CEO Neil McArthur at CMS conference
We meet at an important time for consumers, for gambling operators and for regulation.
First – there is an increasing focus on consumers and the way they gamble – especially online.
We know that millions of people gamble and that many get great pleasure from it but consumer confidence has been in decline for years. You may think that’s the Commission’s fault, but I think you’re wrong as I will explain.
We know that far, far, too many people are still being harmed by gambling and, if you think that is simply a fact of life and cannot be changed, not only do I think you are wrong; I am going to explain why you need to find another job if you are operating in Great Britain or advising operators in Great Britain.
Second – operators and their representatives are changing
The CEOs and Boards I meet are clearly committed to making gambling safer. I welcome that. The industry trade bodies are making public commitments to make gambling safer. I welcome that – in particular, I welcome the change of tone from the British Gaming Council over what has gone before. Operators are collaborating for the benefit of consumers. I welcome that, as the more perspectives you bring to a complex problem, the more likely you are to find a solution.
Third – Regulation is constantly changing:
It is clear that there will be a review of the legislation regulating gambling. We don’t yet know the scope of that review, but it is vitally important that regulation keeps up with the market and operators’ practices. Indeed, every consultation we run on LCCP is, in effect, a consultation on law changes.
The gambling market is increasingly global and international cooperation is vital. We may regulate different jurisdictions but increasingly we regulate the same operators and we share the same concerns
It is easy to accuse regulators of being ‘asleep on the job’ but it isn’t true. I lead a team who are passionately committed to making gambling safer. For example, I have colleagues on our contact centre dealing directly with consumers, some of whom are in crisis and need help. We meet frequently with people with lived experience and we try and bring them into our work and will try to do more of that, because it helps change mindsets. And I’d like to explain on a personal level why I am so determined to make a difference for consumers. I have gambled and I can see why people gamble, provided it doesn’t become a problem. At the same time, I spent my early career as a local authority child protection lawyer - I know the terrible affects that addiction and neglect can have on families. I have sat across the table from a number of families and individuals whose lives have been devastated by gambling and, I have sat, waiting to give evidence about the regulatory framework at an inquest and watched the CCTV footage of a man taking his own life.
So, I realise that criticism goes with the job. I welcome fair criticism and feedback, because there is always more that can be done and criticism can help you perform better. But, more balance to the debate would help all of us. Boiling complex challenges down to soundbites doesn’t really help: I don’t meet with ‘predators’ I meet with people and on the other hand wonder whether we are really in an area of paternalism?
Paternalism, is the “practice on the part of people in authority of restricting the freedom and responsibilities of those subordinate to or otherwise dependent on them in their supposed interest” and I am looking forward to the discussion later to learn more.
That’s not how I see it. Consumers have always been at the heart of our approach to regulation and they always will be. We don’t suggest that we know better than they do, we bring them into our work and we want to do that more and more in the future.
So, what do we know about consumers? I want you to look at this chart. Gross gambling yield has risen although may be showing signs of maturity. In 2008/09 GGY for the sector stood at £9bn billion. By 2018/19 this had risen to £14.4 billion. Participation- participation in gambling is also declining. In 2012 participation in gambling (in the past 4 weeks) stood at 57%. In 2018 it had dropped to 46%. Trust and confidence in gambling is down. This is not a short term or recent issue. In 2008 49% of the population agreed gambling was fair and could be trusted.
In 2018 that number had shrunk to 30%.
So, in a nutshell: GGY is increasing but participation going down – more money being taken from fewer consumers – largely online – and moving to mobile – and GGY shows that they are more likely to be playing products like slots. Let’s unpack that a bit. The Commission is – and always has been – a risk-based regulator. At the Commission we look at risk through several different lenses: The person, the product, the place and the provider.
As consumers move online and move to use their phones the risk profile changes. For many people, the place they gamble is now their phone, which is always with them. What new risks does that that create? And consumers playing online are moving to play slots. What new risks does that create?
