Crackdown on gambling in the UK may be mostly political

The latest attacks on gambling in the United Kingdom may have more to do with politics than problem gambling.

The United Kingdom has always been viewed as the most liberal country when it comes to gambling. Of course bookmakers for horse racing and greyhound racing were the only real forms of legal gambling until 1960 when the Gambling Act was passed, which legalized many forms of gambling in an attempt to take illegal wagering off the streets. The law worked as bookmaking shops opened up on virtually every street corner and illegal bookies were more or less run out of business. William Hill, Ladbrokes, 888 among others were known as the places to go to place a bet on any horse race or sport and games of chance and skill were introduced at the betting shops as well. As part of the Act, bookmakers were required to apply a tax on each bet and that tax was remitted to the government.  

The tax was widely accepted by UK citizens until the 2000s, but the Internet changed things drastically as bettors found new opportunities to wager with different offshore bookmakers operating in tax free jurisdictions. To keep up with the growing number of offshore bookmakers who generally offered poker, bingo and casinos as well, UK based gambling companies opened offices in tax free havens like the Isle of Man and Gibraltar to avoid paying the tax. Consequently, in 2005 the Labour Government under Tony Blair introduced the 2005 UK Gambling Act, which aimed to deregulate gambling in the UK, Scotland and Wales in hopes of raising more revenue for government coffers and put all gambling companies on an even playing field.  The 2005 act gave local governments the right to authorize and license gambling rather than leaving that up to the federal courts, as was done previously, and it created the UK Gambling Commission to create rules for gambling and act as the regulator. The purpose of the Commission according was as follows:

Ensure gambling is conducted in a fair way
Ensure gambling is not used to support crime or criminals
Ensure gambling doesn't affect children or vulnerable persons
Ensure gambling operators are subject to rules on money-laundering and financial probity

UK gambling Commission problem gamblingThe Commission also created a whitelist, which authorized offshore jurisdictions that had regulations comparable to the UK to advertise in the UK and take bets from UK citizens. As well, the Commission eliminated the tax on individual bets and instead changed to a tax on gross profits from UK residents regardless of where the companies were operating, which the UK government hoped would convince most UK bookmakers to move their operations back to the mainland, since the advantage of operating offshore was effectively gone.  The vast majority of UK operators such as William Hill and Ladbrokes did move back to UK proper (Bet365 and Betfair never set up offshore operations), but the majority of bookmakers maintained offshore offices to cater to non-UK citizens who don’t have to pay tax, particularly on non-sports bets which have slightly different rules. The 2005 law also eased restrictions on advertising to allow gambling companies to advertise (previously it was limited to horse racing, bingo and lotteries), and it allowed fixed odds betting terminals (FOBT) to be introduced at bookmaking shops with £100 limits. Not long after the passing of the Act most Premiere League soccer teams started changing their advertising to feature betting companies and TV and radio stations were inundated with advertising from gambling firms.

While the new Act did open up gambling and increase profits, it also increased problem gambling in the UK. And left wing groups and media, such as The Guardian, were quick to point out how gambling was ruining the country. The UK Gambling Commission responded by setting up a self-exclusion program where bettors could exclude themselves from wagering for 6 months, 1 year or 5 years, the bettor’s choice, but it has failed miserably as problem gamblers have been able to circumvent the system and gamble again by using a different email address or physical address. The Commission acknowledged the failure and has said it would be going back to the beginning. It should be noted that the 2005 Act was amended in 2014 to eliminate the whitelist and simply required any company taking bets from UK citizens to acquire a UK Gambling Commission license and submit 15% of gross profits to the government regardless of where they were located. Not surprisingly most offshore companies have ignored that rule, while others simply disallowed UK customers from playing there going forward.

