Wednesday
December 5, 2018
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by Andrew Tottenham
Managing Director, Tottenham & Co
The US Supreme Court’s 6 – 3 decision in May of this year, ruling that the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional, has opened the door for sports betting on a state by state basis. Gambling companies are rubbing their hands with glee at the prospect of a massive new gambling market opening up. Estimates for the whole US market vary from US$1 billion at the low end to US$10 billion at the other, with massive confusion over the difference between betting handle and gross betting revenue.
Personally, I think the total US market is going to be closer to the first number rather than the last one. Regardless, this bonanza is going to take while to arrive – each state must pass legislation, and laws liberalising gambling are notoriously hard to get on the statute book. The anti-gambling lobby in a state seeking to legalise sports betting will publicise any mistake made by operators or regulators in another state. I can see the headlines now: children maxing out their parents’ credit cards while betting online, people losing homes and businesses, and so on. All of this will slow down online betting’s advance across the USA.
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by Luke Haward
CDC Gaming Reports
The UK Gambling Commission recently released their annual edition of their publication “Young People & Gambling”. The report has a number of key findings which might give us pause for thought. Perhaps most important, while 1.7% of children aged 11-16 were found to already be problem gamblers, and 2.2% to be at risk of becoming so, an incredible 32.5% were found to be gamblers, at least technically within the bounds of the study – they had gambled in some form this past year.
Children being influenced by gambling ads is quite rightly a hot topic right now, hot enough to scald, and has led to quite some movement within the gambling industry itself. This has been accompanied by a looming sense of probable further incoming regulations, at least for TV advertising, likely to come if the industry doesn’t opt to self-regulate. Under a Labour government they would come regardless, including a total ban on live sports broadcast ads.
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Andrew says: Oh dear. Triple Five Group, the Canadian mall developer, walked away from developing a project in Extramadura, a landlocked region in Spain with a low population and poor transportation infrastructure. Now another company has decided to fill the void. Cora Alpha, headed up by former Disney executive John Cora, has announced plans to invest €3.1 billion euros in the first phase of Elysium City, a hospitality and leisure destination. It is not clear who else might be behind this scheme, but Cora Alpha certainly doesn’t have the wherewithal to develop this project on its own. As the article points out, the nearest airport, Ciudad Real – which is currently closed, by the way – is 147 kilometres (92 miles) away. Construction is said to be planned to start in 9 months to a year, although anyone who knows Spanish planning and environmental laws and regulations knows this to be impossible. I’m not betting on this project happening any time this century.
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Luke says: The Spanish Parliament has taken some positive, practical political moves on the issue of sustainable, responsible gambling. A new directive is aimed at enhancing the collaboration of executives and ministerial servants, as well as health professionals, to create an industry which is as a whole more responsible with regard to, and more successfully responsive to, issues of problem gambling in the country. It is truly fascinating to see Spain opt for a classification of gambling addiction as a form of drug addiction, which hopefully heralds a true revolution in approach. The mandating of gambling companies to work alongside political servants as well as health experts certainly bodes well, and it seems that those issuing these directives really are looking for a new and more comprehensive approach to customer care and diligence, and to tackling problems of gambling addiction in Spain.
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Luke says: Europe’s largest gambling industry trade association, the EGBA, has published its latest research into the industry, concluding that its spending increases sports industry revenues by around €325 million per year, as well as employing 33,000. This is all very well, but one must weigh it against the staggering €17.2 billion they cite as gross profits across their members in 2017, a respectable enough 1.9% of gross revenue. Of course, that amount is surely more than the industry gives to charitable ends, and naturally enough - the gambling industry has a vested interest in supporting the sports world with which it does so much business. Some of that business now seems to be coming under threat, with restrictions looming in Italy, Belgium, and even potentially the UK. This is perhaps a little added incentive for the EGBA to emphasise the industry’s financial contribution to sports. This financial gain must not come at too great a social cost, of course.
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Andrew says: I recently reported that the employees of the Porto Rio Casino, in Greece, had taken matters into their own hands and removed money from the casino cage and slot machines, money that the employees said was part of the amount owed to them due to unpaid wages. The staff, after being asked to take a 25% pay cut, went on strike. Now the owners, Theros International Gaming, have decided to close the casino until further notice. They are talking up the prospects of new investors in the property, but it’s hard to see how anyone would invest in something that is performing so poorly.
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Luke says: The Gambling Commission have continued full steam ahead as expected with this new slew of penalties for operators failing to ensure legal standards of customer care and protection, this time levying fines and removing licenses from online operators. It appears that three firms will pay seven-figure penalties. A fourth has surrendered its license entirely, nine have been given written warnings, and six are under further investigation. That’s quite a major sweep, and again indicative that the Commission is aiming high and low in its pursuit of the law. On top of this, three personal license holders have surrendered licenses. After years of seeing the online gambling industry become more complex, and more widespread, the Commission is currently taking these necessary actions without hesitation, and that shows no sign of abating in future. Companies are going to have to get their customer care, due diligence, and AML protection in place, or risk shutting up shop entirely.
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Luke says:
Fuelled no doubt by recent reductions in certain areas of gambling tax, the Spanish gaming industry continues to grow apace, as indicated by an almost 30% year-on-year increase in GGR for the third quarter. The surge in sports betting that provides a strong revenue boost has been a common story across the globe during the World Cup, and Spain finishing in 10th place also kept the bets flying at volume for some time during the summer. Liquidity pooling is noted as having helped keep poker on the up and up, and this too was widely predicted. The stats for TV advertising were also published and show an almost 200% rise. This may well be a figure we see recede once again however, in the near future, as Spain has promised a change in course with regard to advertising restrictions for gambling products.
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Andrew says: Sometimes progress does happen. UK start-up banks Monzo and Starling have launched a feature in their mobile banking apps that will allow their customers to block all gambling and betting transactions. It is a welcome development that banks are getting involved in helping customers who want to control their gambling, although a block longer than the 48 hours now offered would be appreciated. A few years ago, I tried to get banks to allow gambling companies to verify the age of customers making a deposit - banks do hold the age of all of their customers, and this simple check would limit underage gambling. However, the banks refused, saying that the legacy systems they used at the time would not allow it. By contrast, banks such as Monzo and Starling that utilise new platforms can build in these features.
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Luke says: Football must be feeling pretty singled-out here, given that GambleAware have never before run an entire campaign around one sport. A powerfully-produced TV ad shows games taking place on local pitches, and even kids kicking around balls in the street, showing the human side of the game; then each ball vanishes, leaving the players confused. The ad ends with dual slogans, back to back: “Is betting taking away our love of the game? Can we have our ball back please?” The ad cleverly leaves the questions open for the viewer to answer for themselves. How much is too much?
It’s a question the industry is also asking itself, with a major meeting hosted by the RGA taking place on this very subject, to mull over the possibility of self-imposed limits on gambling ads on TV and during sports broadcasts. The focus on children is also pertinent, as it emerged in the Gambling Commission’s latest study that an estimated 32% of 11-16 year olds have gambled in the past year.
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Tottenham & Co
232 Cranmer Court
London SW3 3HD, UK
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