Christopher Snowdon is Head of Lifestyle Economics at the Institute of Economic Affairs. He is the author of A safer bet: Gambling and the risks of over-regulation, published this week.
The Government launched a public consultation on gambling regulation in December, saying that it wanted to make Britain’s gambling laws ‘fit for the digital age’.
Now that fixed-odds betting terminals have been banished from bookmakers, online gambling has become the main target of anti-gambling activists. They have a wish list of things they want banned, including gambling advertising and sponsorship, VIP schemes and high stake games. Some have even suggested a legal limit on how much gamblers can spend each month.
These prohibitions are designed to tackle Britain’s supposed gambling epidemic, and yet a close look at the data shows that there has been no rise in the number of people gambling in the UK in recent years, and the amount spent on gambling was in decline even before the pandemic.
Fewer children are gambling than a decade ago and, whilst there is no doubt that pathological gambling can have serious consequences, rates of problem gambling have not risen in twenty years. At around 0.6 per cent of the adult population, our problem gambling rate is lower than in many countries which have stiffer regulation, and it is notable that the number of problem gamblers has not risen despite the growth of online gambling and the proliferation of gambling advertising.
The existence of problem gambling should not be used as an excuse for an endless crusade against an activity which provides harmless fun to the majority of consumers. A mental health problem that affects a small minority requires a targeted response. The NHS has opened a number of problem gambling clinics in recent years, and more are due to open by 2023/24. Offering help to those who need it is a far more constructive and effective approach than hitting all gamblers with bans and restrictions.
The measures proposed by some activists, such as slowing down games and limiting prize money, are not so much designed to help problem gamblers as deter anyone from gambling by sucking the fun out of it. That is not what regulation is supposed to do, and it carries risks of its own.
To operate and advertise in the UK, gambling companies have to abide by UK regulation and pay tax to the British government. Most gamblers are happy to use licensed websites, but that could change if games are made tedious and unexciting by over-zealous politicians. Recent research found that 4.5 per cent of UK online gamblers had used an unlicensed operator in the past twelve months, and 44 per cent were aware of at least one unlicensed gambling website. If the government makes the regulated sector less appealing, demand for the unregulated sector is likely to grow. The Government will get less tax revenue and punters will get less protection.
A smarter approach would be to use technology to our advantage. In the past, gambling companies often didn’t know who their customers were. Today, they not only know their customer’s name and address (which they cross-check with credit agency databases), but how much they spend, what they play and how they play. They know if a person has self-excluded from any other regulated website.
The ability of ‘Big Data’ to identify problem gamblers and prevent harm is unlike anything we have seen before. Players can set deposit limits, set playing times and opt out of receiving inducements, such as free bets. Algorithms are used to identify ‘markers of harm’, such as chasing losses, switching between products and playing late at night.
These red flags trigger interventions. A gambler who displays unusual behaviour might receive an e-mail reminding them about deposit limits, or be taken off mailing lists offering bonuses and inducements. Those deemed to be at higher risk will receive a phone call or be given a spending cap or have their account suspended, sometimes permanently.
Regulated online operators have a range of practical harm reduction measures available to them which target problem gamblers without infringing the rights of the average punter. Not every company uses their technology to prevent harm in the same way, but they could. Best practice could be made standard. It is these practical, sophisticated solutions, not the blunderbuss approach of anti-gambling activists, that should be the focus of the Government’s review.