SBC News Winning Post: WHO is protecting the children?

Winning Post: WHO is protecting the children?

Regulus Partners begins the week by dissecting the news that Addison Global has had its Gibraltar and UK licences suspended over solvency concerns, as well as looking at the latest call from WHO and UNICEF to implement further gambling restrictions to protect children.

UK: Safer Gambling – Low blows signal need for greater regulatory oversight

Last weekend’s Sunday Times attack on Britain’s gambling harm treatment network revealed just how reductive the debate on gambling has become in recent years; and has led to suggestions that the Gambling Commission may need to enlist wider regulatory support to restore order and decency.

The animus against GamCare and its network partners evinced in the press appears to stem in part from their refusal to take sides on matters of legislation. We have seen this before from both pro-gambling and anti-gambling factions. It follows a narrow-minded theme of “if you’re not with us, you’re against us” and it is dismally unproductive.

The desire of treatment providers to stick to their knitting is entirely justified. The role of these organisations is to provide help and support for those experiencing harm in relation to gambling. Given limited resources and the complexity of the issues they face, they are right to focus on their charitable objectives rather than getting sucked into deeply unpleasant and confused policy debates.

In recent years, we have seen a number of other organisations use charitable and state funds to attempt to influence Government policy on gambling – sometimes using dishonest means. It is far from clear that this is money well spent. Indeed, the economist, Professor Douglas Walker has described lobbying as one of the greatest social costs of gambling as it involves the use of substantial resources that could be spent on other, more productive pursuits.

We do not expect lobbyists, journalists or politicians to dabble in a spot of psychiatric treatment on the side, so why do we expect counsellors to spend their time petitioning government? Indeed, the attacks on harm prevention charities and not-for-profit organisations reveal an unedifying belief that it is somehow nobler to criticise the efforts of others than to do something constructive oneself.

This is depressingly reductive and deeply irresponsible. At a time when significant efforts are being made to increase the rate of help-seeking amongst those with gambling disorder, deliberate attempts to undermine the national treatment network may have profound negative consequences.

It appears now to be the case that pretty much any organisation that accepts funding from gambling operators (with the exception of the NHS and the Gambling Related Harm APPG) is considered fair game. GamCare is not the first to be on the receiving end and it is unlikely to be the last. Yet as Collins et al. (2019) write in relation to research, “we should neither engage in nor tolerate ad hominem attacks”. Imputing impure motives on the basis of funding alone is little more than mud-slinging.

The lack of clarity with regard to funding of the National Strategy to Reduce Harms and licensee contributions to research, education and treatment (‘RET’) is likely to make matters fraught until – as now seems inevitable – a levy is brought in to replace the voluntary system (although hopes that this alone will resolve the controversy seem naive).

Now may be a good time to seek greater oversight from the Charities Commission or the Fundraising Regulator – particularly given the apparent involvement of as many as three registered charities (including those seeking RET funds) in lobbying against the national treatment network. The Gambling Commission has worked effectively with other regulators in the past (notably the Competition and Markets Authority) and this seems to be a suitable area for collaboration.

Global: Safer Gambling – WHO and UNICEF call for gambling restrictions to protect children

The ability of the gambling industry to market its services around the world received a fresh blow this week as the World Health Organisation and UNICEF joined the fray. In an article in the Lancet, the two organisations highlighted the risks to children worldwide from “climate change, ecological degradation, migrating populations, conflict, pervasive inequalities, and predatory commercial practices” – with gambling included in the latter category.

The 46-page report featured nine references to gambling, two for betting and one for video gaming (none of them particularly positive) and stated: “gambling is a potentially large and unaddressed public health challenge for children” (by way of context, the report contained 26 references to tobacco and 24 to alcoholic drinks). Concerns related almost exclusively to online gambling rather than its terrestrial counterpart – and formed part of a broader approach to “problematic use of the internet”. Remote gambling thus finds itself standing under an umbrella term with “a range of repetitive impairing behaviours, including excessive and compulsive video gaming, compulsive sexual behaviour, bullying, gambling, and social networks use”; perhaps not the company it would seek.

The chief recommendation from the WHO and UNICEF in relation to gambling is for governments to adopt “a legally binding instrument to effectively regulate commercial appeals to children”. Specifically, this involves the development of an Optional Protocol to the United Nations Convention on the Rights of the Child, “which would require national governments to prohibit or regulate the types of products that should not be marketed to or for children (including sugary beverages, unhealthy foods, alcohol, tobacco, e­cigarettes, gambling products, and breastmilk substitutes)”.

The bracketing of gambling with booze, fags and Coke cans illustrates just how fragile the industry’s position is – and not just in those markets where the industry is already fighting rear-guard actions (as in Spain this week where advertising of bonuses and rewards schemes look set to get the axe). The involvement of the WHO and UNICEF suggests a systemic and global threat.

