Let's collaborate to reduce harm and raise standards
Bacta Convention and AGM
Thursday 22 November
Neil McArthur, CEO, keynote speech
I want to say thank you to Gabi and John for inviting me to address you today. I am Neil McArthur and it’s my privilege to be the Gambling Commission’s Chief Executive. I want gambling consumers in Britain to be able to enjoy the fairest and safest gambling in the world, and today I want to speak to you about how we can all work together to reduce harm and raise standards.
I have been with the Commission since 2006. A lot has changed over that time, but some of the challenges we face have remained constant. First and foremost, our overall challenge is how to balance customer choice and enjoyment against the risks gambling can create for some customers and for wider society.
The second challenge is the fact that gambling is not just a product like any other – it is a product that is a source of fun for most, but one which can become addictive and cause serious harm.
The third challenge is the fact that gambling is also a subject to which people bring their own values, beliefs and opinions to – and to my mind, those values, beliefs and opinions are often given more weight in debates than hard evidence.
We have over 1,800 Adult Gaming Centres and Family Entertainment Centres in Great Britain – in addition to all the unlicensed FECs across the country. In 2011 there were 2,396 licensed Adult Gaming Centres and Family Entertainment Centres, which means there has been a gradual decline in the number of premises.
At the same time, I note that the GGY generated from B3 machines in Adult Gaming Centres has increased every year since 2009. Our latest industry stats show us that the GGY for B3s in your sector reached a high of £202.68m last year. That is a rise from £93.29m ten years ago.
What do we know about consumers? The short answer to my question is not enough. We still know relatively little about what motivates customers to gamble and what keeps some customers safe, but creates risks of harm – or actual significant harm – for others. I think it’s important that we all recognise that some of your customers are either at risk of gambling-related harm or are already suffering harm.
We know this because our evidence and research shows us that 2.1% of the population – which equates to over one million people – play fruit or slot machines in gaming centres and arcades, and of those, 5% of people are already problem gamblers, which equates to over 51,000 people. 12% of those are experiencing moderate harm – that equates to over 128,000 people.
These numbers cannot be ignored or passed off as an issue that is not relevant to this sector, which is why protecting your customers from harm and acting in your consumers’ best interest is as relevant for you as it is for other parts of the industry.
Given that the challenge of balancing consumer enjoyment and choice and the risks gambling can pose is a problem we share, how can we build greater understanding between the Commission and those that we regulate? Earlier this year Bacta invited me to spend a day with one of their members.
As CEO of the Gambling Commission, it is really important that I understand what it’s like to work in different parts of the industry, who your customers are and understand what day-to-day challenges there might be in running your businesses. I accepted the offer and a few weeks later I spent two days doing some work experience at the Grand Pier in Weston-super-Mare where I joined general manager, Tim Moyle, who got me involved with many aspects of the job.
During my day I refilled change machines, gave out prizes in the shop and shadowed workers on the shop floor. And it’s not an easy job. The staff I spoke to clock up many miles walking backwards and forwards between machines, giving out prizes, filling up ticket machines and reorganising toys in crane machines.
One of the first things that struck me was just how much effort everyone put into treating their customers fairly and how they would go the extra mile to ensure that people were having a good time. Every question from a customer was answered with a smile and the team in the prize redemption area was constantly rounding up the number of tickets people had so that they could give them a bit more than they expected.
Customer care was clearly a priority. Everyone was mindful of the fact that their customers have limited leisure pounds to spend and lots of choices about where to spend it, so they went the extra mile to ensure that visitors were having a good time and were well looked after.
I am extremely grateful to the team at the Grand Pier for sharing their insights and showing me the ropes. The visit was so valuable to me that we are now rolling out the initiative across all parts of the industry so that my colleagues can also gain first-hand experience, which will not only give us a greater understanding of parts of the industry but help us to be a better regulator.
Unfortunately, I’ve been in lots of premises that were not as good, which is why none of us can afford to be complacent. For example, I remember people putting different coloured carpets in premises to try to claim they were now two premises, so they could have more machines.
There is no such thing as risk-free gambling and I would urge you all to remember the unique responsibility that operators in your sector have, as many young people and children will first experience gambling in places like Weston-super-Mare. Whilst many will do nothing but have fun with friends and family, our figures show areas of real concern.
1.7% of children aged 11-16 are already problem gamblers – this is a horrendous statistic and one that the Commission is looking at closely to see what we can do. Another 2.2% are experiencing moderate harm (Young People and Gambling Report 2018). Alarmingly, these figures have risen significantly compared to previous years.
We are also really concerned about the results of our most recent test purchasing on category C machines in pubs. When underage teenagers went into pubs across the country – both chains and free houses – 9 out of 10 failed the test. In some places children were able to gamble for over ten minutes before being challenged.
How confident are you that when tests are done in your premises that you will not be caught? And I say “are done”, not “if they are done”, as from where I stand arcades are likely candidates for such exercises (or undercover investigations by the press, for that matter).
A lot of the debate about gaming machines has focused on B2 stakes – but the Commission has not been distracted by that.We recognise that the B3 category covers a range of machine, interface types and locations with differing levels of protection. However, we are looking to you, the industry, to demonstrate how it is going to raise standards across each of these categories.
