High stakes: gambling reform for the digital age
Customers in a casino wishing to buy chips via debit card previously had to leave the gaming floor to purchase chips at a cash desk/kiosk. Legislation requires ATMs to be sited so that customers must stop gambling if they want to get more cash. There are now seven active 2005 Act casinos from which to draw conclusions, with another one having opened and then closed again. When the 2005 Act was passed, the then government planned to review the changes in 2014, but only two of the new casino licences were active at that stage.
- It requires remote gambling operators selling into the British market, whether based here or abroad, to hold a Commission licence to enable them to transact with British consumers.
- The Gambling Act 2005 (Gaming Tables in Casinos) (Definitions) Regulations 2009 makes provision as to how references to “gaming tables” should be interpreted in this context.
- If you aren’t familiar with spread betting, it’s a speculative wager of the price of a stock, fund, or other security.
- Trade bodies representing the land-based gambling sector have recently established a new voluntary safer game design code for gaming machines which aims to instil a minimum set of standards for land-based game design.
- We would not permit betting in Scottish 1968 Act casinos until Scottish Ministers have had the opportunity to consider what (if any) restrictions or protections they would like to put in place by way of amendments to the Mandatory and Default Conditions Regulations.
Chapter 5 ‘Review of licensing authority fees’ outlines proposed changes to premises licence fees for Small 2005 Act casinos, which 1968 Act casinos that elect to move onto the new regime will also be subject to. The government intends for operating and premises licence fees to be harmonised between 1968 Act casinos and Small 2005 Act casinos. This measure will also bring greater consistency to the different licensing regimes and greater parity between online and land-based casinos.
It also highlighted that inflexible funding negatively impacts ‘the Commission’s ability to ensure consumers are protected from … new risks’. The National Audit Office found that the requirement to adjust fees by statutory instrument “makes it more difficult for the Commission to invest in new skills to quickly address changing risks”. Some industry submissions suggested those who demonstrate effective governance and procedural controls should pay lower fees, although a number of other submissions from industry were strongly against such a proposal. They pointed out that the resources of the Commission are small compared to the financial power of the industry that it regulates and relative to other regulators.
Sector overview
The primary benefit of this measure is increased GGY for casinos that take up additional gaming machines. Gambling operators must ensure that their supervision and monitoring of gaming machines enables them to meet the requirements of the Act and conditions of their licence. Data from the National Gambling Treatment Service shows that a relatively small proportion of patients report participating in gaming machines in casinos. Taken together, the three measures will determine the maximum number of gaming machines that casinos will be entitled to. The sector views an increase to this ratio as essential in order to ensure these casinos’ long term viability by allowing them to site more gaming machines, and this conclusion was reflected in the white paper. It has also meant that none of these casinos are able in practice to satisfy the current conditions which would allow them to offer the maximum number of gaming machines due to the amount of space they take up.
There were mixed views on casinos’ ability to hold multiple licences at the same physical location. More respondents were opposed than in favour, but this largely stemmed from those who are opposed to any increases in the supply of gambling opportunities, rather than operators and industry stakeholders. It was proposed that the requirements would form part of a new regime that operators would have the option of moving onto, taking up a new gaming machine entitlement under the new rules. Subsequent discussions with industry have indicated that this would equate to the majority of casinos in practice.
Introduction of an age limit on ‘cash-out’ slot-style Category D machines
The Gambling Commission will launch a consultation on the proposals for financial risk checks outlined in Box 3 below, with the aim of introducing changes in the licence conditions and codes of practice. It is clear that a financial risk model must also pay especially close attention to those who lose unusually large sums relative to both other customers and other likely outgoings. This aligns with recent research into online gambling specifically, which found 22% of regular online gamblers with annual losses over £700 were experiencing ‘problem gambling’ according to the PGSI two years later. Equally, while high losses are not necessarily harmful, it holds that the higher the gambling spend (particularly in a short period of time), the smaller the proportion of the population that can afford it without negative consequences. We received a number of anecdotal accounts from individuals with personal experience of gambling harm that illustrated the relationship between gambling harm and financial vulnerability – both as a cause and/or effect.
In addition to the licence conditions and legislation governing how facilities to gamble are offered, all gambling advertising must comply with the UK Advertising Codes which are set by the Committees of Advertising Practice and enforced by the Advertising Standards Authority (ASA). The change created a ‘point of consumption’ regulatory regime, meaning that any gambling company transacting with British consumers has to have a licence from the Gambling Commission and comply with the licence conditions. Further detail on our initial estimates of the likely or possible impacts of the package, including on sectors related to gambling such as horse racing, is at Annex A.
