Andrew Rhodes - speech at IAGR Conference 2022
18 October 2022
On 18 October, the Commission's chief executive Andrew Rhodes delivered a speech at the 2022 IAGR Conference in Melbourne.
His speech was titled: Time for change? Reflections on the policy landscape and developments in Great Britain.
Thank you, it is a pleasure to be here.
As I am sure all of the delegates are, I am very grateful to IAGR and our hosts for holding this very important conference here in Melbourne.
I know where here is, and it’s a very long way from home. I am far less confident about when now is. For me, it might already be tomorrow.
I am going to share with you our experience in Great Britain with a particular focus on what we have seen happen in the gambling industry since the pandemic and the recovery that is still taking place.
In Great Britain we have the largest online gambling market in the world and one of the most liberalised. So, what happens in the UK will likely happen in your jurisdiction, if it is not already happening.
So, if you look at me and see a haggard, worn down husk of a human being, remember that you may simply be looking at your future...
I am sure this is fairly universal for the attendees in this room, but if you want to make people happy then it’s probably best you sell ice cream for a living – don't regulate the gambling industry – people will always be unhappy with you for a variety of conflicting reasons.
What we do is hard. Opinion is often split, facts and information are often contested or used without sufficient context and political consensus is often hard to come by.
With that liberalisation and scale comes innovation and challenge – for operators and for us as the regulator.
So today I want to take some time to give you an overview of what is happening in Great Britain as we see it as the regulator.
I’ll talk you through what interventions we have made to make gambling in Great Britain fairer, safer and freer from crime. How those interventions came about and what impact we think they’ve had.
And I’ll also look to the future. Where we see our market going and how current global trends we see are leading to new risks for us but also provide new opportunities as well.
But first, let’s start with where we are back in Britain?
Clearly the last few years have seen massive disruption which we still haven’t seen the end of. The Pandemic changed societies across the world and in Great Britain as in all of your jurisdictions - gambling and those who gamble were not immune.
Our data, since Public Health restrictions eased, also shows the unbalanced nature of the impact:
Year to March ’22, showed participation up by 3% reflecting land based opening up. Still lower than pre-pandemic though.
In-person gambling participation rate increased to 26% (from 23% in year to March 2021) showing some signs of recovery since the pandemic.
Online gambling participation remained statistically stable at 26%, compared to year to March 2021, but continues its long-term increase.
And I know Ben Haden will dig further into these points this afternoon.
There are some things here worth realising – we are not seeing inexorable growth in the UK gambling market:
Overall participation in gambling is stable and has not been growing.
It is true that online has continued to grow, but the whole market is not.
Clearly online gambling grew rapidly during the pandemic when the land-based sector could not operate, or was heavily restricted, and some tend to point to this as a sign that gambling participation has exploded – it has not.
For those of you here this week who are wondering and perhaps worrying what the total scale of licenced gambling might be, we can say that we are certainly seeing a plateau in the UK.
What we think this means though, is that we will see a continuation of new and novel products entering the market as well as attempts to extend the participation of certain demographic groups.
Whilst we have seen overall participation remain statistically stable, we are seeing more women gambling than before, as an example of that change.
But in Great Britain we’re also seeing two other big drivers on operator and consumer behaviour starting to impact on the market.
The first is the cost of living. No doubt there are similar stories to varying degrees in many of your jurisdictions, but increases in the cost of living appear to be leading to operators starting to make changes to their staffing and operations – even before we see much evidence of it affecting consumer gambling spend.
The other are the changes operators are making to apply safer gambling measures.
A number of the largest operators are stating revenues are down due to safer gambling measures they are introducing in terms of stake limits and affordability measures being enacted.
They’re also suggesting the proportion of their revenue coming from high spending customers may be reducing, with a pivot towards lower spending customers.
Two of the largest gambling groups in the UK have reported a significant fall in the proportion of income from higher spending customers.
One of these has seen income from higher spending customers fall from 19% of income three years ago, to 5% now.
Another operator has introduced automated affordability checks where they are rejecting 7% of customers at the point of application due to financial risk.
These companies are major multinational operators and have made conscious choices to actively reduce reliance on high-risk and higher-spending customers. I think this is significant.
I’ll come back to this later but had anyone thought that the uncertainty of the last few years may lead to a slow down in mergers and acquisitions, they would have been mistaken.
What we’ve seen in Great Britain is that the now top 3 operators have increased their market share from around 1/3 to 1/2 in just the last five years.
The top 10 operators now represent 77% of total B2C GGY in Great Britain and the top three will represent over 50% when recent mergers are accounted for.
Underlying market conditions may suggest the growth in market share of the top 10 could continue, as a result of the current economic and regulatory headwinds, as well as further return of retail.
What’s more the appetite for acquisitions continues. Whilst the biggest operators will no doubt run into scrutiny from the UK Competition and Markets Authority if they continue with B2C mergers, B2B remains open to further consolidation, as do operators in other jurisdictions, active in other markets.
This is probably the point where I ought to mention the advertising of gambling. I would be surprised if there are many in this room who do not experience the advertising of gambling as a difficult public and political issue.