We said in our gambling review advice that the evidence suggests B3 play carries a similar financial and time-related risk to B2 roulette play. Our evidence also shows actual losses and session duration are comparable across play on B2 and B3 in different venues. We acknowledged the greater proportion of extreme losses on B2s and took that into account in our advice.
But that doesn’t detract from the general point that patterns of loss and time spent look similar across B2 and B3. When the proposals from the gambling review are implemented, B3s will be the hardest form of widely available gaming machine on the high street
Three weeks ago I addressed our Raising Standards conference in Birmingham, where I called upon delegates to work together to make gambling fairer and safer by collaborating, innovating and evaluating, sharing insight amongst each other and talking about what works and what doesn’t in relation to customer interaction.
This call to action also applies to this sector. At the Commission, we look at risk through several different lenses; the person, the product, the place and the provider. Today I want to focus on just two of them, people and products.
Risk to the person is all about how a gambler’s individual characteristics, personal history, playing behaviours or vulnerabilities might increase their likelihood of suffering harm. Risks posed by specific products is about what game-based features or structural characteristics might pose more of a risk to customers and therefore a greater threat to the licensing objectives.
Knowing your customer therefore doesn’t just mean knowing the person in terms of their age, source of wealth and account history. It is also about understanding how they will react to your products.
When we look at the growing range and complexities of products, and the changing nature of the market, I think you will agree this point is even more important. And in terms of your products, how are you explaining the differences to your customer when they play the same game across different categories of machines and online?
Let’s look at one example – Rainbow Riches. It’s a popular game with players which has been around for many years. As with many games, the designers want to get their product into multiple outlets, arcades, bingo clubs and online, and this involves keeping the concept similar across the various versions but amending the game to take account the different stake and prize levels.
But do the less sophisticated players necessarily realise they are playing different versions of their favourite game with probably different return-to-player percentages? The information is there, but how many players know that or bother to look unless it is pointed out to them?
While some may argue arcades are a special case in terms of little to no harm, we can’t forget that some products available in your venue may also appear as similar products in other gambling premises (whether or not in the same category).
You could play a similar version of Rainbow Riches in an AGC, a category C in an FEC, on machines in bookies and bingo premises, and of course online. Even more, consumer play tends to be across more than one venue when it comes to machines.
I would now like to talk about the opportunities for this sector, for which I think there are many, in how you can make progress in making the gambling industry a safe place. We want to make progress on customer interaction to make sure that it’s effective, and every day you and your staff are interacting face-to-face with your customers.
You have an opportunity to really lead the way in customer interaction by working with us to test and evaluate different approaches. As directors, CEOs, owners and managers of arcades, taking seriously customer interaction and identifying the signals of someone that is potentially at risk of being harmed means that your staff will also take seriously their own responsibility to intervene if needed.
You also have an opportunity to use your collective buying power to challenge your suppliers, to make sure that they are giving you machines which will really help you meet your responsibilities.
For example, how many clicks of the button does a customer have to make before they get information about how the game plays or how they can find help? Does anyone think that RTP figures are meaningful to customers?
The Commission is here to support you to raise standards by helping to provide a forum for sharing best practice and lessons learnt. We want to involve you in other initiatives, such as our co-creation workshops, to develop innovative solutions to a variety of challenges across the whole industry.
We will work with you to get this right. Our commitment to you is to share our research and progress when we find effective ways of interacting with consumers right across the industry.
So those are the challenges as we see it. The challenge for you as operators is clear. You need to re-focus on your own products, players and the controls you have, or your sector will face calls for regulatory interventions.
Bacta was very active regarding the changes needed to FOBTs. That was your choice, but with choice comes consequences. The risks posed by B3 gaming machines got somewhat overlooked by the media in all the noise about FOBTs, but they haven’t been overlooked by the Commission and you cannot afford to be complacent.
If you look at B2s, there was arguably a window earlier on where the industry could have taken real action that would have meant that regulatory changes wouldn’t have been required. They didn’t take it and we all saw the outcome.
On B3s that same window has now opened. This is your chance to take action but be clear that window will close, and if public concerns haven’t been addressed then you are likely to find government action being taken instead.
There have been some steps in the right direction. Initiatives like the social responsibility forum organised by Bacta are welcomed, as is Bacta’s participation in initiatives like the bingo messaging evaluation with the BA.
We are moving in the right direction, but the challenge is to do more. We need to see more collaboration and evaluation. There is a risk that if you don’t collaborate with other parts of the gambling industry, you will get left behind.
There is a real opportunity for your teams to use their own personal experiences and interactions with customers to take learnings in your sector and then share these more widely. You have a real opportunity to rise to this challenge. To raise standards, to strengthen player protections and intervention and to help reduce gambling-related harm.
You are wrong to think that this call to action isn’t for you. This call to action isn’t just for betting, casino, online and bingo operators. Make sure knowing your customer and protecting your customer is your challenge too.
Let’s collaborate across sectors to reduce harm and raise standards. I’ll finish where I started. I want gambling consumers in Britain to be able to enjoy the fairest and safest gambling in the world. I and my colleagues stand ready to work with all of you to help reduce harm and raise standards across the sector.
So let’s end the debate. Let everyone accept that gambling-related harm is an issue for family entertainment centres and adult gaming centres and let’s tackle it.