Is the UK’s Gambling Legislation fit for Purpose?

Posted by Harry Kane on Monday, August 20, 2018

Historically, the virtual gambling market has been one of the best protected and regulated in the world. This is particularly true when you compare the UK to alternative regions across the globe, with even the American market undermined by political conflict and a lack of federal regulatory measures.

Comparing the efforts of the UK Gambling Commission (UKGC) with other regulatory bodies is ultimately futile, however, while the rapid growth and diversification of the gambling market continues to create challenges in terms of safeguarding prolific and potentially vulnerable players.

Some of these challenges have been borne out recently, from the much publicised issues experienced by the self-exclusion initiative GAMSTOP to the failure of certain casinos to protect problem gamblers.

One particular example saw 32Red fined a hefty £2 million by the UKGC, after the brand reportedly missed 22 potential opportunities to help a player who was showcasing obvious signs of vulnerability.

With these issues in mind, and the UKGC looking to create a safer and more secure gambling experience for players as one of its core strategic objective through 2021, there are suggestions that the current legislation may no longer be fit for purpose. But is this really the case?

The Facts Behind the Headlines – Are Regulators Failing Players?

One of the latest high-profile individuals to voice concerns on this issue is Lord Chadlington, who recently spoke at length about the growing epidemic of children being exposed to gambling advertising and the problems caused by social gaming experiences that replicate real-money wagering.

According to the most recent figures, there are an estimated 500,000 problem gamblers in the UK, with these individuals likely to frequent online casinos regularly and spend more than they accrue in earnings.

Furthermore, an additional two million people are considered be at risk of becoming vulnerable gamblers nationwide, with the majority of these thought to be aged 25 or under.

Despite this, operators within the industry are spending more than ever in a bid to engage potential customers, with a cumulative total of £312 million invested in marketing specific games and platforms in 2017. The total spend has increased by an incredible 63% over the course of the last five years, with TV advertising up by 43% and the amount invested through digital channels having risen by 87%.

Nowhere is this trend more evident than in the sporting world, in which operators are able to leverage live broadcasts to promote their platforms and share sponsored messaging. This is due to the fact that the UK Gambling Commission (UKGC) allows the promotion of gambling messages during live broadcasts, even in instances where games are shown prior to the 21:00 watershed.

According to research commissioned by the BBC, this meant that 95% of all televised UK football matches in 2017 featured gambling advertisements during commercials, while there were even instances where two competing messages were displayed during the same break.

The fundamental issue here is that while problem gambling represents a growing epidemic in the UK, this is not reflected by the corresponding advertising spend or the direct actions of regulators. As a result, the sustained marketing drive continues to normalise and popularise gambling among vulnerable individuals, while those on the front line of this charge fail to adapt to the needs of their customers.

Beyond the Numbers – The Challenges Facing UK Gambling

Ultimately, these numbers offer a fascinating insight into the nature of the UK market and the growing disconnect that exists between customers, operators and regulators alike. But what are the most pressing challenges facing the market and why are the casting doubt over the effectiveness of the UKGC.

From the perspective of children and vulnerable gamblers, the blurring of the lines between virtual gambling and social gaming has been particularly impactful. More specifically, gaming developers have been quick to integrate online gambling and real-money wagering into their narratives in recent times, with the Grand Theft Auto (GTA) franchise offering a relevant case in point.

The social space has proved particularly troublesome, particularly as sites such as Facebook allow individuals to register for an account from the age of 13 and above. Not only this, but firms such as Scientific Games (who have designed thousands of the UK’s controversial fixed-odds betting terminals) have also launched a number of gambling-inspired apps within this space, exposing children to titles that effectively replicate real-money casino gameplay.

These titles are available to everyone, as players are not required to verify their age when accessing them through Facebook. Even more worryingly, they appear to have been designed with the intention of directly targeting and engaging young players, with cartoon characters such as The Flintstones and Rapunzel featured prominently.

These games also feature inherently childlike features and narratives, which help developers to command relatively short attention spans. Take the Jackpot Party Casino Slots game, for example, which included a featured called ‘Toys for Toys’ and encouraged players to invest real money in the pursuit of randomised rewards.

This is arguably the fundamental definition of real-money gambling, and its little wonder that individuals who play social games as children are more likely to emerge as problem gamblers in later life.

Unfortunately, this is also part of a wider trend in the gaming world, where gambling is becoming increasingly prevalent in console titles and being marketed as a feature that dramatically enhances the quality of gameplay. This is especially true in the case of loot boxes, which are essentially bundles of randomly selected goodies that players are compelled to pay for with real-money.

These are now available across a wide array of games, while they continue to drive micro-transactions worth billions of pounds every single year. Incredibly, the statistics suggest that publishers such as Activision (who developed the Call of Duty franchise) generate as much in loot box sales and in-game purchases as they do through the games themselves.

Make no mistake; loot boxes have created a significant crossover between console gaming and virtual gambling, as while these in-game purchase options are marketed as having the potential to enhance the quality of your gameplay and help you to achieve specific objectives, they’re entirely randomised and do not necessary offer value in relation to the amount spent.

