David Clifton: Licensing Expert – First thoughts on UKGC’s FOBTs & social responsibility recommendations

David Clifton

It’s been a long wait, and an even longer debate, but in an announcement that will undoubtedly have a very strong influence on Government gambling policy, the UK Gambling Commission has advised that whilst a stake reduction for FOBT (category B2) machines is appropriate to reduce the risk of gambling-related harm, that alone is unlikely to have more than a limited impact.

The Commission’s advice, therefore, builds on the above by identifying a package of measures which it considers, taken together, could “form a coherent strategy for tackling harm in relation to machine play”.

The Commission’s headline recommendations are that:

  • FOBT slots stakes should be limited to £2,
  • the stake limit for FOBT non-slot games (that include roulette) should be set at or below £30 if it is to have a significant effect on the potential for players to lose large amounts of money in a short space of time,
  • the facility for machines to allow different categories of games to be played in a single session should be banned,
  • there is a strong case to make tracked play mandatory across machines categories B1, B2 and B3,
  • similar kinds of protections, such as player limits, that are in place on FOBTs should be extended to category B1 and B3 machines, and
  • steps should be taken to make limit-setting more effective, for example ending sessions when consumers reach time and money limits.

The Commission advises that, when setting a maximum stake for B2 machines, the Government should consider the likely impacts on gambling-related harm, commenting that whilst lower stake limits reduce the potential for players to lose a lot of money in a short space of time, it can be expected that players will respond to lower limits by adopting riskier staking strategies, playing for longer or switching to other gambling products.

Those who had forecast a £2 staking limit for roulette-type FOBTs will take note of the Commission’s comment that “a very low stake limit would make B2 a ‘softer’ form of gambling that is available in arcades, bingo halls and pubs, which are less tightly regulated than the betting shops and casinos in which B2s are permitted”, which is why the Commission has stuck with the principle that ‘harder’ forms of gambling are to be permitted in more tightly regulated venues. However, it also makes clear its expectation that operators will provide adequate staffing levels to maintain a safe gambling environment, saying: “appropriate levels of well-trained staff are necessary for operators to meet our expectations in full around social responsibility and keeping gambling crime free”.

In what may lead to a ray of hope on the part of operators, the Commission is suggesting to Parliament that the effect on consumer choice of a maximum stake reduction is an important consideration, for example where imposition of lower limits will reduce the staking options for consumers and a very low limit is likely to remove a popular game (roulette) from betting shops. This may be what led to the Commission’s Executive Director, Tim Miller facing a challenge on BBC Radio 4’s ‘Today’ programme that the industry had “got to” the Commission. However, this was entirely refuted by Miller, who made it clear that the Commission has focussed solely on the impact on the consumer, with the consequence that the betting sector’s economic arguments (such as increased unemployment arising from betting shop closures) have played no part whatsoever in the Commission’s recommendations.

He also emphasised that, contrary to some immediate media reports, it is not the case that the Commission is recommending a reduction to a maximum £30 stake for non-slot FOBT games. He said that it would be consistent with the Commission’s advice if the Government decides to impose a lesser maximum stake than that and, in so doing, it will be important that it takes into account public and Parliamentary opinion. This is consistent with what is said in the Commission’s advice, namely that “gambling regulation needs to be rooted in an understanding of what is acceptable in society, so it is important to take account of the opinions of consumers, parliamentarians, local authorities, faith groups and other stakeholders”.

It follows that this is by no means the end of the saga. It is merely the beginning of the end.

Although newspapers will no doubt continue to focus their attention on merely the so-called “crack cocaine” FOBT staking limits, it is important to understand what else the Commission is proposing.

A key recommendation by the Commission, described by it as presenting a ‘strong case in principle’, is mandatory tracked play across category B1, B2 and B3 machines in order to increase the availability of information, giving:

  • consumers access to information that it says “would help them keep track of their own play and make informed choices about whether to continue”,
  • operators “no excuse if they fail to identify players that are starting to show signs of problematic gambling” and
  • Government and the Commission “a clearer picture of whether the industry is meeting its social responsibly obligations,” so that it can target its regulatory interventions appropriately.

