David Clifton, Licensing Expert: Time to examine the evidence

David Clifton

8th December 2020 was a momentous day for all involved with the UK’s gambling industry. It was on that day that the UK Government launched its Review of the Gambling Act 2005 and published its Policy Paper entitled Review of the Gambling Act 2005 Terms of Reference and Call for Evidence“.

There is a very specific reason why the government published a call for ‘evidence’. The then Minister for Sport, Tourism and Heritage, Nigel Huddleston MP, expressed the answer succinctly when he said: “This Review is about using the evidence to assess whether we have the balance of regulation right.”

What did he mean by that? The answer lies within the Policy Paper that explained the government’s three policy objectives, one of which is to ensure that there is “an appropriate balance between consumer freedoms and choice on the one hand, and prevention of harm to vulnerable groups and wider communities on the other”.

It was made abundantly clear that, where possible, all respondents to the Call for Evidence should provide “specific evidence or data” to support their responses. It was also explained that, after the initial 16-week call for evidence (that expired on 31st March this year), the government would assess the evidence presented and other data with the aim of setting out conclusions and any proposals for reform in a white paper later this year.

So far, in just four short paragraphs, I have used the word “evidence” seven times. You get my point. The outcome of this government review process should be about evidence not ideology, fact not fiction.

There’s nothing intrinsically new in that idea. 22 years ago, a Modernising Government’ white paper was published by a UK government of a different political hue than the present Conservative administration. It advocated that government “must produce policies that really deal with problems, that are forward-looking and shaped by evidence rather than a response to short-term pressures; that tackle causes not symptoms”.

Reflecting the ongoing recognition of the importance of evidence-based policy in shaping future legislation, the word ‘evidence’ was used many times when the UK Government published – also on 8th December last year – its formal Response to the House of Lords Select Committee’s Report on the Social and Economic Impact of the Gambling Industry.

Examples include:

  • “A robust evidence base is essential to effective policy making and regulation, and in order to make progress in this area we are working with experts to develop a model that delivers the data and insights we need to more fully understand gambling in Britain”,
  • “It is important to build the evidence base on gambling harms with high quality, independent research and is committed to working to this goal. We will be considering how to ensure the availability of high-quality evidence to support policymaking as part of the Gambling Act Review”,
  • “In reviewing the Gambling Act 2005 to make sure it is fit for the digital age, we will consider the evidence on whether additional measures at the product, or account, level are now required for online gambling products”,
  • “As part of the Review of the Gambling Act, we are seeking evidence on the case for further controls on online gambling accounts, including those based on affordability”, and
  • “We recognise that the more we tighten the regulation of the licensed sector, the more we need to ensure we have the right measures in place to prevent the black-market moving in. We are … seeking evidence on the extent and risk of the black market in our consideration of the Gambling Commission’s powers through the Gambling Act Review”.

In some instances, the government’s Response to the Select Committee’s report was specific on where evidence in support of particular calls for reform was lacking, for example:

  • “To date, the government has not seen evidence demonstrating a causative link between exposure to operator logos ….. and problem gambling in children or adults. Nor have we seen evidence that a familiarity with operator logos is linked to problem gambling”, and
  • “The Gambling Commission and government have not seen clear evidence that allowing operators to show or stream sport poses a risk to the licensing objectives, including the protection of children and vulnerable people”.

One trusts that those presently sifting through the responses to the government’s Call for Evidence will have been carefully briefed to differentiate between dogmatic expressions of opinion on the one hand and, on the other, evidence-based comment directly relevant to the 45 questions posed by the government and the issues that those questions seek to resolve.

Included within their reading material will be submissions by the Gambling Related Harm APPG and ‘Peers for Gambling Reform (PGR).

The APPG submission treads a similar path on the issue of affordability to that set out in the recently published Centre for Social Justice report entitled Not a game: a call for effective protection from the harms of gambling. The CSJ’s proposed ‘solution’ to the affordability conundrum is open to criticism as being wholly unrealistic for the land-based sector and raising obvious questions of feasibility insofar as its application to the remote sector is concerned.

If implemented, it could well fall foul of the law of unintended consequences, but it makes for an interesting read if only to see how complex and bureaucratic a solution might be foisted on the sector unless a proper sense of proportion is applied.

