Wednesday, January 9, 2019
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2018 was a year to remember, possibly for all of the wrong reasons. For the European gambling industry, there was not much positive during the year, with plenty of bad news to write about. The exceptions are the successful opening of Melco’s satellite casinos in Cyprus; the fall of PASPA in the US, which represents an opportunity for European betting operators and suppliers; and a reduction in taxes for online gaming operators in Spain
One trend was additional operating restrictions of one form or another. The much-publicised UK government review of stakes and prizes for FOBTs eventually took place, which plumped for the politically expedient maximum bet of £2, despite the absence of any evidence to suggest that a £2 stake limit would limit the harm from gambling. In some sense the bookmakers only have themselves to blame: they did not ever manage to get ahead of the issue, and tried to use rational arguments to fight what became an emotive issue. The weakness of the current UK government did not help, because they weren’t prepared to lose friends in order to keeping the bookmakers happy.
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There has been a lot of talk towards the end of 2018 concerning new efforts by the UK gambling industry towards more responsible gambling. These have included private “leaders’ meetings” to discuss voluntary self-imposed advertising restrictions or caps, as well as major PR campaigns such as Will Hill’s “Zero Harm.” In this piece I’d like to consider how much it is in the leadership’s interests, or even in their power, to make fundamental changes to the
modus operandi of their firms, especially when it comes to changes which may better protect their customers at the cost of immediate profits.
There are certain elements to the very nature of corporate structure, especially once a firm is publicly traded, which require that corporation provide maximum returns to its shareholders. There are very few protections in place for most stakeholders, which (lest we forget) includes all those affected by the business a firm does. Most externalities are written off as just that, something external to the firm, which they aren’t obliged to deal with directly, let alone seek to remedy.
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Luke says: Interesting but not surprising: it seems likely that the state of Hesse will be opting for the escape clause in the State Treaty on Gambling, previously agreed across Germany’s sixteen states. Hesse and some other states view the Treaty as requiring a shift away from a quantitative cap on license applications towards a qualitative determination of which applicants are deserving, a view not likely to achieve unanimity across a nation where gambling has always been regarded with a diversity of views, as both a blessing and curse. This breakaway will surprise no one, given Hesse’s history of attempting to circumvent existing restrictions through the issuing of waivers to operators. What remains is the question of how the remaining fifteen states will collaborate on gaming legislation after Hesse’s departure from the Treaty.
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Luke says: A really nasty tale of simple greed here in signing advertising deals, and a very easy decision by the Children’s Commissioner. Yes, sites which encourage you to pay to open mystery boxes, which contain items with a range of possible values, is clearly gambling. A site which does an instant opening of the box (“virtually”) is clearly going to be closer to online gambling than a subscription to getting mystery boxes delivered via the postal service. To see two prominent YouTubers, at least one of whom has publicly acknowledged that a majority of his viewers are underage, flagrantly promoting such a site, is disappointing, and depressing. Another major star of YouTube, Daniel Keem, recently claimed on Twitter that he was offered $100k to promote the exact same site on his channel, and that he “almost took the cash”. Statements from the site themselves, who I won’t name here for fear of creating negative promotions, defending their service as unlike gambling, seem to be pretty flimsy and fanciful.
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Andrew says: A new casino, Casino Boomerang, opened in Sochi, Russia, at the beginning of the year. The Russian Government has a history of closing casinos as fast as they open, as the operators in Azov City found out to their cost. The owners of Casino Boomerang are either very brave or believe they can rely on the support of the Russian Government for enough time to make a good return. Rather them than me.
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Luke says: A good roundup of some recent items of significance here from consultancy firm Regulus Partners, covering a wide range of international elements, with excellent analysis. Italy is the frontrunner, with the most space given, including detailed coverage of the new tax hikes and the new advertising ban. Interestingly optimistic in terms of the immediate impacts of these changes, this well-argued piece does warn that more changes are likely to be incoming. They also have a marvellous turn of phrase, “the pendulum of fiscal-regulatory pain”. Sweden is tackled next, including their regulation which requires a self-exclusion system to be available to citizens which they can use to block themselves from playing with all operators. The Dutch prosecution of gambling corporate criminals is covered, alongside speculations about how the Dutch will treat “bad actors” once online gambling is at long last regulated in law. The other two European nations covered here are Romania (the rise of recent “greed taxes”) and Cyprus (development of an integrated resort casino).
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Andrew says: Fine Gael, the governing party of Ireland, has made a commitment to get its Gambling Control Bill passed this session. The Bill is a badly needed replacement of laws that were put in place in the 1930s and 1950s. Casinos in Ireland are almost self-regulating and operate on the basis that they are private members clubs; how that fits with always making a profit I’m not sure. The OECD has been concerned that Ireland’s unregulated casinos are an easy opportunity for money laundering. There have been numerous attempts to regulate the sector in the last 15 years; perhaps this time will be successful. But passing a law is only half the battle, with enforcement the other half. For example, for many years casino-style slot machines operated in the open in the heart of Dublin, illegally, and no effort was made to close them down, perhaps because the owner was a former policeman.
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Andrew says: Four more banks in the UK have joined start-up banks Monzo and Starling to block online gambling transactions at their customers’ request. The new service being offered by the four is not quite the same as Monzo’s or Starling’s, because rather than blocking all online gambling transactions they will block only those made with a debit card. Although not completely ideal, it is a step in the right direction. By contrast, Monzo takes its responsibilities towards its vulnerable customers very seriously, as can be seen from their blog posting at
https://monzo.com/blog/2018/05/16/gambling-self-exclusion/
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Luke says: The ongoing saga in Andorra has a new twist. Four jilted suitors for a license, still licking their wounds after getting knocked aside by the little yet mighty local Jocs SA, have now stated that a combined lawsuit will be brought, and will surely between them be mustering a mighty legal challenge, using a good deal of financial clout. So, payday for corporate lawyers, then, with fighting talk of “grave indiscretions” resounding on a battlefield where multiple millions are at stake. What’s somewhat more amusing to contemplate is how quickly these four - Casinos Austria, Genting Group, Partouche France, and Grupo CIRSA - will break ranks and turn on one another when, and if, their assault on Jocs SA is successful. In practical terms Andorra’s gaming control board, the CRAJ, have already agreed to review the tender process. The challenge to Jocs SA’s very right to hold a gambling license smacks of overkill, as does the position against the suitability of the CRAJ’s review process. Certainly, it will be an interesting and hard-fought case in the courts, if it comes to that.
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Luke says: Proving once again that they are not partial in prosecuting the letter of the law with regard to entities major and minor, the UKGC’s hammer has come down on a couple offering a draw to win their own home. Unlike some other such competitions deemed legal through inclusion of a skill element, this draw was deemed illegal simply through lack of the same virtue, thereby constituting a lottery. Seeing the UKGC being impartial in their application of the law should be heartening, even where parties who meant no malice are inconvenienced. In this case, the couple will be able to run the same draw again with a skill element firmly included, and the law should be clear for those who wish to do something similar in the future. I do hope that the Commission won’t spend too much time on such cases, however, when major failings abound in the gambling industry itself, failings which are far more exploitative and cynical.
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Tottenham & Co
232 Cranmer Court
London SW3 3HD, UK
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