What did reaction to the Social Market Foundation report tell us about the approach to affordability?

Every stakeholder in the UK’s gambling industry has known for some time now that wide-ranging regulatory changes are coming. Once re-elected, the Conservatives committed to a review of Labour’s 2005 Gambling Act, pledging to transform it “for the digital age” as public perception of the industry reached an all-time low.

We have described the gambling act review as “imminent” on more than one occasion, but it remains to be seen exactly when our parliamentarians will get down to the nuts and bolts of gaming legislation as they fumble from one financial crisis to another. The review was thrown back into the spotlight in August, however – briefly resurfacing amid the political rubble of Covid-19 and Brexit – when the Social Market Foundation published its study into the sector, complete with recommendations on affordability.

The report was written over a five-month period by Cambridge University alumnus Dr James Noyes, former adviser to ex-Labour deputy leader Tom Watson. One of the major headlines of the study centred around a £100 a month soft cap on affordability spending limits. Affordability is huge. Operators have come on leaps and bounds in recent years in their quest to minimise gambling-related harm and protect vulnerable customers, and understanding affordability is arguably the key to creating a safe environment for people to enjoy gambling responsibly.

However, it has often been a sticking point in cross-industry discussions and nobody had been able to coin a unanimous definition of it, let alone agree upon and apply a one-size-fits-all solution for the 2,500+ companies regulated by the UK Gambling Commission.

But Noyes did the hard work and provided that package. His “socially acceptable” limit for the UK’s lowest income households worked out at approximately £23 per week, or £100 per month. Anybody wishing to spend beyond that could do so, so long as they passed adequate affordability and source of funds checks.

“Before determining this figure, I said to my colleague we need something which, for the vast majority of people who gamble, shouldn’t even come close to their experience because at the end of the day, we’re not an organisation which believes in a nanny state,” Noyes tells EGR Intel. “We need to have something which wouldn’t even be an issue, so it has to be high enough to be above that average spend, but low enough to protect the most vulnerable in society.”

Dr James Noyes

Regulus Partners analyst Dan Waugh described the report as “an interesting contribution to the policy debate of gambling in Great Britain” while Northridge Law LLP partner Melanie Ellis said the affordability soft cap would “level the playing field for all licensed operators”.

The Betting and Gaming Council (BGC), vociferous in its criticism of online gambling’s “prohibitionists”, or the All Party Parliamentary Group on Gambling Related Harm as you might know them, described the report as “a thoughtful study” and offered its support to many of the recommendations made.

“In contrast to the siren voices of prohibitionists who claim problem gambling is high and increasing, this report rightly states that there is no evidence of a rise in problem gambling and that levels have been stable around 0.7% for nearly two decades,” said BGC CEO Michael Dugher.

On the core issue of affordability however, the BGC said: “We disagree with the suggestion of an arbitrary and random low cap on spending and can think of no other area of the economy where the government determines how much an individual can spend,” as it hinted at the “nanny state” comparisons Noyes had foreseen in the foreword of his report.

“I had hoped that the usual quarters who are critical of reform might have come up with something a little more creative in their rebuttal of my report,” wrote Noyes on his blog. “Unfortunately, I was to be disappointed. One industry lobbyist even got in touch with me to complain, ‘I don’t want the state overseeing what I drink, what I eat, how much I spend on clothes and holidays’.”

Clean Up Gambling’s Matt Zarb-Cousin, a recovering addict who is also the former spokesperson to Labour leader Jeremy Corbyn, says: “If you read the report, everything is evidence-based, it’s very well thought through and is making the point that even with a soft cap, it still wouldn’t impact the vast majority of gamblers. This proposal didn’t contradict the industry’s rhetoric, so it was very interesting to see the BGC oppose it.”

Nobody is suggesting the industry should have embraced the Social Market Report with arms open and wasted no time in implementing its proposals. But for the first time, some solutions had actually been written down on paper. The £100 soft cap had been arrived at after months of painstaking research, so for the BGC to disregard it as “arbitrary and random” could be seen as disrespectful, especially as several of its members had aided Noyes in his work.

“Those industry lobbyists who today are accusing me of being a nanny statist were the same ones who, for two years, insisted to me that the focus of my thinking had to be on affordability, not stake limits,” wrote Noyes. “I have lost count of how many conversations I have had about the need for affordability checks and the need to standardise these checks across all operators. I took all those conversations in good faith and made sure that the various sensibilities were reflected in my report.”

Since its launch in 2019, the BGC has done an excellent job of portraying a united front across the industry. Drawing the gambling industry’s biggest players together under the umbrella of one trade body was a masterstroke and the group has been effective in its PR and communications strategy by fighting fire with fire.

Before the BGC, there was no voice prepared to defend or even represent the industry as it faced an endless onslaught of negative press from both tabloid and broadsheet, on the left and on the right. It got on the front foot in the war of words, and the hire of PoliticsHome editor Kevin Schofield was an astute one as it provided some much-needed column inches, but the language used could be seen as combative for a subject as sensitive as gambling addiction.

We welcome this thoughtful report ahead of the Govt’s Review, a review we fully support. We share the desire for big changes, but reforms must be evidence based and avoid players drifting off to unregulated illegal online sites that don’t adhere to the BGC's high standards. https://t.co/j1sP1RY8Be

— Betting and Gaming Council (@BetGameCouncil) August 5, 2020

Much of the affordability and player safety research being conducted by the industry is being driven by the UKGC and its collaborative working groups initiative. The BGC is coordinating the initiative, which includes more than 30 operators, but the trade body has focused primarily on PR, reiterating that the industry provides 100,000 jobs and £3bn in UK tax revenue, or that 30 million people enjoy the occasional bet responsibly – but what about those who are unable to bet responsibly?

“If you can’t engage with the people that want reform in a meaningful way, then where does that leave you as a standards body?” asks Zarb-Cousin. “The BGC at the moment is a PR push, and the only reason that you would lead with a PR push is if you think that your problem is one of perception only. But this is not about perception; perception is just a symptom of a much wider problem. They have to engage meaningfully with the reform itself,” he adds.

Like him or loathe him (Zarb-Cousin was on the frontline fighting for FOBT stake cuts), he is right. The BGC cannot afford to scoff at every public proposal between now and the government’s gambling act review – it has to engage. Otherwise, parliamentarians will take matters into their own hands to dish out draconian measures that cost the industry millions in operating revenue. Then, when the sector complains, MPs can say they were left with no choice because it rejected every reasonable proposal up to this point. It will be FOBTs 2.0, and it could easily spell the end for many gambling businesses in the UK.

Noyes summarised this, disillusioned with the industry after the fallout of his report: “If the concept of affordability is dismissed as too interventionist and ‘arbitrary’, then we are left with only one alternative: fixed stake limits. I shall be making this clear in any conversations that I have going forward.”

Zarb-Cousin agrees, adding: “This is what the industry should have remembered from FOBTs. They left it too long after refusing to engage with the core ask which was a stake reduction. They couldn’t accept that £100 a spin on the high street was probably too high.”

The UK gambling industry has a loud and loyal trade body, but have any lessons been learned?