The UKGC is responsible for regulating arcades, betting, bingo, casinos, fruit machines, and lottery games as well as remote gambling, which including internet sites and telephone betting. A substantial number of responses drew upon the higher levels of customer spend which is evidenced on Category B gaming machines by comparison to Category C and D gaming machines, particularly as this relates to potential indicators of gambling-related harm. Equally, we want to ensure that customers receive a genuine offer of lower staking gaming machines as an important mitigation against gambling-related harm.
One operator-led submission to our call for evidence suggested that 25% of people reduced their gambling expenditure after setting a deposit limit, compared to 6% who increased their gambling. As outlined in section 1.1 above, online gamblers already have access to a range of tools to help them control their time and money spent gambling and there are rules governing their use (for instance deposit limit increases must take at least 24 hours to come into effect). Morgan Stanley and NERA Economic Consulting have respectively estimated a £2 fixed limit on online slots would reduce online slot GGY by 22% and 23%, but some of this could be displaced to other online gaming products.
These organisations generally made targeted submissions which concentrated on single aspects of the call for evidence and gambling policy which overlap with their interests. The next biggest category of respondents was Parliamentary stakeholders, including both Parliamentary groups and individual members of both houses. Most of the substantive evidence, information and data provided to the Review was included in the 404 submissions which were prepared in response to the call for evidence and sent directly to DCMS. To the extent that some gambling harms are more prevalent within certain protected characteristics (e.g. young people and potentially certain ethnic groups) and also among socio-economically deprived groups, our proposals to reduce harm should have a positive equalities impact. Young men aged 16 to 24 and 25 to 34 are more likely to experience both problem and at-risk gambling behaviours than other cohorts. Male online gamblers spent on average 81% more than females, and according to the PHE evidence review, men are more likely to be problem gamblers (0.8%) than women (0.1%).
(c)facilities for gambling must not be provided in the non-gambling area, and (b)lobby areas and non gamstop toilet facilities may be taken into account in calculating the non-gambling area; but the non-gambling area must not consist exclusively of lobby areas and toilet facilities, Have a gambling area, the floor area of which is no less than 200m², and The gambling business has made arrangements to protect your money if they go bust. All gambling businesses must make it clear which level applies to you. You can also find more information about different topics relating to money and rights when gambling in our guides.
Failing to meet the size requirement in any of these three areas will result in a lower machine entitlement. Therefore, we would welcome any responses which highlight concerns about this approach and how non-gambling areas could be calculated using a different method. Industry has raised some concerns about how areas like bars would be categorised if sports betting terminals were placed in them. If its gambling area is 500sqm or more, its non-gambling area must be equal to or greater than 250sqm. It could also mean that the same gambling facilities are compressed into a smaller gambling area, with potentially a worse customer experience and no player protection benefits.
We will also permit casinos of all sizes to offer sports betting in addition to other gambling activities and will take steps to reallocate unused 2005 Act casino licences to other local authorities. We will allow smaller casinos to benefit from more machines on a pro rata basis commensurate with their size and non-gambling space, subject to the same table to machine ratios and other conditions. The 2005 Act sets out a range of restrictions for land-based gambling based on the assumption that restrictions on supply (for example casino numbers and gaming machine availability) are an important protection.
Simon Stevens, then-chief executive of the NHS, said in 2013 that he “disapproved of eight betting firms” because “they do not pay towards NHS costs in countering gambling addiction.” The gambling industry has announced voluntary curbs on television advertising. The online sports betting market in the UK is estimated to be worth £650 million which has seen a compounding annual growth rate from 2009 to 2012 of approximately 7%.
This has increased substantially since then and during the course of the Review the Betting and Gaming Council offered to further increase voluntary contributions across its wider membership representing 90% of the industry. When we last considered this issue in 2018, much of the debate centred around the quantity of funding provided by industry. This would impose a specific reporting requirement on gambling licensees to notify the Commission if they become aware of a customer’s suicide, even if there is not an obvious link to their gambling. DHSC will engage with key stakeholders, across both the gambling and health sector, during this process. DHSC recognises that many stakeholders will have contributed to the previous consultations, including one on mental health, and will set out opportunities to contribute further in due course. The Welsh Government has worked with key partners to undertake a gambling health needs assessment which it published in February this year and will inform the development of specialist treatment services in Wales.
Some concerns were raised by industry about the technical feasibility of voluntary limits, particularly for Category D crane grab machines. The vast majority of respondents agreed that there should be a minimum transaction time for customers making a cashless transaction on a gaming machine. This could include looking at how customers interact with machines that accept cashless payments, how much they spend and the impact of different protections. As set out above, while chip and PIN could be used as a verification method, we would expect manufacturers and operators to adapt or make new machines that accept payments made by mobile devices which have some sort of biometric verification and meet the SCA standards.
