Does the industry need blanket loss-limits?

The UK results season was a disparate one for the major listed operators, with varied growth rates, predictions for the wider market and talk of a growing, slowing market and the beginning, middle and end of some dynamic changes. It was a hugely muddled picture and you have to pick who you want to believe when it comes to the outlook, but on one point there was a consensus of a sort. Responsible gambling.

Responsible gambling is an issue nobody can afford to ignore and getting on the front foot in terms of dealing with and preventing problem gambling should be at the heart of any business strategy for 2020. GVC CEO Kenny Alexander, not a man for intentional overstatement, said there was no bigger threat to the industry than the issues of problem gambling and that his company would “continue to lead the charge” on finding solutions to keeping players, and the industry, safe. But it’s worth noting there is no shortage of additional chargers here with William Hill and Flutter talking about significant investment in both technology and people to try and lead from the front.

All three firms, along with Sky Betting & Gaming and various other operators, have started to build predictive analytical tools that try and spot markers of harm as well as taking a much tighter grip of customer due diligence with more than a few “good” customers turned away. It’s more than just doing what’s required of them by existing legislation too, it’s about going above and beyond and it’s part of a wider move to try and reposition both their products and the industry as one that puts consumer’s welfare first. But there is the nagging sense that the lack of coordinated effort and the desire to redraw the issue on the industry’s terms may not be the silver bullet solution everyone hopes.

A group think

There does, however, seem to be some consensus in thinking. All the major operators were clear they recognise there is still a lot of work to do on responsible gambling, and all are very aware of the ongoing consultation from the Gambling Commission over a wide range of areas. Credit cards and e-wallets are the most obvious near-term target and it’s quite possible we will see some action taken there by government with policy seemingly guided by optics as much as data at the present time, but there are still bigger issues to attend to.

While much of the current work is correctly targeted towards active monitoring of player behaviours and source of funds information, what the industry needs to prepare for is the possibility of more passive tools being enforced on them. The Gambling Commission has previously raised the prospect of affordability checks being part of the licensing conditions, but this brings with it additional discussion around staking levels, loss limits and other factors such as VIP concentrations that nobody really wants to talk about.

The head of the Gambling Commission may have told Panorama that stake limits online was not something they were considering, but it’s important to note he added the word “yet” to that statement. And while the conversation on this isn’t taking place in public there is a sense among some industry executives that it’s an issue that will come to a head sooner rather than later. More than one industry executive has mentioned to me that they feel some form of loss limit may be required as a first-line of defence option in the future and as ex-Sky Betting & Gaming CEO Richard Flint noted on Twitter it could be the least worst option with doing nothing “no longer an option”.

IMO we need something like this as the least bad option (doing nothing isn’t an option). Needs more thought and much better if industry-wide, and limit should be a ‘base case’ that can be moved if someone can show wealth and ability to control gambling. But don’t dismiss idea.

— Richard Flint (@YorkshireFlint) August 14, 2019

Limiting the loss

The idea of a loss-limit would be anathema to large sections of the industry, and it would certainly cause a significant rethinking of some business models and unit economics, but it’s something that already exists in Spain, was introduced by Paf last year and is being considered in other markets. For it to be effective it would reasonably need to be done in conjunction with deeper affordability checks and more flexible dynamic limits applied to players who have undergone more thorough due diligence checks.

The Gambling Commission has already informed the industry it feels these checks need to be carried out at far lower thresholds than previously, with the idea of £500 a month mooted in various formats already. So moving this from a vague concept to a hard limit doesn’t seem incredibly unlikely. But can the industry cope with such seismic change? The question is probably can it afford not to consider it. If the work being done isn’t effective at reducing problem gambling rates and, more importantly, being seen to have done so, change will be imposed on it.

And this is something that is unlikely to remain solely an issue in the British Isles with the US market one that could quite quickly flip with some negative media coverage and legislative attention. Likewise some of the newer emerging regulated markets from the major nations such as Germany, the Netherlands and Sweden seem ripe for a player-safety first approach that includes closer checks on affordability, loss limits and default player controls. This is an industry making big changes and fundamentally rethinking the way it operates for a modern online gambling regulatory world. But perhaps it’s not yet thinking quite big enough.