Regulating in a global pandemic

Owain Flanders examines regulation during the COVID-19 pandemic, and evaluates arguments that the risk to player safety under lockdown might have been overestimated

In a pandemic-stricken UK, the gambling industry could be forgiven for thinking it might take a break from the swathes of negative press it had become accustomed to in recent years. From mid-March, mainstream media was firmly focused on the new invisible killer, COVID-19. This meant problem gambling, often the focal point for a number of media companies, suddenly took a back seat to a much more immediate and widespread danger to public health.

However, as the UK Government outlined plans for lockdown measures and employers began making use of furlough schemes - trapping problem gamblers at home with a potentially diminished income - it soon became very apparent that there would be no escape from the media spotlight for operators. In fact, as the anti-gambling headlines rolled in one by one, it was clear that the pandemic might have had the opposite effect.

Among a string of articles, the BBC described NHS fear over a “new wave” of gambling addiction, and the Guardian reported the lockdown might lead sports bettors to make riskier choices on online casino sites. Meanwhile, in the House of Lords, 22 MPs urged the British Government to impose strict curbs on gambling during the lockdown, while Swansea East MP Carolyn Harris described the pandemic as “absolutely disastrous” for those suffering from gambling addiction. All of this made clear that rather than stifling industry criticism, the pandemic galvanised its opponents towards a louder cry for regulatory action.

It was the industry itself that responded to these concerns with newfound solidarity. The Betting and Gaming Council (BGC) did everything it could to allay lockdown fears, including issuing a 10-point pledge promising extra steps would be taken to

protect customers. In a bid to ease concerns further, operators also agreed to halt all TV and radio advertising for their products for at least six weeks, replacing them instead with safer gambling messages.

Despite its critics’ claims that it could not be trusted to do so, the industry came together to protect its customers under the leadership of the BGC. However, questions have been raised as to whether this was all absolutely necessary. While action might have been needed to quell the concerns reported by the media, has the pandemic actually increased any risk to problem gamblers?

While it might have forced betting shops and casinos to close their doors, it certainly hasn’t stopped the industry from speaking up on its own behalf. From March, virtual summits have allowed operators, regulators and affiliates to voice their opinions on the pandemic’s effect on player safety, and the general consensus is that the danger posed to problem gamblers might have been overestimated.

Speaking as part of a safer gambling panel during the SBC Digital Summit in late April, Yanica Sant, head of EU affairs & policy for the Malta Gaming Authority (MGA), said the data the regulator received did not show as “drastic” a change in player behaviour as was expected during the pandemic. “The data does tally with what operators are saying,” she confirmed. “What we were expecting was a much more drastic change in player behaviour than has actually happened.” This is also reflected in reports of the industry’s behaviour during the pandemic, which for the most part has been praised by regulators. When contacted by Gambling Insider, Sant confirmed that although some operators did

attempt to exploit the situation via marketing, “the vast majority of operators had acted in a responsible manner”.

It’s evident the MGA placed significant trust in its operators not to abuse the crisis from the very beginning. In fact, its only real action came in March, when the regulator warned its licensees against using any COVID-19 themed wording in promotions or marketing. Sant had a simple explanation for why this was the MGA’s chosen strategy. She said the MGA did not opt for restrictive measures as a reaction to the pandemic as it “did not have evidence suggesting that this was necessary”. This was a similar strategy employed by the Gambling Commission in Britain that, despite providing guidance for operators on how to protect customers during the crisis, enforced no new regulatory measures.

In Sweden however, we have seen a different story entirely. In April, the Swedish Government announced its proposal for a string of measures intended to “reduce the risks in the gaming market as a result of the outbreak of COVID-19”. At press time, the Government intends to implement the regulation in July, including an SEK 5,000 ($530.10) per week deposit limit for gaming accounts and vending machines, mandatory limits on playing time for online casino, and a maximum bonus offer limit of SEK 100.

Ardalan Shekarabi, the social security minister of the Swedish Government, described “increased risk of unemployment, sick leave and financial uncertainty, combined with a decline in wages”, as the reasoning for such measures, and it would certainly be difficult to argue with the prevalence of these issues during the pandemic. However, it could be argued this combination does not create “major risks in the field of play” unless operators are behaving irresponsibly to begin with, which, as Sant confirms, has not been the case with the majority of operators.

Kindred is one operator that vehemently disagrees with the Swedish Government’s regulatory intervention. The owner of Unibet and 32Red published a response to the measures, criticising the Swedish Ministry of Finance for the lack of evidence supporting its “alarmist hypothesis”. While the response does not produce any exact figures in regards to the effect of the pandemic on problem gambling, Kindred argues there is no evidence in its own or its competitor’s data to indicate any increased risk. “Rather, the overall gambling industry has experienced a drop in gambling activity,” the operator concluded.

But what might be the danger of imposing temporary restrictions on the Swedish gambling industry for the length of the pandemic? Kindred argues that it may force customers towards unsafe black market sites. While the “black market” argument is one we have heard reiterated by those who oppose stricter legislation in any regulated market, it holds particular weight in Sweden where channelisation rates are not reaching targets set out at the beginning of re-regulation last year. Figures published by Copenhagen Economics and highlighted by Kindred estimate that every fourth krona played in Sweden goes towards the unlicensed market for online casino games.

Speaking with Gambling Insider recently, Gustaf Hoffstedt, general secretary for Swedish online gambling trade association Branschföreningen för Onlinespel, also agreed with Kindred’s concerns. “We expect channelisation to drop even further,” Hoffstedt said. “Maybe as low as the figure before re-regulation. Sweden re-regulated for the very reason that channelisation was very low and, 18 months later, the Government is taking measures it seems will push punters outside of the licensing system.”

In contrast to Sweden’s approach, Sant argues for evidence-based legislation - the utilisation of data as a backbone for policy making. This has been the strategy used by both the MGA and the Gambling Commission throughout the pandemic, and so far it seems to have paid off. Once the pandemic has subsided, other regulators might do well to learn from these examples to build more sustainable markets moving forward. After all, a strong and honest relationship between regulators and their licensees is vital for customer protection, both in deterring customers away from the illegal market and driving operators towards self-regulation and responsibility.