In this respect, loot boxes tread a fine line, while they’ve also prompted different regulatory responses across Europe. Belgian authorities have moved to ban loot boxes in console games, for example, whereas the UKGC stopped short of this measure as the prizes unlocked through loot boxes are usable only in the games in which they’re won and cannot be cashed out (we’ll have a little more on this later).

The challenges are also mounting in the online casino space, with the aforementioned struggles of the existing self-exclusion software GAMSTOP causing particular concern for regulators. Even accounting for the fact that this software is continually being refined and developed, it is currently being undermined by a number of fundamental and potentially fatal flaws.

Firstly, although the software serves as a one-stop self-exclusion app that prevents users from registering themselves on casino platforms, it is currently unable to stop them from receiving marketing materials and promotional incentives in their inbox.

Additionally, vulnerable players can circumnavigate the GAMSTOP process simply by changing their surname and online username, enabling them to open brand new accounts with any virtual casino that they wish.

These serious failings have an impact at various stages of the vulnerable gambler’s journey, as they’re incentivised to engage with operators and able to open a brand-new account in a matter of seconds. As a result, these individuals are clearly not being afforded the protection that they have proactively requested, and this is continuing to wreak havoc on the reputation of the industry and those who seek to regulate it.

Is the Current Legislation fit for Purpose, and if Not, What can be Done?

With a clear understanding of the issues and challenges that continue to undermine this growth marketplace, the question that remains is whether regulators, government bodies and individual operators are doing enough to safeguard players and the reputation of the industry as a whole?

More specifically, is the current legislation fit for purpose and capable of meeting these challenges head-on?

The short answer is arguably no, although it’s important that we also consider the remit of the UKGC in the context of each individual challenge. In the case of social gaming, for example, the Commission cannot compel sites such as Facebook to increase the user registration age, or directly ban content from appearing on people’s feeds.

Instead, it must focus on ensuring that all gambling-related social games are subject to stringent age verification measures, in order to stop anyone younger than 18 from accessing them.

In the case of loot-boxes, the UKGC has already made its ruling, based on whether or not these in-game purchases fit the textbook description of gambling. Given that other countries have moved to ban loot boxes completely, however, it’s arguable that the Commission has been a little too literal in its interpretation and failed to respect the concern of parents nationwide.

This may require a strategic re-think, especially if the Commission is to achieve its objective of safeguarding players and the industry as a whole in the longer-term. Similarly, the UKGC may also need to review individual pieces of legislation such as GAMSTOP, in order to urgently correct the flaws within this software and ensure that players are given the necessary protection.

Most importantly, this is indicative of a proactive mindset, and one that strives to identify and tackle issues before they become an epidemic. At present, it may be argued that the Commission has been left behind by the pace of change in the virtual gambling market and become reactive as a result, creating a set of regulatory measures and legislation that is not entirely fit for purpose.

This would ensure that operators like 32Red are compelled to identify and help problem gamblers before their behaviour spirals out of control, rather creating a scenario where all parties fail to achieve their objectives and the regulator ultimately has to impose a hefty financial sanction.

The Bottom Line

Ultimately, the UKGC is responsible for the well-being of all gamblers nationwide, while it must also take proactive steps to regulate channels that blur the lines between virtual gaming and gambling.

It needs help to achieve these objectives, however, and there’s no doubt that regulators must collaborate with both operators and government agencies if it is to create legislation that is genuinely fit for purpose in the digital age.

According to both Lord Chadlington and Matt Hancock (who was previously Secretary of State for the DCMS), this process of collaboration should start with the commission of independent and objective studies into gambling. Initially, this should be focused on the use of advertising and gambling-inspired social games to target children, while also addressing the precise impact this has on suicide rates and future addiction.

From here, regulators could work to tackle such issues at source, by creating a more proactive set of regulatory measures that minimise the risk of young or vulnerable players from being exposed to gambling. This may include measures such as banning all gambling advertisements during live sporting events, particularly those that are broadcast prior to the 21:00 watershed.

It may also see the UKGC look to reclassify (and ultimately restrict) loot boxes, while regulators could also introduce age verification on all gambling-inspired social games.

At the same time, the government could invest in an educational drive that strives to inform young people about the core risks associated with online gambling, using in-depth research to inform its approach and enable the next generation to gamble responsibly.

This type of proactive and collaborative approach will help to resolve issue both in the short and longer-term, while helping the UKGC to achieve its core strategic objectives over the course of the next three years.

By also incentivising individual operators to introduce their own self-exclusion initiatives and establish themselves as ambassadors for responsible gambling, regulators can take a significant step towards safeguarding the interests of players and the future of the marketplace.

Fourth, we need a nationwide programme backed by the DCMS and the DHSC to help those already addicted, those at risk of gambling-related harm and supporting affected families.

Who should fund this four-point programme? Currently there is a 0.1% voluntary gambling industry levy which this year will generate less than £10m. This levy must be made mandatory and increased to 1%, generating some £130m every year to be directed to a new independent commission which would execute and monitor the above strategy.

To ensure that our UK gambling legislation is fit for purpose, we need this independent review and scrutiny of digitised multimedia marketing if we are to avoid a gambling epidemic in the UK and if we are not going to look back in ten years’ time and wonder why we sat on our hands.

Italy has recognised the severity of the problem and acted decisively. Why can’t we?