Will the US Take Heed of The Gambling Problems Experienced in the UK?

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Since the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018 the way has been open for state-by-state regulation of the betting industry, allowing sportsbooks and online casinos to set up shop and take bets from US customers. With huge growth reported already in states like New Jersey and Pennsylvania, the move to a legitimate regulated market is widely being seen as a success. It allows punters to play at sites run by businesses who must comply with strict rules on fairness and security, unlike the black market ones that ruled the roost before now, and revenues can be taxed to contribute to the federal government.  

Everyone is happy, right? Well, not everyone.  

There will always be those who believe gambling should be prohibited. And it shouldn’t be overlooked that for some it is a danger and can lead to addiction. So, in this new liberal world, has the US got it right and is it doing enough in its regulatory framework to protect consumers from the perils of problem gambling?  

The UK – A Case Study in Progress 

To find out we could look to a case study in progress happening across the Atlantic in the UK. Since 2005 online gambling has been legal there and the country has witnessed extraordinary growth to close to £5 billion per year in Gross Revenue in the remote sector. But with it has come serious concerns around gambling addiction and the lack of protection for consumers. Objections to the industry have coalesced around a drive towards a new Gambling Act – a review of legislation from 2005 – that aims to address some of the shortcomings of current regulation. 

US regulators would be wise to look at ways in which their UK counterparts are backtracking on some of the more liberal aspects of the 2005 act that allowed gambling operators to grow unchecked for more than a decade.  

Here are some of the most significant areas to which the US should pay attention. 

Significant Proportion of Profits Derived From High Spending Customers 

In the UK estimates around the contribution of high spending customers to the profits of operators vary, but it is acknowledged that a huge proportion is driven by this segment of the player base. Around as much as 60% of gross yield from 5% of players is a figure published in the media in the UK.  

Whilst not all of this group are problem gamblers it stands to reason that some are. In the UK until now the onus has been put on the operators to self-regulate, identify problem gamblers and close their accounts. But with such significant revenues derived from this group betting firms have been reluctant to invest resource into this area.  

As a reaction to this issue many proposals have been put forward, including strict deposit limits for players each month and affordability checks that require new customers to submit payslips, bank statements and other personal details before they can set up a gambling account.  

In response to the threat of regulation, betting firms in the UK have started to become more proactive in addressing problem gambling accounts. Many are now using affordability checks internally to restrict customer spend, and some are even reporting on the impact of attempts to reduced revenue derived from problem gambling accounts.  

As the debate rages over the level of responsibility that should be placed respectively on the consumers, the operators and the regulator in the UK, there are lessons to be learned for the US. A balance needs to be found between letting the betting firms take care of their own house and using regulation to pressure them into exerting control over the problem gambling issue. 

Regulating the ‘casino in your pocket’ 

Much has been made in the UK of the differences between betting at an offline casino and playing at an online site or using an app. Opponents of the industry refer to the ‘casino in your pocket’ as a way to allude to the dangers of a gambling product that can be used anywhere and at any time, with deposits made in seconds through bank cards and all variety of eWallets and bank transfer options. 

In the UK several steps have recently been taken to address the speed and ease with which players can spend money and build up debt, including: 

  • A ban on credit cards as a deposit method 
  • Slowing down slots spins so that there is a 2.5 seconds break between spins 
  • A ban on ‘auto play’ on slots that allows players to spin ‘hands free’ 
  • A ban on game features that celebrate wins that are smaller than the stake 
  • A ban on ‘reversals’ of withdrawals which are in progress 

These new measures have been introduced in the UK in October 2021. Most relate specifically to online video slots. These are seen as a particularly dangerous form of online gambling and are responsible for a huge portion of company profits each year. The sector attracts many game developers and 1000s of new slots are produced annually to satisfy the voracious appetites of the modern gambler.  

In the US, online casino gambling has not been legalised in as many states as sports betting, but it is growing, and the UK’s revised attitude to these games is a pointer to how each state regulator should approach the rules around them.  

Advertising and Marketing 

The other area of significant controversy for UK law makers is that of advertising and marketing. The UK public have been subjected to pervasive gambling advertising on TV, on social media and in sports for more than a decade now and it is this that has driven the growth of the industry.  

Now that there is a significant drive to curb the level of exposure the public has to gambling advertising, the UK government finds itself in a predicament. In particular, much of the sporting world, including clubs playing the national game of soccer, find they are dependent on revenues from gambling sponsorship, which pays greater fees than other commercial deals. As plans are made to prohibit advertising on the front of Premier League team shirts and in the lower divisions, the financial impact cannot be overlooked. In particular, as smaller clubs suffer in the wake of the pandemic, some claim that removing the revenues from gambling sponsorship could be a terminal blow. 

Elsewhere, TV companies are not happy at the prospect of losing money as advertising of casinos and sports betting is restricted. 

In Conclusion … Lessons to be Learned 

As the US enters a new period of liberal gambling legislation there is much that can be picked up from the UK’s own experiences, and by acting now, the government can prevent the same problems happening in their own country further down the line. Having allowed the industry to thrive under very permissive laws for many years, the UK must now tackle gambling issues with many competing interests shouting to be heard and controversy at every turn.  

By addressing tighter, but fairer regulation around product, marketing and customer management right now the US industry can grow whilst reducing the risk of problem gambling and ensure everyone from the consumer to the operators, and the state governments themselves are happy.   

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