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When it comes to regulating gambling, the UK is playing catch-up

Wednesday, 7 February, 2018 - 18:04

The Competition and Markets Authority (CMA) has issued a major crackdown against the gambling firms William Hill, Ladbrokes, and PT Entertainment after finding out that they use a devious system of online promotions to “trap” players’ money. This means that betters will no longer be forced to continue playing multiple rounds before they are allowed to withdraw their money but can stop playing at any point.

Coming mere weeks after the World Health Organization (WHO) classified gambling addiction as a mental health disorder, the government’s move to protect vulnerable players from exploitation is a welcome one. Yet overall, the UK still lags behind when it comes to enacting proactive policies to promote consumer protection and tackle addiction. If the government wants to continue reaping economic benefits from the gaming sector, it must do more to safeguard consumers against predatory companies – before such abuses take place.

According to the European Commission, the EU gambling market is worth an estimated €85 billion and is growing at an annual rate of 3%. Online gambling accounts for a large and growing part of that industry, with 6.8 million players and a market share of 17.5% in 2015. The UK, in particular, has been leading the expansion, partly because of first mover advantages and also because firms there are not as tightly regulated as in other parts of the world. Online gambling now constitutes 34% of the country’s overall market, making it the largest gambling sector with £4.7 billion in gross gambling yield.

Nevertheless, UK regulators are failing to keep up with market expansion, and though this means big bucks for gambling companies in the short term, it raises questions about the long-term health of the industry. More importantly, it means that thousands of UK players are being put at risk.

Given free rein and pursuing growth at all costs, for instance, some UK betting firms have made it standard practice to attract players with misleading offers of “free bets”. These offers are made on the condition that players contribute their own funds to the pot. This money is then “trapped” for a number of bets, encouraging players to stick around longer than they might want to, or longer than they can afford. Fixed-odds betting terminals (FOBTs) have also caused controversy for similar reasons. With high caps on permitted stakes, FOBTs allow players to spend up to £100 every 20 seconds, with 233,000 FOBT users reportedly each losing more than £1,000 in one sitting in 2016.

Only very recently have we seen signs that the government might be moving to tackle these problematic practices. In addition to the CMA’s most recent action, the government has also suggested it is ready to accede to campaigners’ calls to slash the maximum FOBT bet from £100 to £2.

But both these measures fall short of properly regulating the industry. The Mediterranean island of Malta, for example, has taken a far more proactive approach to the issue. The nation was the first EU member state to license online gaming and there are now more than 270 remote gaming operators based in the country. The Malta Gaming Authority (MGA) requires these firms to offer self-barring services, which allows players to request to be denied access to all gaming activities for a given period of time. According to an interim report from the MGA, the number of such requests rose by 17.8% from 2016 to 2017. The MGA is also the only national regulator that offers a Player Support Unit to protect vulnerable users.

Critics of regulation might argue that players’ rights come at the expense of the wider economy, but this is clearly not the case when it comes to Malta’s online gaming industry, which accounted for 20% of Malta’s economic growth from 2011-2016 and now contributes a robust 12% to the country’s GDP.

Of course, the gaming sector is important to the UK economy too and is one of the sectors that are predicted to continue growing strongly post-Brexit. However, this growth can’t come at the expense of long term stability, and it can’t come without the regulation that is necessary to protect consumers. And when it comes to these issues, the UK needs to stop playing catch-up and put the right policies in place – before companies can get the chance to exploit vulnerable consumers.


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