Do Gambling Regulations Really Work?

Posted by Harry Kane on Wednesday, October 10, 2018

Throughout the ages, various governments have tested the notion of prohibition as a response to supposed social issues and anti-social behaviour.

From the prohibition of alcohol in the U.S. during the 1930s to the banning of Western movies throughout North Korea and the Soviet Union following the Second World War, this tactic has proved popular among leaders on the left and right of the political spectrum.

Gambling has also been the focus of prohibition in various countries and at different points in time, with the vast majority of states in North America continuing to outlaw online casino gameplay and sports betting. While this may be about to change following the reversal of a 1992 federal law that prevented state authorities from legalising sports betting, there’s no doubt prohibition has proved to be spectacularly unsuccessful as a way of both tackling social issues and preventing people from indulging in specific practices.

Instead, the introduction of stringent and measured regulations has proved to be far more effective, with the UK Gambling Commission (UKGC) leading the way in this respect while creating a British market that is both safe and prosperous.

With the online market becoming increasingly dominant and evolving at a frightening pace, however, is the regulatory framework in the UK still fit for purpose? Let’s take a look.

A Look at the UK’s Regulatory Framework

As we’ve already touched upon, the UK’s gambling market boasts one of the most comprehensive sets of regulatory measures in the world. Make no mistake; this has played a pivotal role in the recent growth of this market, which generated a total yield of £13.9 billion in the year ending September 2017.

To achieve a regulatory framework that empowers growth while safeguarding customers, the UKGC has developed a strong network that includes both government organisations and charity groups.

Through a collaborative approach, these parties have helped to impose rules and create effective solutions to real-time market issues, including a trail-blazing GAMSTOP service that offers free self-exclusion tools to so-called problem gamblers.

Gamble Aware is another group that provides support to the UKGC, with this charity group offering additional resources and a system of checks and balances to the policies created by the commission. One of the key benefits of this is that it helps to guarantee the impartiality of the UKGC, ensuring that players receive the support that they need to gamble safely and responsibly.

From the perspective of the UKGC, this group remains the market leading regulation and one that was founded as part of the 2005 Gambling Act. It’s main focus is to prevent criminality in the sector and safeguard the interests of customers, while also promoting a fair and transparent market that prevents the exploitation of vulnerable players.

The UKGC also licenses operators in the marketplace, ensuring that applicants adhere to all of its rules and regulations. To achieve this, the commission organises inspections of land-based establishments and actively reviews online casino platforms, while it retains the power to sanction brands that fail to comply with the latest regulations.

So while the UKGC focuses primarily on regulating operators on the frontline of the market, its various support groups provide additional resources and drive greater levels of transparency across the board.

What Are the Challenges Facing the UKGC?

While the UKGC remains extremely active and has blazed a trail for other regulators to follow across the globe, the question that remains is whether it’s capable of keeping pace with a fast-evolving marketplace.

Back in 2014, the UKGC played a key role in reforming the British marketplace, with the Gambling Act being updated to introduce a further raft of regulations. These changes were made to cope with a sudden surge in rogue brands operating online, while they were also a response to the pronounced levels of growth that started to grip the market in 2010.

This highlights the core challenge facing regulators in the modern age, as both the global and the UK markets continue to grow at a compound annual growth rate (CAGR) in excess of 11% and 10% respectively. The online market has also grown to account for a hefty 35% of the industry as a whole, and these two factors are making it exceptionally difficult for regulators to impose effective rules and guidelines in real-time.

The growth of this market has been inspired by greater accessibility to casino and sports betting sites, with the levels of exposure having been increased further by aggressive marketing campaigns and the presence of various social media channels.

At the same time, the rise of cryptocurrency has made it possible for players to register at casinos without having to follow standard verification procedures, creating specific issues in terms of problem and underage gambling.

These are two areas that the UKGC has been relatively slow to counter, despite the introduction of stringent restrictions on pre-watershed advertising, deposit limits and the creation of collaborative self-exclusion programs. Many of these measures have failed to yield initial results, with operators still able to advertise their products freely during live sporting broadcasts and existing self-exclusion schemes struggling to cross the barriers between different platforms and email addresses.

The failure of these measures is beginning to cause a slight increase in the number of problem gamblers in the UK, with more than two million Brits currently suffering with an addiction. So while around 0.7% of the UK’s population identified themselves as problem gamblers between 1999 and 2015, this is beginning to increase noticeably.

In the case of underage gamblers, a 2016 report highlighted that around 450,000 children were gambling regularly across England and Wales. Social media is proving to be a significant catalyst here, with 36% of children aged under 16 having played a casino-inspired game through Facebook during 2015 alone.

Can the UKGC Keep Pace with the Changing Marketplace?

On the face of it, there’s no doubt that the UKGC is finding it increasingly difficult to keep pace with a fast-evolving marketplace.

However, this is to be expected given the nature of technology and innovation in the digital age, while the it’s fair to say that the UKGC remains one of the most proactive regulators in the world.

This is reflected by the organisation’s core strategic objectives through 2021, which include the greater safeguarding of vulnerable players and a drive to create a more transparent marketplace. We’re already seeing new measures being introduced to help the UKGC achieve these objectives, including tougher sanctions for operators who fail to safeguard their players effectively.

The next and most difficult stage of this journey is to safeguard players who are active through social media, with people as young as 13 able to access casino-style games without the need for any age verification process. The UKGC may need to adopt a more aggressive approach to ensure compliance across multiple channels, and this will prove key to creating a safe marketplace in the future.