UK government throws a curveball

By Scott Longley

Perhaps erroneously in hindsight, the UK gambling sector had been somewhat relaxed during the summer about the outcome of the government review into the legislative framework.

Notably, fears about much stricter rules around affordability and talk about potentially ruinous spending limits being introduced appeared to have faded as then minister John Whittingdale was seen to be casting a more friendly eye on the evidence set before him from the consultation.

Moreover, with UK Gambling Commission chairman Bill Moyes also heading for the exit, and taking with him the hapless chief executive Neil McArthur, it looked like a crisis had been averted.

However, the UK government reshuffle introduced a further dose of uncertainty which, it can fairly be surmised, has set the industry off balance once more.

As Dan Waugh at Regulus Partners suggested in the wake of the move, the decision to move on John Whittingdale and Oliver Dowden (replacing the latter with Nadine Dorries) “is an example of unfortunate timing, to say the least.”

“Regardless of partisan views on where his sympathies may or may not lie, (Whittingdale) had better claims than most to expertise on gambling regulation, having sat on the scrutiny committee for the Gambling Bill, chaired the Culture Select Committee’s review in 2012 and 2013 and having been Culture Secretary between 2015 and 2016.”

The government insisted last week the publication of the white paper on the government’s proposals remains on track for later this year. But the fear is now twofold. First, that there will be further delays as the new minister gets up to speed with the brief. And second, that the change at the top could presage a less benign view of the sector.

A good time, then, for the reinvigorated Parliamentary All-Party Betting and Gaming Group, with Blackpool South MP Scott Benton as the newly installed co-chair, to launch an enquiry into the competence and effectiveness of the UK Gambling Commission.

Steve Donoghue, a consultant within the sector who also fulfils the role of secretariat for the APBGG, said the intervention was a sign that the industry can still count on support from some quarters in the House of Commons.

Speaking in his own capacity, he said he was “saddened” by the departure of Whittingdale but that the concerns of the APPGG lay more with the recent behaviour of the UKGC.

“We think that the Gambling Commission still has much to answer for and that it’s repeated claims of being world class would appear to fall rather short when considering the evidence we’ve received from operators at the coalface,” he says.

“Of particular concern is that the Commission is still determined to have its say over the issue of affordability despite the fact that it is clear that any decision around the issue should be a matter for Parliament and not an unelected regulator,” he adds.

Affordability check

Affordability is central to the sector’s worries and the fear is that a complicated issue will be boiled down, either by the regulator or the legislature, to an over-simplification which could involve unnecessary intrusions on the consumer.

It’s a problem where a number of companies including TransUnion and Experian have attempted to apply themselves. The latest to try and unknit the knottiest of problem areas is Department of Trust, a new enterprise from Charles Cohen, ex-founder of Probability and most recently at IGT.

His solution is to use Open Banking in order to facilitate a third-party data offering that consumers can trust but also provides the framework for operators to gain a more nuanced view of whether any given player can afford their levels of gambling.

“At the moment we have a fire extinguisher approach but I think what we need is a smoke detector approach,” he says. “It needs to be normal for people to agree to affordability checking in the same way they do about giving away other key details – bank account, passport, driving licence – when they register.”

Cohen says the task facing a company such as the Department of Trust lies in persuading legislators and regulators that the tech means exist to make affordability tests work in a way that benefits all.

“The case study is GeoComply – it educated the regulators in the US,” he suggests. “I think the same thing about affordability.”

He adds that the hope is that a system such as his company is proposing can “normalize” affordability. “It stops the conversation about loss limits across whole demographics,” he adds. “That is a defeat. No matter where you set the line, it is always going to be wrong. And it forces certain patterns of behaviour. It doesn’t solve the problem.”

The fear for Donoughue is that such innovations might be too late. He suggests the UKGC has already started down the road of “acting ultra vires” and is introducing intrusive and onerous affordability measures outside of any legislative oversight.

“We are very much concerned that the UKGC – having previously acknowledged that their desire to impose mandatory loss limits had ‘been superseded’ – are imposing limits on operators by the back door. We know of operators who have been told to impose limits of between £500-600 per month in their reviews.”

Cohen says that arbitrary or mandatory loss limits would “clearly be a bad thing and wouldn’t solve the problem.

“But if operators were allowed to take a proper risk-based approach as they already do with AML – and now in theory have access to services like ours – then maybe we can move the conversation forward from the blanket bans to a personalised approach.”

Such are the debates awaiting the new culture minister and Chris Philp, who has taken over Whittingdale’s brief. One hopes there is a post-it buried somewhere in the files on what the government attitude should be to affordability tests – and perhaps a warning about the regulator overstepping the mark.

Scott Longley has been a journalist since the early noughties covering personal finance, sport and gambling. He has worked for a number of publications including Investment Week, Bloomberg Money, Football First, eGaming Review and Gambling Compliance.