The Uncertainty Principle

No decision is a decision in itself

Sep 28, 2022

Welcome to the latest edition of Pinchpoint.

Early this summer we had a look at the White Paper leak. Release was imminent! Or maybe not.

The uncertainty principle is a theory of not knowing, and gambling reform looks to have entered just such a quantum state.

Pinchpoint has heard from impeccable sources that the White Paper has been junked, and from others, with equal certainty, that it is going ahead. We have been advised that the Government intends to push the key measures through without legislation, and that a Bill is still in the works.

In other words: no one knows.

So this issue we’ve been out in the field talking to operators and others to gather their views on tackling affordability and establishing financial KYC as part of building a sustainable and respected industry.

Declines and falls

A recent post from Regulus Partners examined the long-term trend in activity and value of individual customers at a number of the largest operators. The short version is they are both in decline.

While the pandemic occurred over the period shown above, the downward trends for revenues per active across slots, betting and other forms of gaming are clear. As Regulus points out, the year-on-year comparisons for Entain, Flutter and 888-William Hill show total online revenues off by ~15% with betting down a “painful” 26%.

This is the commercial backdrop to the reform of the gambling industry, of which affordability checks are a major part.

Some might argue that this shows that government can relax: fewer gamblers, spending less money. Affordability is not a problem.

Others might argue the opposite: it could lead to operators concentrating more on higher spending customers, precisely that cohort which campaigners argue has the most risk of harm. Affordability is a critical problem.

So what does the gambling industry think?

Waiting for instruction

As was noted by Tom Banks, head of corporate affairs for the UK and global at Kindred, during a panel session at SBC Summit in Barcelona, in the absence of clarity on what measures might be part of any White Paper, many operators within the sector “have taken steps anyway”.

But that same panel also highlighted how much the industry is still flying blind when it comes to the crucial issue of affordability. As Sophie Platts, head of safer gambling and external affairs at Entain, put it “the balance we are trying to strike is to get enough information to ensure someone is comfortable with their levels of spend but we don’t want to introduce a lot of friction”.

Since the summer the working assumption has been of detailed considerations of financial positions being made at £1,000 over a 24-hour period and £2,000 within 90 days.

But that is only a working assumption and the ongoing lack of clarity clearly leaves the market wide open to bad actors to take advantage.

It should be clear to policymakers that the current situation is absolutely the worst of all worlds. Decisions that need to be made are being delayed, definitions around such important areas as affordability are yet to be set and the broad objectives of government policy appear to be all at sea.

This is why no decision is, in itself, a decision: industry leaders fear being caught between the profit motive and social responsibility.

A coda

Meanwhile, we note a story in EGR this week that the opposition leader Keir Starmer took the opportunity afforded at the party’s recent conference to meet with the main protagonists of the Gambling With Lives lobby group. Labour has also pressured the government to release the White Paper. Pinchpoint has spoken about this to some Conservative MPs who see this as a call to arms for their own side: act now, or the other guys will do it for you.

The cost-of-living

The non-appearance of the White Paper comes at a time, of course, when the cost of living continues to wash over millions of households. A frightening chart was published in early September which showed the extent to which inflation is causing real pain with household budgets.

Data from the Joseph Rowntree Foundation and Loughborough University found that it now costs 20% of household budgets to cover the essentials.

It needs repeating. With the vacuum in government policy, it comes at a particularly perilous time for the sector as regards the ongoing cost-of-living crisis. The sector and its customers deserve better.

The Pinchpoint

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