We have of course learned that simply because health organisations say something is so, does not mean that it is. As we have seen recently in both Great Britain and in New Zealand, some of the most august bodies are not beyond a little fibbing; and (not for the first time) there are some questionable assertions in a Lancet piece on gambling, suggesting a lack of editorial rigour. Indeed, the evidence base regarding the effects on children of gambling adverts and other promotional activities is not particularly substantial; but nor does it need to be. Societies rightly set lower precautionary thresholds where children are concerned. Meanwhile, the thoughtless marketing tactics of some operators, sustained over a number of years has created an open goal for agitation.

Around the world, public health has gambling in its sights. The involvement of such politically powerful organisations as the WHO, UNICEF and Britain’s National Health Service suggests the need for a more systemic, scientific and international industry approach to understanding and addressing gambling harms. The clock is ticking…

Global: online gambling – global ambitions to noplay…

Addison Global, operator of the Moplay brand, has had its licences suspended in Gibraltar and GB, citing solvency concerns. Addison Global is owned by controversial US businessman Roderick Aycox, who made his money through title loans (very high interest loans secured on cars). The group made a number of high profile hires, entered into some very high profile sponsorships and started trading as an SBTech frontend in H218.

As well as the UK, MoPlay was targeting Germany, China and even Mexico – illustrating global ambitions. Problems first became publicly apparent in September last year when US court filings relating to Aycox revealed that Man United had not been paid two £1m payments as part of a £12m deal over three years – either by Addison Global, or by Aycox’s businesses, which guaranteed the payments, and so had made a US$11m civil complaint.

While it is only conjecture, it would appear that Mr Aycox found that making money in the world of online gambling more difficult than through high interest loans and decided to cut his losses. To some extent this reflects the low barriers to entry but the very high barriers to success of the online sports betting industry – especially if rapid progress is expected or desired (as it too often is).

However, regulatory regimes that dangle the carrot of easy access and then encourage trading regimes that move the carrot out of reach (unlimited licensing, broadly unlimited advertising, minimal other restrictions) essentially encourage such ‘have a go’ behaviour, which not only causes licensing risk in terms of business failure (a given in any commercial enterprise and not necessarily a bad thing if protections are in place – a big if) but almost ensures an overheated market where taking on the world is encouraged. Whether this is a desirable outcome for customers or points to a sustainable industry is worth considering in GB as part of the Gambling Review as well as in other open gambling regimes (e.g. in Malta, Europe’s POS hub, c. 100 new licences are granted every year and c. 50 disappear for various reasons).

Separately but loosely connected, Matchbook has had its GB licence suspended after a two year audit found serious compliance issues. These issues have been accepted by the company and changes are being implemented. The licence is likely to be renewed if a further independent audit confirms the changes are sufficient, but considerable damage has already been done. This issue highlights the extent to which regulatory compliance has become complex, expensive and unforgiving (and usually rightly so given the nature and scope of past failings).

The ability of small companies to fulfil these obligations is inevitably more difficult than larger ones, especially if resources are stretched and/or operations are in complex business areas such as exchange betting. While it is desirable that markets are open for small businesses, it is equally critical that those small businesses can clearly and actively demonstrate the wherewithal to meet stringent obligations ahead of and while being licensed, in our view. The size of the marketing budget should no longer be seen as the most important question for sustainable growth and regulatory scrutiny should be active enough to prevent red flags rather than struggle to identify them.

UK: horseracing Levy – small victories

Some of last year’s sudden gap in the Horserace Levy has been closed as bookmakers accepted the HBLB’s legal advice that cash back offers should not be treated as winnings (and therefore deductible). £5m has been recovered, of the c. £7-8m impact we estimate the main offer cost overall (some of it is effectively irrecoverable due to the second order impact of bookmaker generosity and so this return is almost as good as it gets, in our view), bringing the 2018-19 Levy back up to £83m.

The timing is also apposite given that the Cheltenham Festival (next month) tends to be the most concentrated week of bookmaker offers and customer recruitment in the British racing calendar by some margin (itself a rather telling commentary on the other 51 days of the year and the other racing codes).

Despite this important victory for racing’s sustainability and a common sense view of the underlying purpose of the law, we would caution that this merely removes a threat rather than creates an opportunity. Prize Money might have had one of its more sensitive ‘black swan’ risks removed (really just a swan in the dark in this case, as many issues of racing and betting on racing are), but the bigger question for us is that racing’s betting productivity did not improve at all while prize money was growing significantly, while prize money cuts fall as an outcome of racing’s legacy structures rather than as part of any coherent plan.

In a similar vein, whether bookmakers should pay for online media rights on the basis of turnover or revenue should be a secondary question to how bookmakers can ensure sufficient sustainable betting quality from the value transfer. Sometimes small victories can be dangerous as they breed complacency and give an opportunity to kick more structural cans down the road. The productivity of racing’s value transfer from betting is just such a can and the forthcoming Gambling Review might very well decide that there isn’t much road left (deliberately or otherwise).


Content provided by Regulus Partners

SBC News Winning Post: WHO is protecting the children?

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