Gambling advertising and sponsorship is a major talking point in the UK and the very high levels of spending are sometimes claimed to be evidence of growth in gambling participation.
As I have already said, we are not seeing a growth in overall gambling participation, but we do know that there is fierce competition for market share.
The other sticky issue is sponsorship. If I take the Premier League and Championship as examples, we see overseas operators with little presence in the UK market sponsoring teams due to the international television coverage. They have to be licenced in the UK, but sometimes we are not the target market – you may be.
Whilst we monitor what’s going on in the established market the Commission is also alive to emerging products.
Now when I talk about this, I don’t mean the ‘Black Market’ of unlicenced gambling. We all face this issue, some more than others and of course, that is a concern and one that the Commission also tackles day in, day out. And we are deploying more resources to combat illegal online gambling.
But with a large and diverse licenced online sector in Great Britain, this is not the overwhelming risk it is sometimes painted to be, nor can it be the excuse for not addressing some of the extremes we see in the regulated industry.
Now, when I talk about emerging products, I’m talking about products such as non-fungible tokens - or NFTs - ‘synthetic shares’ and crypto currency. They are becoming increasingly widespread and the boundaries between products which can be defined and regulated as gambling are becoming increasingly blurred.
We are likely to see more and more integration of these types of products into sport and other areas of lifestyle, as well as the legitimate gambling industry. These are lucrative growth areas, and we ignore them at our peril.
Finally, we are also awaiting the Gambling Act Review in Great Britain. The Review is of course a matter for the UK Government, but as and when the next step in the Review occurs – the publication of a Government White Paper – this again may lead to further impacts on the gambling sector and potentially a further round of mergers and acquisitions.
I’m sure what I’ve just described, in the main, you are seeing back home as well. And if you aren’t, you soon will. This isn’t really a surprise. Many of us will be dealing with the same operators and groups of operators.
We will be tackling the same issues too, whether you are a newly regulated market, licensing online gambling for the first time or a large and mature market.
And ultimately, we all want the same thing too – operators who are compliant with our regulations and rules.
But we know as well as you, in such a volatile and innovative environment, it can be hard to keep pace.
And a lot of the time, that story suits all too many operators in the gambling industry.
Take customer interaction and affordability. For years now we have had regulations in our LCCP on customer interaction. And we have taken enforcement action repeatedly where operators have failed to meet our expectations.
But too many operators didn’t get the message. Some continued to say this was all too hard.
So we have brought into effect further, more prescriptive rules on customer interaction.
We are consulting on new guidance that explains how to be complaint.
And we aim to consult further on how to further improve outcomes for consumers.
Sadly some operators continue to pedal the story this is all too hard. But the Gambling Commission has a duty to make gambling fairer, safer and free from crime. Our duties don’t end even if something is hard.
So in the last 10 months alone 16 operators have paid out a total of £45m because of regulatory failures. A further two have had their operating licence suspended because of regulatory concerns.
For comparison, in the whole of 2016/17 full financial year we took action against 3 operators who paid out £1.7m for regulatory failures.
At this volume, we think the message is starting to get through. And we refuse to accept the pace of the slowest when we are confronted by recent stories of people suffering as a result of preventable harm.
For example, one customer was allowed to lose £70,000 over a 10-hour period just a day after opening the account.
One operator gave a customer they knew was an NHS worker earning £1,400 a month a monthly deposit cap of £1,300.
Or the operator who didn’t carry out any meaningful responsible gambling interactions with, or place any effective restrictions on the account of, a customer who spent £245,000 in three months despite knowing she earned just £30,000 a year.
And this is just one area we are working to move the dial in favour of good practice protecting normal people and away from poor practice that leads to unfair and harmful outcomes for the same consumers.
We continue to work with industry and the Information Commissioner’s Office to develop a ‘Single Customer View’. A Single Customer View would give operators a full picture of a customer’s risk of harm whilst keeping the customer’s data secure. A Single Customer View could dramatically help reduce harm and that is why we will not accept progress at the pace of the slowest on this work either.
A problem we will all face is that a very responsible operator may exclude someone from gambling, or force a pause in their gambling as they are showing signs of harm.
However, this may simply result in a person who may be in distress simply moving to another operator, and then another, and another.
All of the operators could behave sensibly and reasonably, but there is nothing that would stop a customer experiencing serious gambling-related harm across multiple operators.
The single customer view will allow operators to be alerted to customers who have been excluded by another operator due to concerns about their level of gambling, thus breaking this circuit.
A trial is due to begin in the coming months and we look forward to the results, but this has the potential to be a significant step change in improving the safety of gambling.
We are also now in the experimental phase of the work to improve our Participation and Prevalence statistics. Not understanding the scale of a problem always makes it harder to find solutions. We were pleased with the outcome of our trial earlier this year and expect to move over to the new methodology next year.
We’re also putting resources into looking at how we can make quicker and better use of the data that we at the Commission collect and access, in order to deliver better outcomes for consumers. We are including our Digital Advisory Panel in our data sprint and I’d be happy to discuss it with any of you later this week.
