Awaiting the Arrival of Godot: Grasping the White Paper Chance –
Safe Wagering Week Special: Based on the most recent reports, the highly anticipated Gambling Act Review White Paper is scheduled to be unveiled in the upcoming weeks. So, is the sector prepared for the potential alterations it may bring, such as in player safeguarding, or is it still seeking further clarification?
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Awaiting the Arrival of Godot: Grasping the White Paper Chance
The Gambling Act Review was initiated on December 8, 2020, by the then-Secretary of State for Digital, Culture, Media and Sport Oliver Dowden, with the goal of “modernizing gambling regulations to ensure they are suitable for the digital era, as promised in the manifesto.”
Since that time, there have been three new gambling ministers, two Secretaries of State for Digital, Culture, Media and Sport, a government reshuffle, and Liz Truss assuming the role of the new Prime Minister. The mandate for the review is founded on the manifesto promise, which was penned in a world before the COVID-19 pandemic reshaped British politics, a world now referred to as the “past” in jest.
The long-awaited result of this process is the Gambling Act Review White Paper, a Whitehall document that will aim to outline the direction of legislative reform by proposing some concrete policy changes. It has so far encountered four significant delays in its release – the most recent and dramatic being the aftermath of Boris Johnson’s government collapse.
In the midst of the postponements, whispers are circulating that the administration might completely ditch gambling reform, choosing a more business-friendly, anti-regulation strategy.
Although improbable at this juncture, the government once again appears on the verge of falling apart, making any solid predictions challenging beyond the latest crisis. As reported last week, iGB understands that the white paper will be released in a few weeks – but as Rab Butler stated, in politics, a few weeks is a significant amount of time.
Amidst this disorderly delay and disarray, the industry and the public are attempting to predict the final outcome and adapt accordingly.
Reading the Gut
How does the industry perceive the prospects of reform? Charles Cohen, founder of Department of Trust, a gambling financial compliance services company, states that the industry can be divided into two groups.
“There are two very distinct reactions at this time. Some are adopting the perspective that they will simply sit back and observe what transpires,” he said.
“We’re hearing that compliance teams aren’t engaging in much hiring. Some operators are trying to avoid devoting time to truly considering what they might need to alter. They’re simply trying to perform the actions necessary to avoid being penalized by regulators.
“However, with new fines seemingly being imposed on a daily basis, I’m not certain this ostrich-like approach is maintainable.”
Conversely, some operators are eagerly anticipating this, believing that a similar, if not identical, approach is clearly the path of regulation.
Conversely, these operators are beginning to modify their operations, as they state, “We must be ahead of the curve.”
Many of the larger operators appear to fall into the latter category. 888, Entain, and Kindred all reported a decrease in UK revenue in their second-quarter reports, attributing this to more stringent social responsibility measures, which they claim should diminish the impact of the review itself.
Grainne Hurst, Entain’s Head of Corporate Affairs, stated, “We have been clear that we support the new Gambling White Paper.”
Hurst views the reforms as a chance to address the expanding black market.
“Clearly, we require regulations that are current for the digital era, as we have not had an update in several years. However, we also believe this is a valuable opportunity for the government to consider addressing the black market, which we know from a recent report has doubled in size and scope in the UK.”
The regulatory penalties and settlements implemented by the Gambling Commission have also contributed to the frustration of some operators as the UK enters a critical period of reform.
Fortifying Regulation
A few individuals believe they’ve escaped consequences, particularly when it comes to past occurrences involving practices that are no longer commonplace, Cohen remarked. They feel as though these situations won’t affect them.
“However, I believe the general sentiment I perceive is that individuals are disheartened because they feel they’re fulfilling all necessary requirements yet still encountering obstacles. They’re still facing penalties, and the inspections and verifications are becoming increasingly stringent.”
Entain recently reached a record £17 million regulatory agreement with the UK Gambling Commission regarding past shortcomings in anti-money laundering/counter-terrorism financing and social responsibility. The operator stated that such historical deficiencies wouldn’t occur within the current responsible gambling framework.