The PGR submission was supplemented on 26th May with a report on the economic analysis of selected recommendations of the House of Lords Select Committee Report, that includes assumptions on mandatory affordability checks and stake and speed of play/spin limits for online gaming.

PGR Chair, Lord Foster of Bath, enthusiastically welcomed the report by saying: “The evidence base and now the economic case for reform have now been made. This Government now needs the resolve to get on with it”. Betting and Gaming Council CEO, Michael Dugher, couldn’t disagree more, dismissing the content of the PGR report as containing “fantasy figures” and “economically daft” ideas.

In the meantime, Gambling Commission staff are continuing to sift through the more than 13,000 responses to the regulator’s Remote Customer Interaction Consultation and Call for Evidence on “affordability thresholds and actions” for the remote gambling sector. A good number of those responses will doubtless cover similar ground to submissions in response to the government’s Call for Evidence.

It was clear from the Moment for Momentumspeech by the Commission’s Tim Miller at the end of March that it would be some time before we learned about the outcome of that Gambling Commission consultation process. He said then: “Given the volume of responses that we have received, it is perhaps unsurprising that the process of giving detailed consideration to all the evidence is still ongoing with extensive further work and engagement likely to be needed”.

This was reinforced more recently by Sarah Gardner, the Commission’s Acting Joint Chief Executive since Neil McArthur’s sudden departure in March, who delivered a speech entitled Reducing risks, tackling harms” on 20th May. Some industry headlines focused on her acknowledgement that recent data shows “a clear reduction in the rate of at-risk gamblers and also suggests that we may be starting to see a decline in the overall rate of problem gambling”. [In passing, I should include reference to a recent research finding that online surveys tend to over-estimate the prevalence of gambling harms.] 

However, it was once again the issue of affordability that grabbed most headlines. In her speech, Sarah Gardner described this as “a controversial and complex area” in which the Commission needs to “strike an appropriate balance between consumer protection and concerns about privacy and consumer choice”, adding that “such a volume of responses will take time to process. But this will not stop us dealing with levels of harm that are clearly well beyond any borderline of acceptable risk”.

Expanding on this, she indicated that the Commission’s initial focus will be on cases where customer interaction failings relate to plainly obvious unaffordable gambling activity by customers, saying:

“We will be taking the next steps towards introducing requirements on operators to take action at more appropriate levels. Our immediate action will be focused on preventing the types of cases we still see too much of in our casework. In particular, this will tackle where operators have allowed people to gamble amounts that are clearly unaffordable, with very limited or no customer interaction until a very late stage; we will act to prevent harm to those who are financially vulnerable.”

What we didn’t know then was that, just a few days later (on 25th May), the Commission would be confirming this by way of a formal update on its Remote Customer Interaction Consultation and accompanying Call for Evidence. That update has served to remove, for the time being at least, concern that a £100 loss per month threshold for a mandatory affordability assessment might be imposed within the near future.

Instead, the Commission is advocating more of a risk-based approach whereby it is prioritising for action cases where (a) customers have been able to spend many thousands of pounds in short periods, including minutes, without any check, (b) customers have significant losses over a period of time without sufficient assessment of whether they are being harmed and (c) information is available that shows when customers are particularly financially vulnerable and likely to be harmed by their level of gambling.

The last of those priorities raises the question to what extent UK licensed remote gambling operators will need to establish whether a customer is “particularly financially vulnerable”. The Commission’s expectations in this respect will hopefully become clearer as it “continues to engage with consumers, the financial sector and the gambling industry the information about customers that should be available to gambling businesses” – to quote the update.

All of this leaves wider open the question whether the overall affordability checks question will be decided not by the Gambling Commission but instead by Parliament. As I have said before, so many concerns have been expressed that imposing monthly spending caps on gambling consumers (in line with the Commission’s consultation affordability proposal) would constitute such a fundamental policy change affecting personal freedoms that it would be constitutionally wrong for it to be considered otherwise than in Parliament as part of an evidence-based Government Review of the 2005 Act. So on that note, I finish exactly back where I started!

_________________________

David Clifton – Director – ‎Clifton Davies Consultancy Limited

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