In the meantime, the Conservative Government has been treated as the fall guy for the current situation and anti-gambling groups have painted Theresa May, and David Cameron before her, as the reason for problem gambling in the country, even though all decisions fall with the Gambling Commission. And the Labour Party has jumped on board painting itself as the new “anti-gambling” alternative. Current Labour Deputy Leader Tom Watson has said that the party has realized it made a mistake with the 2005 Act and now wants gambling curtailed. The current scandal with Brexit no doubt is playing a huge part in Labour’s move as well, since the backlash against the Conservative Party and Theresa May has left them very vulnerable for the next federal election and the Labour Party no doubt hopes that an anti-gambling stance will win more votes with many traditional Conservative voters.

fixed odds betting terminalsThe first attack on gambling was with the FOBT terminals where the UK Gambling Commission recently cut limits on those terminals to £2 from the previous £100 limits. Several reports suggested that these machines were highly addictive, so the Commission cut the limits as a result of public and political pressure. The betting shops were not happy about it, but agreed to the reduction. Despite the cuts being welcomed by all parties, Labour seems to have indicated they are responsible for the change.

The second attack on gambling was with advertising, as betting firms agreed to an advertising ban on all sports (except horse racing) during live telecasts airing prior to 9 p.m. The hope is that doing so would curtail problem gambling and would be out of site to minors who would be in bed. Both the Conservative and Labour Parties welcomed the move, although Labour seemed to suggest that it was their efforts that ultimately led the Remote Gambling Association (RGA) and the gambling companies agreement to the ban. As well, at the beginning of April, a new law was put in place that made it illegal for young celebrities and sports stars to promote gambling and ensure that most of the audience in social media that takes gambling advertising is over the age of 18. How they will do so is unsure. If Labour has its way, however, it will not stop there. The Party is seriously looking at banning gambling advertising on Premiere League uniforms, even though 60% of shirts feature gambling companies, and they have even suggested they may look at the types of casino games being offered and making them less animated and kid friendly. I asked a UK bookmaker who offers casinos online what he thought, and he said that this was just a deflection, since it’s the adults who want the cartoon games, saying "the days of fruit symbols, 7s and bars for slot games has long passed its interest." He also said that UK companies go over and above the requirements to make sure minors can’t register and bet.

Credit card ban in the UK for gamblingThe latest attack on gambling, and perhaps the most concerning, relates to credit cards. Last year Barclays, Lloyds, Santander and the Royal Bank of Scotland along with a couple of other smaller banks allowed customers to “turn off” gambling as an option for credit cards to effectively block them from using their card to gamble. Once turned off customers would have to wait a set period before they could turn it back on. The UK Gaming Commission indicated it wanted to do something similar to stop problem gambling and has solicited feedback from UK citizens. The Commission is considering mandatory blocking, fixed deposit limits and perhaps a ban on credit card use if necessary. Tom Watson said that if elected his Party will demand that the Gaming Commission issue a full ban on the use of credit cards for gambling.

I spoke with Wes Himes, the new CEO of the Remote Gambling Association, and asked his opinion on the proposed credit card ban.

"The current situation is that the Gambling Commission, the regulator, has issued a call for evidence of the use of credit cards in gambling. My view is that some parties see the credit card issue as a very binary issue – should they be used or not. However, the issue is more complex than the headlines. For instance, using credit cards gives a much better data footprint than more anonymous sources which helps in identifying customer behavior. And if credit cards are banned, they can still be used via a PayPal for instance.

We shall see what the call for evidence produces and be ready to respond."

So, the most liberal gambling country in the world seems to be moving towards more gambling restrictions to curtail problem and underage gambling. There is no question that these are concerns that must be addressed, but hopefully any solution and action will be based on reason and fact and not political gain. Self-exclusion and advertising bans during live telecasts are reasonable concessions, but a ban on credit cards may be overkill. Where there’s a will there’s a way and, as North American gamblers have proven, e-Wallets, money transfers and cryptocurrency are just as easy to use as credit cards for payments. And, as Wes Himes has mentioned, banning credit cards may actually be counter-productive if the real concern is problem and underage gambling since credit cards leave a digital footprint which other forms of payments do not.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

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