“We’ve acknowledged these are legacy issues, and we’ve reached a regulatory agreement,” Hurst stated. “But in the process, we’ve implemented numerous robust policies and procedures to ensure these situations don’t reoccur within the business today.”
“We’ve acted upon our words, we’ve made the necessary changes, and we’re confident this won’t happen again, and we’ve completed the process. I believe individuals are quite proud of the progress we’ve achieved over the past several years, particularly within our Advanced Responsibility and Care (ARC) program, as it truly is industry-leading and operates in real time to safeguard players.”
Price accessibility assessments are a popular discussion point in the gaming industry. Some within the sector view stringent affordability checks, which necessitate gamblers to demonstrate their earnings through bank records, as a significant obstacle.
Matt Zarb-Cousin, who manages Clean Up Gambling and co-founded the self-exclusion system Gamban, believes affordability checks are simply making the current system more equitable for both consumers and gambling enterprises.
He states, “Affordability checks are essential. The Gambling Commission has already penalized companies for failing to conduct them appropriately, as they were imposing unfair limitations on customers and neglecting to monitor their spending after they incurred a specific amount of losses. This was unacceptable.”
“Currently, we are striving to establish this process as a standard. If a company is acting ethically, another company might be engaging in less scrupulous practices and escaping consequences. Unless the Gambling Commission takes action, which is frequently too delayed and perceived as merely a business expense, you are at a disadvantage for being honest.”
The entire procedure was marred by the industry representatives’ slanderous comments that weakened the discussion. In truth, there should have been at least an effort to engage constructively with the essence of what we were trying to achieve. Instead, we received only very broad criticisms that centered solely on abstract concepts of freedom and personal liberty.
However, Cohen believes that the matter is both a technological and a regulatory one.
“This brings to mind what occurred in the early 2000s when the last Gambling Act mandated identity verification before opening an account,” he stated. “Many individuals may not recall, but in the past, this wasn’t a requirement, so identity verification was typically only requested when someone desired to withdraw funds or make a large deposit.
“For affordability checks, people have come to believe that a very strict affordability check entails examining bank statements and pay slips, and obtaining letters from accountants, and so on.
“What transpired in the early 2000s is that it became a requirement. Technology advanced, systems were automated – it became seamless. Now nobody discusses it anymore. The same thing will happen, and needs to happen, for affordability, what I term financial KYC. Because it’s not just affordability, it’s also RG. It also encompasses AML. It also includes anti-fraud.”
If operators can efficiently execute financial KYC without creating too much difficulty for players, then this issue can be resolved.”
Hurst also emphasized that smooth payment verification is at the core of Entain.
“The key to affordability is that it must be sensible,” Hurst stated. “We completely support this idea and principle, but it needs to be practical, it needs to be sensible, it cannot penalize customers, most of whom gamble safely and responsibly with us. For us, the essential aspect is that it must be a smooth process.”
Restructuring the Gambling Sector
For a long time, updating UK gambling regulations to adjust to the digital era has been an objective – but there’s no simple solution in sight. The next phase of reform is likely to be about balancing conflicting interests to ensure both operators and players are shielded.
“The aim of gambling reform should truly always be to have a healthy functioning marketplace, one that is healthy for both operators and players. All of this needs to be balanced,” Cohen said.
“Wise operators understand that lack of knowledge is not a tactic. Not understanding your customer’s financial situation is not a sustainable approach. The question is, how much do you need to understand? Or how much should you understand?
“There needs to be some kind of rule to truly provide them with guidance.”
Consequently, I eagerly anticipate the white paper or discussion, as we must elucidate this.
For Zab-Kousen, reform presents an opportunity to establish a more effective approach for the entire sector, and he has been frank about his past battles with gambling.
“I do not oppose gambling; that is a misconception. Despite my personal struggles with addiction, I am deeply interested in how to better regulate gambling. I harbor no ill will towards the industry.
“I simply desire to do this correctly. I believe we can attain a point where the business model is no longer so exploitative and harmful. I firmly believe we can achieve this, and that is why I advocate for specific regulations to be implemented.”
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