Analysis: Gambling policy in the UK

Industry writer Sam Miranda and doctoral researcher Benjamin Kirby posted an extensive investigation on LiveCasino.co.uk into the UK government’s regulation of the commercial gaming sector. Here, they dig a little deeper, providing an overview of major developments in British gambling legislation and considering the future of government policy towards gambling in Britain.

 

Gambling regulation in the United Kingdom has only undergone three significant upgrades in the last century, with the Betting and Gaming Acts of 1960 and 1968 and (most recently) the 2005 Gambling Act.

 

While the latter has, by and large, been praised for finding a balance between protecting vulnerable players and promoting growth in the gambling sector, there are voices in government (informed both by industry insiders and anti-gambling organisations) calling for further reform. This article will provide an overview of the circumstances that have shaped gambling regulation in Britain and consider the future of commercial gaming legislation.

 

Understanding the present state of affairs necessitates placing current gambling legislation in context. From the early history of regulated commercial gaming in the UK, the objectives of government legislation towards gambling have been based on three core principles:

• Gambling should not be a source of crime or disorder, associated with crime or disorder or be used to support crime.

• Gambling should be conducted in a fair and open way.

• Children and other vulnerable people should be protected from being harmed or exploited by gambling.

 

Of course, gambling has occupied an important place in British culture for centuries, but it was not until the 1960 Gaming Act that gambling law liberalised to the extent that a legitimate gambling industry could grow and prosper in the United Kingdom.

 

The Act legalised betting shops and led to an explosion of commercial gambling in casinos, restaurants, bingo halls and members’ clubs. An unintentional side-effect of this Act was the influx of illegal, unregulated gambling. Another Gaming Act in 1968 limited commercial gambling to casinos, amusement arcades and bookmakers, largely curtailing this illicit market.

 

Over time, societal mores in the UK shifted and the role of government became less prohibitionist and more clearly orientated towards protecting vulnerable players. Subsequently, the government has identified different levels of ‘harm’ posed by various gambling practices, tailoring regulation to reflect these potential harms. For instance, high-stakes, ‘hard’ gambling types (casino games, betting shops) are more heavily regulated than comparatively low-risk, ‘soft’ gambling types (bingo, amusement arcades).

 

A catalyst for change came in the form of the National Lottery Act in 1993, which relaxed the regulation of lotteries to permit the establishment of a televised, national game. However, this partial liberalisation of gambling law led the rest of the gaming market to demand a ‘level playing field.’ Consequently, a Gambling Review Board was set up in 2001 to perform a comprehensive review into gambling legislation. The 2005 Gambling Act arose from the board’s policy document: A Safe Bet for Success—Modernising Britain’s Gambling Laws, fully replacing the 1968 Gaming Act in 2007.

 

The new Act was considered a drastic modernisation of gambling legislation and stirred a fair amount of controversy. Its provisions, which included the establishment of a National Gambling Commission, expanded consumers’ choice of betting and gaming products and made consumer protection measures an enforceable requirement for the gaming sector.

 

As a result of the Act, casinos no longer need to operate a members list and the government retains the power to tackle problem gambling through direct intervention, though the responsibility for consumer protection is laid squarely at the door of the gambling industry. The new legislation also permitted the development of Regional Casinos (casino ‘resorts’), introduced governmental regulation of online gambling and allowed gaming establishments to operate more B2 gaming machines (formerly Fixed Odds Betting Terminals (FOBTs).)

 

Despite the initial shock, the implementation of the 2005 Act has been seen as a reasonable measure to liberalise gambling regulation – reflecting improved public attitudes towards gambling – while still fulfilling the core legislative values of protecting players and preventing criminality.

 

However, in 2012 the Culture, Media and Sport Committee filed an extensive critique of the 2005 Act. The Committee published a document entitled The Gambling Act 2005: A bet worth taking? that identified the following weaknesses in the 2005 Act:

 

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The committee complained that current legislation “failed to create a fair system of regulation and a level playing field for the UK gambling industry either nationally or internationally.”

 

The increased presence of relatively high-stake category B2 (FOBT) machines in high-street betting shops was identified as “a source of considerable concern to groups which aim to combat problem gambling.

 

The committee stated that the 2005 Act was “over-complex and difficult to interpret.” This resulted in “communication problems between the Gambling Commission, local authorities and certain sectors of the industry.”

 

The 2005 Act’s introduction of official regulation of online gambling was held up as woefully ineffective, as “only the UK-based providers were made subject to regulation by the Gambling Commission.” The result of this, together with tax increases, led to the migration of online providers offshore.

 

Finally, the 2005 Act created anomalies in the regulatory regime for casinos, failing to result in any licences for Regional Casinos and only one for a ‘large’ casino complex.

 

A general complaint held that government regulation aimed at consumer protection stemmed primarily from assumption about gambling harms, rather than drawing on actual hard evidence about problem gambling.

 

Furthermore, it was noted that taxation seemed to target more lucrative gambling practices rather than more ostensibly ‘harmful’ services. For instance, Bingo Halls are taxed far more heavily than ‘hard’ casino establishments.

 

This year, the coalition government officially responded to the Culture, Media and Sport Committee’s report. By and large, Parliament concurred with the Committee’s findings (being quite happy to poke holes in legislation developed by the previous Labour government). Both bodies agreed that the gambling industry should contribute to the funding of research into and treatment of problem gambling.

 

As a trade-off, the government has officially acknowledged “the importance of gambling as a legitimate part of the leisure industry and the contribution it makes to the economy.” Consequently, Parliament has promised to relax regulation where necessary in light of the data obtained through industry-funded research into problem gambling.

 

Furthermore, gambling regulation is to be partially de-centralised, with the national Gambling Commission no longer standardising stake and prize levels, for instance. However, the government has remained resolute on the point of taxation, refusing to bring 20% duties on Bingo Halls in line with other forms of gambling (15%). Given the precarious state of the economy, this is hardly surprising but remains galling.

 

In response to the 2005 Act’s inadequate regulation of online gambling, the British government will be introducing a new point of consumption tax for online gaming brands at the end of 2014. The new legislation will place a 15% tax on profits earned from UK players, where previously offshore casinos enjoyed a 1% levy. Failure to comply with this legislation will incur fines, license withdrawal and a maximum seven year prison sentence. Sajid Javid, economic secretary to the Treasury, stated: “These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.”

 

It is highly unlikely that we will witness a sweeping overhaul of British gambling regulation any time soon. Instead, we will probably see tweaks to existing legislation – which is already laudably liberal in most respects. Current developments are in line with a general trend towards acceptance of commercial gambling precipitated by the passing of the Gaming Act in 1960.

 

However, it appears that neither the government nor the Culture, Media and Sport Committee can develop adequate proposals for the regulation of web-based play in the United Kingdom. This is likely to remain a bug-bear for policy makers for the foreseeable future.

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