What about consumer confidence? It is also simply unacceptable that there remain more than 300,000 problem gamblers in Great Britain and many more at risk of suffering gambling related harm. I think we will only see an increase in consumer confidence if we see a drastic reduction in the numbers of people suffering gambling related harm.
Some commentators have suggested that 340,000 problem gamblers is a glass floor that can’t be broken through. As I said earlier, if you think that we cannot reduce the number of people experiencing gambling related harm, you need to find another job. There is a saying: if you believe you cannot do something, you’re right. So, if you believe nothing can be done, you have already failed. Your mindset is wrong and that self-limiting belief means that you are going to struggle to make progress. So if you cannot change your mindset you need to go and do something else and make way for other people.
I can see that a consensus is building about what needs to be done. Moreover, it isn’t a consensus born out of a ‘belief’ or assertion about what will work. It is built on evidence and experience, which is why I welcome the panel discussion with voices from industry, as well as Anna Hemmings from GamCare. But are the bad news stories about gambling the Commission’s fault? Maybe – but the solution sits with operators, not me. In 2017, we introduced a much tougher compliance and enforcement regime. We did that because we needed to significantly change the behaviour of operators and those who run them. There were far too many failures, too many repeated instances of lessons not being learned and – frankly – standards were not good enough. I realise that each press release we put out adds to the weight of negative stories, but it’s not my job to create positive stories or supress bad news stories. The cure lies in having good news to tell and not having bad news stories of compliance failures to publish in the first place.
The Commission will continue to be tough on those who do not meet our expectations but I am pleased to be able to say that we are seeing signs that behaviour is changing. Here is just one example: Not so many years ago – and I see some former colleagues from the Commission in the room, who will remember this – many operators argued that the MLRO had to be completely separate from the rest of the organisation. Safer gambling was something entirely different to AML controls. Now, when I visit operators, I am introduced to integrated teams, where money laundering and safer gambling issues are shared and a more holistic, real-time, view of each consumer is being built up.
Operators: Collaboration and innovation. Consumer behaviour and technology are changing so quickly. Small incremental improvement will not keep pace with emerging risks or opportunities. I am prepared to work with anyone who shares a willingness to make gambling safer. I want people to be able to enjoy gambling but not be put at risk. I am also convinced that only a bold and innovative approach will allow us to reduce risk and achieve the reduction in the gambling harms rates that we need to see.
Bold and innovative are not necessarily words that people associate with regulators, or lawyers. So as a regulator and - no longer practising – lawyer, this could be seen as a risky place to venture into. And it is a risk: There is a risk that I am accused of being too cosy with the industry, or permitting the industry to regulate itself – it isn’t true but is easy to say. But it’s a risk I am happy to take as I think we have a massive opportunity to make significant improvements for consumers, which is why we have launched four initiatives which have the capacity to deliver real and rapid change for consumers in key areas of risk:
First, Product and Game Design. We know that success of products and games depends on their ability to establish and maintain the engagement of their consumers.
We know that this can be done using behavioural techniques. These can change behaviour without the consumer’s knowledge, not always in good ways.
That is why we have challenged the industry to work together to produce an effective Industry Code for Game Design, to be published no later than this Spring’s Raising Standards conference.
Such is the interest in this important work that we have two teams of operators working on it. We expect the code to set out: the techniques that the industry plans to use when designing apps, online games and gaming machine products, the risk associated with each product and how they can be mitigated, a clear explanation of what is not acceptable. To support this the Commission will: act as a sounding board for ideas, and ask our Digital Panel to collaborate around the challenge.
If the Code is a success, the Commission will move to bring it into LCCP and Technical Standards to ensure a level playing field. If not we will have to urgently consider other options.
