April 7, 2021
On April 1st the Gambling Commission published two documents. The first was its three-year corporate strategy plan for the period, the second its business plan for the financial year 21/22.
Two issues are highlighted as posing a particular challenge to the regulator in the short-to-medium term. First, the re-tender for the National Lottery licence will have to be executed. Second, we will have the result of the DCMS’s review of gambling (for which the call for evidence has just closed) to deal with, in whatever form that may take.
One of the dominant themes of the industry’s responses to the two recently-concluded consultative exercises (the Commission’s affordability consultation and the wider DCMS review) was that ‘good regulation’ always requires a thorough prior analysis of the issues needing to be regulated as well as a thorough impact and cost-benefit analysis of the proposed regulation. Put another way, a number of questions have to be asked and answered using hard evidence before a regulatory burden may be imposed. Do we have a problem? If so, how big is it? Is it getting bigger or smaller? Do existing measures have the potential to fix it or is something more needed? What does a ‘fix’ look like and what other potentially unintended consequences might flow from it?
It is fair to say that the Commission’s current resourcing has meant that it has rather struggled in recent years to undertake the breadth and depth of research and evaluation necessary for robust, evidence-based regulation. The ‘Evaluation Protocol’ laid out by the Responsible Gambling Strategy Board (now the Advisory Board for Safer Gambling) in 2016 set out some excellent standards for the analysis of proposed gambling regulation, so the methodology exists and has been thought through and put in place. The Commission clearly hopes for some more financial support from the Government in this area and the corporate strategy document significantly refers to the DCMS taking into consideration the Commission’s ‘resources to regulate’. Any additional ability of the regulator to gather and interrogate data, to understand not just the nature but the size and the trends of problems, and to model the impact of regulatory change, will be very welcome to both the Commission and to the industry.
Other than these two concrete challenges, the documents are consistent with the Commission’s view of its remit, which is to prevent harm to consumers. The Commission sets out its view of the core issue as follows: ‘Many people enjoy gambling. But for some, gambling poses serious risks and can cause devastating harm both directly and indirectly’. The Commission also points out that ‘public trust and confidence in gambling has declined over recent years’ and that there is ‘significant public concern about the visibility of gambling and the impact this may have on children’. There is not much to balance out the ‘gambling is a problem’ narrative and the Commission acknowledges as much when it says that ‘Our mission is to make gambling fairer and safer’.
The Commission could have taken a more positive approach and pointed out that rates of problem gambling have actually declined over the last few years, years in which the industry has implemented a series of substantial regulatory improvements beginning with the 2019 enhanced customer interaction guidance, the ban on credit cards and reverse-withdrawals and additional regulation around VIPs. There is also much research to show that any link between advertising and gambling by children is very hard to demonstrate and that where they do gamble, children generally do not use the kind of online, age-gated products that are the subject of advertising anyway. The force of the Commission’s concerns around consumer harm is blunted by the concern in the mind of the reader that evidence contrary to the established narrative is not given fair and objective consideration.
The Commission states that ‘The strategy is driven by our statutory duties’. But it seems reluctant to acknowledge those duties that are set out in ‘The Regulators’ Code’, a code of practice that came into statutory effect on 6 April 2014 under the Legislative and Regulatory Reform Act 2006 and which appears in the Commission’s own ‘Statement of Principles’ as an instrument binding upon the Commission. Section 1.2 of ‘The Regulator’s Code’ states as follows:
‘When designing and reviewing policies, operational procedures and practices, regulators should consider how they might support or enable economic growth for compliant businesses and other regulated entities’
This chimes exactly with the intention of Parliament back in the early 2000s when the current gambling policy was being formulated and passed into the law now represented by the Gambling Act 2005. The preliminary White Paper ‘A Safe Bet for Success’ was keen to stress the need for balance between the many positive aspects of the nation possessing a large, profitable, tax-paying, job-creating, digital entertainment industry in the form of online gambling and the need to protect the vulnerable. Michael Fallon, the minister who wrote the foreward for ‘The Regulator’s Code’ makes this very clear:
‘Regulators within scope of the Regulators’ Code are diverse but they share a common primary purpose – to regulate for the protection of the vulnerable, the environment, social or other objective. This Code does not detract from these core purposes but seeks to promote proportionate, consistent and targeted regulatory activity…’
The concern is that whereas the Government and the law call for a balance between the interests of business and the protection of the vulnerable, the Commission’s current policy seems to focus on the issue of consumer harm to the exclusion of all else. It is difficult to make such a point without opening oneself to the charge of complacency or, worse, unconcern for the plight of those for whom gambling ends up as anything but a harmless punt on the football or the horses. But the point to remember is that this balance, taking into account all of these issues, is the prerogative of Parliament to debate, decide and enact and that Parliament has done so and that Parliament recognised that historic prohibitory gambling laws had not worked.
So as a suggestion and a talking-point, here is the writer’s suggested draft ‘alternative’ regulatory strategy for the three years ahead:
- Priority 1: to evaluate thoroughly the impact of the July 2019 Formal guidance on customer interactions, the March 2020 Guidance on gambling and the pandemic, the April 2020 Ban on use of credit card payments for online gambling, the May 2020 Ban on use of reverse withdrawals and the October 2020 New code for High Value Customers.
- Priority 2: to understand whether these measures collectively are a sufficient and adequate ‘targetted and proportionate’ response to the need to protect the vulnerable and if not what further measures might be justified, and whether trends of consumer harm are stable or in fact declining.
- Priority 3: to develop a clear, understandable and workable concept of ‘vulnerability’ and to consult with the industry on how rich data and AI may be used to identify it.
- Priority 4: to develop a cost-benefit methodology which models the economic impact of regulatory burdens on gambling businesses and balances it with the need to protect the vulnerable.