In our last newsletter I wrote about the decline of the independent bookmakers and the cost of “player protection” on revenue. Using the Drinkaware campaign and the fall smoking as examples of successful campaigns where the combination of taxation and publicity cause the undermining of a product. If gambling were to follow the same path then, over a five-year period, revenue could fall by sixteen percent.
Judging by the emails I received from readers it is something that the operators had not considered and possibly by coincidence a letter went out from the Gambling Commission warning operators they need to step up to the plate and really get behind social responsibility.
The Gambling Commission’s Matthew Hill in a speech to BACTA members at their AGM said, “public tolerance for gambling, and any growth in gambling, is likely to be sustained only by ensuring, as far as possible, that commercial success is built on the ‘good’ money coming from consumers choosing to spend their leisure time and money on gambling and not from ‘bad’ or financially risky money, coming from those who have difficulty controlling their gambling, or from criminals or the black economy”.
“I will continue to beat the drum about player protection and the major part that operators play here”.
I don’t know why Matthew chooses to mix up criminals and the black economy with social responsibility; I guess it just helps a negative perception towards the gambling industry when the authorities are aiming to achieve something.
Having said that, from the people I speak to in casinos and betting (both on and offline) are fully committed to implementing the Gambling Commission’s wishes. Just as a publican will serve time on a drunk, the gambling industry does not want to see people lose all their money. They want what is now the holy grail of gambling the ‘recreational gambler’ who bets for fun.
Managers have been trained to intervene and stop addictive play, often to the annoyance of many customers.
A question yet to be answered is when is enough? Because whatever the industry does it never seems to satisfy the regulators. Occasionally there is faint praise, soon to be followed by an ever increasing list of demands.
All of this compliance does place the industry in a dilemma. On the one side appeasement of the authorities and Government if you follow the policy, but consternation from shareholders when revenues decline as a consequence.
To require any business to get behind a policy where the supplier advertises that the product they sell is harmful and will cause a loss of profits, loss of jobs and capital value is a big ask of the operators.
The solution is obvious. For every one percent fall in revenue, due to social responsibility measures, there should be appropriate compensation from the Treasury, possibly through a lower rate of betting duty. After all it is Government policy that is blighting the business.
There is precedent. In 1994 The National Lottery was introduced to the UK. It was more successful than anyone had predicted. The Government had forecast yearly revenue of £1.5 billion but in the second year it topped £5 billion. This had a considerable effect on a wide number of industries and in particular gambling.
The then Chief Executive of the Betting Office Licensees Association (BOLA), Tom Kelly requested that Home Office economists track the effect on the betting industry. The Home Office said that for the first five years of the lottery the cost to betting revenue was fourteen percent.
In those days the Government was quite fair about it. They introduced various measures that compensated not only betting, but bingo, casino and greyhound and horse racing.
It is my view that an unfettered social responsibility campaign will cost the industry 15% – 16% percent of revenue over five years.
This does not mean to say that operators should abandon their social responsibility campaigns, they have a duty of care to their customers but by the same token they should not use shops and websites to advertise social responsibility at the expense of gambling products.
I have seen whole shop fronts dedicated to the social responsibility message and not to product. This is lunacy. There is no stronger negative message to the consumer to have the supplier of a product tell you it is harmful, particularly when for the vast majority of people it does no harm at all.
by Warwick Bartlett