This represents a triple-blow for betting operators because, in addition to what they believe will be a large reduction in demand if machine play has to be tracked, there would also be obvious adverse cost consequences as well as a considerable step being taken in the direction of account-based play.

In terms of additional cost, operators would need to ensure that they have the hardware and the infrastructure in place to allow machines to:

  • identify who is playing (even if only via a number),
  • track what the player does on the machine and
  • transfer data to a storage facility where it can be stored securely and analysed.

In addition, the substantial ongoing cost would be involved, including for:

  • the capture and storage of (a) player details at registration (if this was required) and (b) all of the play data that would be linked to an individual player’s account,
  • additional data protection requirements where more personal information is linked to a player’s account, particularly bearing in mind the new GDPR arrangements that come into force on 25 May 2018 and
  • monitoring player data to identify potentially problematic behaviour justifying intervention, which the Commission says “is likely to lead to a step-change in the level of resource operators use to monitor player behaviour”.

The Commission’s answer to operators’ concerns about mandatory play tracking is that they would expect operators to respond “by incentivising players to sign-up, and by developing innovative new products that would not require their play to be tracked”.

Another key recommendation is the proposed ban on FOBTs being able to allow different categories of game to be played in a single session, which would stop players from switching rapidly on one machine between a fixed odds game such as roulette (that provides them with the opportunity to manage their own risk by spreading their stake) and slots games (that have a lower return to player and potentially more volatile outcomes, and that offer less opportunity for players to manage risk through different staking strategies). The Commission’s data shows that B2 slots sessions give rise to a greater proportion of significant losses and a greater proportion of significant wins than is seen in other B2 sessions (which are mainly roulette) – hence the recommended £2 maximum stake.

I predict that the betting shop operators will seize on the Commission’s comment within its advice that “any restriction on freedom of choice requires careful consideration”. However, what has been clear from the outset of this entire saga is that the Government’s decision will be evidence-led. The Commission’s newly announced recommendations are based on its analysis of data from “billions of plays on B2 machines”, so that is going to be difficult, if not impossible, to contradict.

In terms of other aspects of the Commission’s advice:

  • it will consider extending requirements around time and monetary limits from B2 to B1 and B3 machines, and explore how to strengthen those measures,
  • it does not support permitting direct debit card payment methods for gaming machines until there has been sufficient research into the adequacy of any harm mitigation measures,
  • if the industry fails to implement improvements in funding the present voluntary arrangements for problem gambling research, education and treatment, the Commission thinks it is entirely appropriate that the Government should consider alternative options, including a statutory levy,
  • the Commission will continue to work closely with the ASA to enforce advertising standards, particularly when there is a risk of consumers being misled and engagement is to continue with the main social media platforms to explore how vulnerable people can limit their exposure to gambling advertising online.
  • in terms of online gambling, the Commission will:
    • consult on:
      • amending the LCCP to require age verification to be completed on all consumers before they can deposit money and gamble, and for play-for-free games to be available only after age verification is completed,
      • introducing a CDD requirement that operators have more information about their customers at an earlier stage (including a requirement for players to be verified before they are allowed to gamble) and setting limits on players’ spending that could only be increased once operators have further verified information about the player (for example via “an affordability check”) and
    • undertake further work on:
      • assessing the effectiveness of current consumer protections,
      • reviewing game and product characteristics to identify whether particular features pose a greater risk of harm than others,
      • reviewing its requirements on the protection of customer funds (including whether there are sufficient protections around dormant accounts),
      • considering whether gambling on credit should continue to be permitted, and
      • considering whether it needs to make changes to LCCP in order to ensure that consumers can withdraw funds more easily
    • it is not just betting operators who will be disappointed with much of the Commission’s advice; it contains no positive news for casino and arcades operators either.

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David Clifton – Director – ‎Clifton Davies Consultancy Limited

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