Second, Incentivisation of high value customers. Despite the LCCP provisions which cover this, the evidence we get from our enforcement work, compliance work and consumer feedback suggests that current requirements are not effective. More needs to be done so we launched this second initiative. Conversations have been developing across the industry about this for some time. So, with thanks, we have now taken up GVC’s offer to lead the development of a code of conduct in this area. We must see tangible progress quickly or else we will have other action to address this.
Thirdly, the use of Ad Tech. We are still awaiting the final report from the major research report that Gamble Aware commissioned on gambling advertising and its effects on children, young people and vulnerable adults. The Interim Report shows that ad spend has surged over recent years and that Children, Young People and vulnerable adults are being exposed to significant levels of gambling ads online - including via social media. This concerns us and it should concern the industry. I am not suggesting that children, young people or vulnerable adults are being actively targeted but the research found very little evidence of ad tech being used to proactively target ads away from these groups. Exploring how operators can make better use of technology to minimise the risk of exposure of gambling advertising content to children, young people and vulnerable adults is key for this challenge. Again, we expect progress by the Raising Standards Conference in the Spring and thank you to Sky Betting and Gaming who has stepped forward to lead this work. A single customer view. The fourth piece of work we are collaborating on with industry is slightly different but if it is successful could become the most significant. A single customer view has the potential to be extremely powerful. We recognise the challenge of keeping a customer safe where operators currently only have a partial view of a customer’s behaviour.
We also know the technology exists to facilitate a single consumer view and making that work would significantly enhance player safety.
Since announcing our intention to push this initiative, we have been delighted with the interest from industry. The Betting and Gaming Council will help coordinate the operators involved - thank you to Brigid, who is here today and her team for their help – and we will do everything we can to ensure that the initiative has the chance to succeed.
For example, we know that GDPR compliance and compliance with LCCP will be at the forefront of operators’ minds – it has been seen in some quarters as an insurmountable barrier to progress – but it doesn’t need to be. We will be supported by the ICO at our ‘TECH SPRINT’ so participants can be reassured about compliance with data protection laws. That ought to create the conditions to allow us to push ahead with innovative solutions in response to the challenge.
We are working towards an event in February for this and so again, I look forward to progress being discussed at our Raising Standards Conference.
Regulation. How are we using regulation and how will it change? It is important for regulation to keep up with changes in technology and consumer behaviour. It’s also important that regulation is based on the best available evidence and judgement, whilst reserving the right to take a precautionary approach when the evidence is not necessarily conclusive.
This is not always a popular approach. To re-use a line in a recent article, we risk “pleasing none of the people, none of the time”. But our approach is not going to change.
In the last twelve months we have: Strengthened age and identity verification online to further protect children and the vulnerable. Strengthened requirements on how gambling operators identify and interact with customers who may be at risk of experiencing gambling harms. Taken the decision to ban gambling with credit cards. All these actions were taken based on evidence, after consultation and to make gambling fairer and safer in Great Britain, but it’s a difficult path to tread. It’s important to remember, the Gambling Commission is not alone in having to tread this line.
It’s great to see other international regulators here. In the last 12 months we have strived to work even more closely with other regulators as they have with us. Whether it be colleagues in Gibraltar who we met with last Spring; Malta’s MGA who we visited in October and are here today; the Danish Gaming Authority who met with us last year; or the many others from around Europe and the world. Increasingly I think you will see cross regulator action being taken in the years to come.
We are making progress and I have today outlined where we need more progress. The initiatives on product and game design, incentivisation and Ad-Tech are all important opportunities to raise standards. As is the challenge to create a single customer view. As I said at the start, we meet at an important time. We are making progress and I have outlined where we need more progress, more quickly. Changes in consumer behaviour and technology will continue to create new risks to consumers and new opportunities to keep them safer. Taking those opportunities will need us all to take risks. Not everything will work. Nothing will be acclaimed or praised until there is clear evidence that it is having a true impact.
I and my colleagues at the Commission stand ready to work with anyone who shares our determination to make gambling safer. If we work together, I am sure we can do that.