iGB panel: The black market policy paradox
The Gambling Commission’s (GC) black-market report is set to soon be published, and no one will be shocked to discover that it deems illegal online gambling to be a significant problem. While this is a UK-based project, the wider implications are far reaching for online gaming Europe-wide.
The Betting and Gaming Council (BGC) has run its own studies and estimated that £2.7bn ($3.6bn) is staked annually on hidden-market websites. According to the body, this is a conservative evaluation, and the real total may be nearer £4.3bn.
How aligned these two bodies can stay, therefore, will likely determine the effectiveness of attempts to stopper black market growth. The black-market paradox was the subject of this panel, with Alex Roberts, Director of Policy at the BGC, and Anna Davies, Head of Compliance and Safer Gambling at Metropolitan Gaming. This ‘paradox’ suggests the more you regulate to protect users and licensed industry, the more you hinder them, encouraging bad actors to enter the market and motivating players to gamble with them.
Both panellists were keen to explore alternative solutions, while neither want to make an enemy of the GC. It raises the question: How can you solicit the aid of regulators without being further inhibited yourself? This might be the industry’s most challenging paradox, and the way the panel walks that rhetorical tightrope is indicative of two battle-hardened lobbyists.
They’re boxed in. Legitimate industry has the black market on one flank – an aggressor harvesting players and revenue – while on the opposite side is the GC. Licensed operators must fear being caught in the crossfire if the problem posed by the black market is overstated. The attempts to manage and dictate discourse on its size then start to make more sense. The last thing they want is to be more tightly regulated, but they don’t want those player-stealing sites to go unchecked.
Roberts delicately calls for “balanced regulation.” A sweet spot.
Aggressive marketing is one of the most fraught regulatory battlefields and greatest weapons of the online black market.Consider the GC tightened advertising regulation further. The new rules would apply to licensed operators, while offshore invaders would continue raining URLs on our heads and circumventing guidelines. So, if not that, how do Roberts and Davies want to see the battle fought?
By détente. Through finding a common cause. Fighting a battle on two fronts has ominous historical precedent, so the BGC has by and large backed the GC. “No one benefits from demonising the regulator.”
In Berlin, the BGC recently agreed with the AGA and the ECA that illegal gambling was a serious threat. Here at iGB Live, Roberts repeats the £2.7bn figure. No one wants to deny the illegal market, but Roberts is still keen to repeat his tempering mantra: its scale shouldn’t be overestimated.
“Balanced regulation.” That phrase again evokes a trembling high wire act.
Showing deference to the work of the GC is a sage strategy, and trying to get on top of research puts the BGC in a strong position to negotiate the way ahead. The tighter industry can be with lawmakers, the more influence they can wield to move themselves out of that regulatory firing line.
And how do they think the GC’s resources and time should best be used? Because, as Davies points out, these illegally trading operators are sophisticated set-ups, and taking down a URL is not going to head them off. This kind of criminality is not a cottage industry and there is plenty of money to be extracted from British gamblers. One demolished URL will quickly be replaced with five more. For Davies, it’s education as much as enforcement: “As an operator it’s about educating customers, to put people in a safe place is to empower them, find out why people are motivated to go to the black market.”
This mature and diplomatically inoffensive accord seems to be the terminus of this discussion. While it’s about educating players, it’s not about industry versus government; and it benefits third-party social enterprises and charities too.
The panel points out that studies have shown most people can’t pick out a legal gambling website from an illegal one. Education really does seem to be in order. Realistically, while that is the case, other efforts take on a pretty blunt look. Our speakers agree that cross-industry, cross-government, cross-border cooperation will have to light the way out.
“It’s not a gambling industry problem; it’s a social problem, education problem, crime problem, banking problem. Lessons can be learned from other black markets” says Roberts.
It’s both a convenient conclusion for the industry representatives and just maybe the most sensible.
“Balanced regulation.”
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