Most spend small amounts which are similar to or less than spending on other leisure activities and do not report experiencing any harm from gambling. We also need to have the right controls in place on the products people can be offered, safeguards covering how those who gamble are treated by operators, and the right safety nets in place to stop harm where it occurs. We recognise that people should be free to spend their money as they choose, but when gambling poses the risk of becoming a clinical addiction the government needs to ensure there are proper protections. Adults who choose to spend their money on gambling are free to do so, and we should not inhibit the development of a sustainable and properly regulated industry which pays taxes and provides employment to service that demand. Millions of us enjoy gambling every year and most suffer no ill effects, so state intervention must be targeted to prevent addictive and harmful gambling. We are enormously grateful to all of those who have contributed to our Review, especially those with personal experience of gambling-related addiction and harms who have spoken out about their own struggles or those of people they love.
This mainly extended to random number-generated casino games, but a few submissions argued that betting should also be included. However, a case has been made that the unlimited stakes on online slots play are particularly problematic due to the nature of slots play and its increasing popularity as seen in the monthly operator data collected by the Gambling Commission since the start of the COVID-19 pandemic. In addition to the structural characteristics discussed above, stake size can be a key determinant of losses and gambling-related harm. However, the new rules will strive to make games intrinsically safer across the sector, while leaving space for operators to continue innovating and developing games which customers want to play. Longer-term, Gambling Commission changes to the prevalence and participation methodology will provide a more detailed assessment of problem gambling trends across the online slot player cohort to support evaluation.
We have taken into account that these machines currently account for approximately two thirds of Category D slot style machines. While many welcomed this voluntary move, some respondents called for the restriction to become mandatory, while others like the Gambling Related Harm APPG wanted it to be extended to ticket-out slot style machines too. The distinction with ticket-out machines was drawn on the basis that while cash can be reinserted for further play (potentially facilitating behaviours like chasing losses), tickets cannot and have no value beyond what they can be redeemed for within the venue. Industry has recognised the concerns around slot style machines and in March 2021, Bacta members updated their Social Responsibility Charter and Code of Practice to voluntarily implement a ban on under 18s using cash out slot style machines. 18% of 11 to 16-year-olds had played on fruit style machines where you win tickets to ‘buy’ prizes and 10% on fruit style machines with small cash prizes. The tickets these machines pay out can be exchanged for a small physical prize such as stickers, sweets or a toy.
This means, for example, that operators will be able to site 2 Category B cabinet gaming machines to a minimum of one Category C or D gaming machine. The government intends to amend the current gaming machine ratio to allow operators to make 2 Category B gaming machines available to a minimum of one Category C and D gaming machine. This chapter outlines the evidence received in relation to the white paper proposal to amend the ratio of Category C and D to Category B gaming machines in arcade and bingo venues.
Gambling premises, either proposed or existing, within GVZs are expected to take into account the information contained with the Council’s Local Area Profile when completing their local gambling risks assessments. This varies slightly in Wales where betting offices are still in the A2 use class, and in Scotland, as some gambling premises are classed as ‘Class 11’ and some are ‘sui generis’, but both categories require change of use planning permission. For example, an office cannot be turned into an adult gaming centre without planning permission from the planning authority, and it will also need a premises licence before it can open.
Given the small number of responses, we assume that the favoured option amongst licensing authorities remains Option 2. Under Option 2(a), the Bingo Association has advised that 2 substantial multi-site bingo club operators and several single site operators would be disadvantaged by comparison to the current regime. Option 2(a) had more varied views across bingo operators.
It has also argued that as bingo games are required to have a participation fee which creates a retention pot for future winners, operators are constrained in offering further choice of side bets within their session. While the pay-out per game can be variable, the participation fees create a pot in retained prize fees should multiple customers win. These additional games are compliant with current rules of bingo in that they require participation in the main game of bingo and the numbers are allocated to the customers. Licensed bingo operators already offer in-game bonus prize opportunities under current rules defining bingo. While there is an initial outlay, we believe this gives operators some flexibility on late night opening and falls within the discretion of local authorities, ensuring decisions are made at a local level.
Such apps have so far only been rolled out for use on a relatively small proportion of gaming machines, principally in pubs. However, the advice is that the onus should be on industry to demonstrate how developments on cashless payments can be offered in a manner which does not increase the risk of gambling harm or gambling-related crime, such as money laundering. They also pointed to anecdotal evidence that indicates a decline in gaming machine usage in alcohol licensed premises by casual pub goers, who now pay by card but who previously might have played a machine using spare change. The original purpose of rules prohibiting the use of debit cards on gaming machines was to protect players. As well as supporting the recovery of those businesses which choose to offer betting, offering an alternative to betting on a phone while in a casino could lead to player protection benefits where the casino operators are better able to monitor all the customer’s activities while in their premises. In line with the intention of the 2005 Act to create casinos providing a range of gambling and non-gambling activities, we propose to permit sports betting in all casinos.