shareholder-centric – and many organisations are learning this the hard way – you will ultimately collapse, because it’s a short-term method of business operation. It’s not about sustainability, long-term growth, contribution or collaboration. If there’s one aspect of corporate governance where gambling operators are decades behind financial services businesses, it’s in this multi-stakeholder model. This, very simply, means all stakeholders have equal opportunities within your business model. Your customers, therefore, should have equal opportunities to your employees, shareholders and third parties.
These are the reflective practices already occurring within financial service businesses and other corporations around the world. The UK is actually, in terms of financial services, leading the charge across Europe. The FCA (Financial Conduct Authority) started this journey in 2018 by launching cultural assessments. These assessments are already occurring and I don’t think it’s going to be long before the Gambling Commission does this; I know from the work I did with the GC they look to the FCA as a regulator to follow.
What conclusions have you drawn from your own research into governance, compliance and culture?
My research isn’t specifically in the gambling space; my research lies in governance and whether or not we can influence organisational culture through different methodologies. The methodology I’m looking at currently is whether we can influence organisational culture by introducing narratives. As human beings, we live our lives through story. It’s how we make meaning within everything we do. It’s what supports our decision making and everything we do on a day-to-day basis. We make stories for the world to make sense.
An extension of that within the gambling space would be can we change the narrative of our risk management frameworks and the stakeholder models, by injecting different narratives into those organisations? The evidence that’s coming out so far would be yes. Those stories have to have a framework and operate in certain ways. It can’t just be any old story; the story needs to do certain things and follow a pattern. But it’s actually one of the most powerful ways of changing organisations. It may be a strategy operators can use as evidence, for example, when the Gambling Commission asks how companies are instigating cultural change.
This recent case is an exact example of this kind of story. Every single employee within an operator’s organisation needs to read this. Human beings are influenced not by what we understand but what we feel. I’ve seen this in boardrooms, it doesn’t matter what industry you’re in; it isn’t the data that influences our decision making as much as how we feel about something. Therefore, stories like this are tremendously powerful when it comes to changing patterns of human behaviour. Every employee of every operator in the UK should read that story. Will they? No. But should they? Yes.
With scrutiny only increasing as a result of these kind of examples, a short-term ‘cash-grab’ mentality is clearly not sustainable – and ultimately self-defeating – for the industry. How can change be achieved in this area?
Organisations make a choice. They choose to be an evolutionary organisation, meaning they sit in their space and respond to how the environment is around them. They follow Charles Darwin’s theory of evolution and survive as a consequence. There is another type of organisation, which I call a behavioural organisation. They’ve actually set themselves up to be deliberate in the decision they make. They influence their environment, not vice versa. They influence their stakeholders, customers and the journey those customers are taking. In other words, they’re market disruptors. My view of the gambling sector is that it’s really enjoyed itself for the last 30 to 40 years. It’s been in this fantasy situation where it’s lived in an unregulated, fairly evolutionary space.
But now the world is definitely changing. It’s been changing in the UK since much tougher regulation and a proper regulator coming into the space in 2014. Ever since then, they haven’t really known what to do, because they don’t have the systems and culture in place to be behavioural. I have come across a couple of operators in the space that appear to be getting this picture and appear to understand that they can be deliberate and intentional, shaping the market around them. But at the moment, they are few and far between; there are still organisations asking the question ‘are we compliant?’
You can never answer the question ‘are we compliant?’ because the answer’s always no. In a world of regulation, compliance doesn’t exist but non-compliance does. So you will always be non-compliant. The issue is by how much? The way you measure that is by looking at your risks, understanding what they’re and doing what you can to mitigate those risks. I’ll be honest with you – the operators I’ve seen are a million miles away from this. That’s not to be critical, because it’s hard work. But if you’re making the money you’re making, yes, it’s hard work – but get on with it. That’s my view.
But what about player responsibility. Players who are not problem gamblers can blame a bookmaker for a lost bet out of pure frustration, and for what is ultimately their choice. How much responsibility lies with the player here and can that be incorporated within this kind of framework?
Absolutely and I think it needs to be incorporated. This is why the partnership between an operator and its customers needs to be as wide open as possible. It’s that channel that enables the operator to understand the risks the customer poses and to express clearly the risks posed to the customer. Within that comes what you’re calling player responsibility. I understand the concept of players taking responsibility, for the fact they understand that, by playing, they undertake certain risks. Just like there are risks in me choosing to buy a packet of cigarettes from my local Morrisons. I’m undertaking the risk that there are health consequences should I smoke those cigarettes. The same if I buy a bottle of wine and drink that every evening.
This is the open channel of communication and transparency that needs to exist between an organisation and its stakeholders. Within this, you’ve got your customer. But I think the reason it hasn’t got the traction is because we’re not looking at this from the point of view of this exchange of risk. I think this really needs to be an educational journey, and operators may have to lead it so players can understand more clearly the risks being undertaken. I don’t think there is enough clarity. Often the trouble is the language used by the operator isn’t transferrable.
During my time in the industry, we thought we were making ourselves clear but actually, we could only have said this if we had done proper consumer research. We could canvas 1,000 customers and ask whether they understood key terms, conducting focus groups, etc. If you did that every six months and could say 98% of people understand these terms, we could then be confident of our marketing messaging. There’s an illustration of how I think the relationship between operator and customer can be enhanced a hundred-fold by simply engaging and saying ‘we really want to make this clear to you, because you’re gambling, that there’s a risk you might lose all your money. You need to understand this.’ This is absolutely where it has go.
Ultimately, what would be your advice to an industry with this juxtaposition – the drive to maximise profits and the essential need to protect vulnerable customers?
My advice would be to ask four questions. Who do you serve? What do they need? What do you have? What do you know? They’re very simple questions. Players need to be protected. They’re a customer of yours. Why would you not want to protect them? They need to be valued, understood and to have fun. They need to know they can trust you.
These are the things your customers need; are you providing those things? I don’t think operators have asked ‘What do you know?’ enough. The reality is if they were to begin to really look at the data they have, the amounts of information they can take from that would make them know a lot more. But it takes effort, graft, grit and determination. The industry genuinely has something to offer. It just needs to really look hard at itself and say ‘How are we doing this?’