We are also continuing to ramp up our compliance and enforcement work, with quick triage of operators into special measures, direct engagement from myself and others where we are starting to see failings and a remorseless escalation of penalties for operators who fail to reach our standards.
Of course, not all of this work always leads to all consumers being happy with us either. Some punters are worried about what we are doing with customer interaction and want reassurance that their data will be looked after in any Single Customer View that is taken forward beyond trials.
Roughly 22 million gamble in Great Britain every four weeks. It’s rare 22 million people agree on anything!
Balancing protecting people from harmful or unfair outcomes with freedom of choice is an issue for each jurisdiction to look at themselves. Checking we have the balance right for our society’s purposes is something the Gambling Act Review has the capacity to look at in Great Britain.
But understanding what motivates and drives consumers is vital to our role. That’s why we’re also putting our consumer research at the heart of what we do. Our ‘Path to Play’ research, published earlier this year, is the latest step in this work. I’m sure this isn’t a surprising piece of work to many of you in this audience, no doubt some of you have something similar. We certainly know operators do.
We wanted to explore what the typical consumer journey looks like, from the beginning of a gambling interaction to the end.
Crucially this had to be from the gambler’s perspective, which we know is quite different to what an operator sees, or our perspective as a regulator. We wanted to better understand what factors influence them, where there may be greater risks for some players, and identify key touch points or opportunities for intervention.
The overall aim was to create a framework of the ‘path to play’ showing the key milestones and stages gamblers go through when they gamble, which the Commission can then use to shape its policy development work, ongoing research and wider communications – ensuring the experiences of consumers are at the heart of what we do.
We don’t set out to develop a ‘one size fits all’ model. We know that gamblers and their experiences are all slightly different. But taken as a framework, we hope it and the approach that follows can help us going forwards.
All of this work though, from the successful innovations, to the sadly necessary enforcement actions, can and should lead to more compliance and fairer, safer, crime free gambling. In a globalised industry however, there are of course significant gains to be had from regulators working more closely together across borders and across jurisdictions.
We see greater collaboration amongst all of us, gambling regulators across the world, as the essential next step in tackling the challenges that the morphing of the gambling market into a global tech industry pose for all of us.
As I’ve already said, we all want the same outcomes for our jurisdictions - operators who are complaint with our regulations and rules.
In a world where many of us have the same companies, operating at the same scale, offering the same products, why can’t we share notes on how they are performing?
At the Commission, we monitor the situation in other countries. And we are seeing operators that we take action against, starting to be tackled by other regulators as well. Often for very similar issues.
It is of course to be welcomed that the poor practice and harm that we are trying to stamp out in Britain is likewise being stamped on in other places. But wouldn’t it be better if we could find more ways to coordinate?
We already look to share best practice and learning from each other’s experiences but clearly this is an area we can all do more.
And are there ways we can share intelligence? If a multi-national operator is engaging in poor practice in Britain, there must be a chance the same issues are occurring elsewhere.
At the Commission we want to have a meaningful conversation with you about how we can turn ideas like this into a reality. And we want to do that now.
The quicker we can find ways to work together in pursuit of fairer and safer gambling the better for all of us, as the challenges we face will continue to become more complex.
Just last month the Gambling Commission successfully awarded the Fourth National Lottery Licence to Allwyn. Our priority was to run a competition that would attract a strong field of candidates. Having received the most applications since 1994, it is clear that we've achieved just that. And I’m confident that the success of the competition will lead to a highly successful fourth licence – one that maximises returns to good causes, promotes innovation, delivers against our statutory duties, and which ultimately protects the unique status of the National Lottery. That said, as a result of the competitive process we ran, the outcome was inevitably taken to Court.
This has become one of the biggest procurement litigations in the world. It’s still on going.
But it points to how our jobs as regulators continues to get harder in the new global tech industry we now look to regulate.
All those Mergers and Acquisitions I was talking about earlier continue to get more complex. More multi-layered. And so more expensive to investigate. As we move from a world of small time bookmakers to multinational online casinos, its algorithms that make a decision on who can bet and at what odds, not a person who looks you in the eye.
Across markets, across jurisdictions, across cultures, collaboration will need to be a key tool in our work to make gambling fairer and safer for consumers worldwide.
And we as regulators now need to grasp those opportunities to work together in a more joined up way. Let’s do more to share practices, share understandings and share outcomes of our work.
Gambling will always be a fast changing and innovative sector. It will also always be an industry that attracts strong and wildly different views.
But wherever our jurisdictions are on the scale, as gambling regulators we all want the same thing – compliance.
If we can crack ways to better work together - sharing data and intelligence, adopting common approaches and coordinating actions where possible – we can achieve globalised progress across a globalised marketplace.
It’s a real pleasure to speak to you here today, I’m looking forward to your questions and speaking to many of you throughout the week.
Let’s raise our ambition, let’s work together and let’s make gambling fairer, safer and more crime free.
Last updated: 18 November 2022
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