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Government and gambling: restoring the relationship
Thursday, December 13, 2018, by Lorien Pilling, comments 0

Gambling is not the only sector which find itself out of favour with government at present. Irwin Stelzer used his recent American Account column in The Sunday Times to write about the US technology giants.

He noted that some US$ 800 billion had been wiped off their stock market value in three months. Facebook is the most notable faller, down 40%, as the companies face scrutiny from the EU and the UK.

There is, as Stelzer notes, one common share price depressant – fear of regulation.

He argues there is a sense that the party is over for Facebook, Google and Amazon, just as it was for John D Rockefeller’s oil monopoly in 1911.  Gone are the days when Eric Schmidt, then Googles chairman, did not need Washington hotel reservations because, so the story goes, there was always a bed for him in the Obama White House, and when Mark Zuckerberg, boss of Facebook, was the wunderkind who was knitting the world together, profit being only a secondary or tertiary goal.  These companies have taken dead aim at their feet and pulled the trigger.  Sound familiar?

In the aftermath of the recession, governments have lost faith in business, which is now less trusted than ever before. The consumers are angry at wage stagnation and are voting in ways that the main political parties do not like.  Facebook, for all its billions, is on the rack. It has been used to encourage people to vote away from the main political parties. They are now in governments’ sights and this demonstrates more than anything else that when government is going for you there is only one result:  Government is going to win.

Regardless what you do, the PR and good intentions are not going to work.  Facebook has taken the unprecedented step of employing Sir Nick Clegg, the former leader of the Liberal Democratic Party and UK Deputy Prime Minister, as head of global affairs and communications.  A good move because politicians have an entirely different thought process to business people and Clegg should be able to bridge the cerebral gap. He will know in this age of transparency what needs to become transparent.

As for gambling, we just must ride the punches. I see a five to seven-year process before we get back to a reasonable relationship with government.

Phase One: Implementation
The £2 FOBT stake will be implemented. It will cause shop closures and job losses.  Casinos and AGCs may pick up some of the benefit of less machine competition. E-gaming will be the biggest winner.

Phase Two: The Aftermath
The expectation is that addictive gambling rates will fall.  They will not.  The UK Government and the Gambling Commission will want statistics that mean they can continue their crusade – “there is more to be done”. The gambling industry should produce its own data.

Phase Three: A Period of Calm
The wicked FOBTs have gone and if egaming keeps itself clean the industry should be able to resume the good relationship with Government it had prior to the introduction of FOBTs.

During this period, one would hope that the Gambling Commission will make a better attempt to adhere to the Government’s own Regulators Code of Practise.  For example.

Understand and minimise negative economic impacts of their regulatory activities. The Gambling Commission (GC) did not complete a financial risk assessment prior to embarking on Gamstop, an obligation for all regulators.

Minimising the cost of compliance for those they regulate. Was it reasonable for the GC to pass on to RGA the full cost of Gamstop?  Why are fines not used to reduce GC licence fees so that those who do not commit an offence are rewarded?

Avoid imposing unnecessary regulatory burdens on those they regulate. I am sure your list is greater than mine.

Regulators should provide a timely explanation in writing of any right to representation or appeal. I was told by one operator that to appeal against a decision you have first to put the GC in funds so that they can use your money to fight their case against you! This cannot be right.


By Warwick Bartlett