08 February 2023Speech by Andrew Rhodes
Andrew Rhodes delivered a keynote speech at ICE 2023. His speech was titled: "Latest research shaping regulatory decisions in safer gambling in the UK".
Please note: This is the speech as drafted and may slightly differ from the delivered version.
Thank you and thanks for attending. It’s good to be here speaking to you in the Consumer Protection Zone.
It’s also good to see the Consumer Protection Zone thriving several years after its introduction. It was something that the Commission had called for and we’re pleased Clarion have committed to it and that it is now an integral part of ICE.
Today I want to discuss with you consumer behaviour and how we want to know more about that, what that means for us and what we want to do to make sure we get better research and better outcomes. But in order to do that, it’s important to touch on how the market looks today.
So, a few points about where we are in the gambling sector today.
Three years on from the start of the pandemic, whilst the economy still faces issues - globally as well as in Britain - our data suggests gambling may well have settled into a ‘new normal’.
As of September 2022, overall participation in any gambling activity, in the last four weeks, remains statistically stable at 44 percent compared to year to September 2021.
Within that, the level of online gambling has continued its long-term trend up to 27 percent and this is matched by land-based gambling as well.
The overall headline problem gambling rate is statistically stable as well, although more on those numbers later.
So there is no explosion in online gambling, participation has not gone through the roof in recent years.
This means operators need to be that bit more competitive and innovative if they want to continue to grow in the British market. Or they need to diversify abroad.
And the truth is both are happening.
To begin with, mergers and acquisitions continue throughout the industry.
The now top 3 operator groups in Britain have increased their market share from around 1/3 to 1/2 in just the last five years.
The top 10 groups now represent 77 percent of total business to consumer (B2C) gross-gabling yield (GGY) in Great Britain and the top three groups now represent 50 percent.
Latest information confirms mergers and acquisitions continues up and down the market.
On the innovation front, we’re seeing two things that are worth mentioning.
Some innovation is going into emerging products such as non-fungible tokens - or NFTs - ‘synthetic shares’ and crypto currency. These aren’t gambling in the main, certainly not under legislation in the UK. But we’re watching and rest assured, we’ll have questions of any operator who gets involved.
On the other hand, some of the largest operator groups are stating revenues are down due to safer gambling measures they are introducing. Now we aren’t saying these groups are getting everything right, but this is a development that has our attention.
All of this tells a story of a competitive market place. But how are consumers responding to this?
The Gambling Commission is an evidence-led regulator but just as importantly we’re people-focussed.
We’re interested in the experience and behaviour of every person who gambles in Great Britain. The tens of millions who enjoy gambling and the hundreds of thousands who suffer harm. They are all different.
The Commission has already published significant research detailing just how different each consumer can be.
Our Path to Play research examines the influences on people making choices about their gambling and how that decision making plays out.
We’ve also published research on the various motivations people have for gambling. These typologies give you an idea for how different consumer behaviour is, person to person.
And its these differences that make Customer Interaction - by operators with their customers - so important.
What have we seen in the most recent consumer and operator data?
Amongst the largest operators in the British market we have seen some interesting changes which are pretty consistent across those larger operators.
Across those larger operators, we are seeing GGY fall by just under 16 percent. The amount of money staked is down by just over 13 percent.
We have seen the number of players losing over £500 a month drop by nearly 8 percent, and those losing over £200 a month by a little over 2 percent.
We have seen players staking £50 and over per spin for slots fall by 76 percent. Some operators have seen this reduce by over 90 percent, with the largest drop being over 98 percent.
However, the number of bets is up by just under 5 percent and actives by almost 6 percent.
What does this mean?
Data like this needs to be seen in the right context and it’s difficult and sometimes unwise to rush to particular conclusions.
We know that some major operators have a policy of withdrawing from what they regard as higher risk staking and losses.
We also know that for some time the Gambling Commission has been addressing clearly unacceptable levels of gambling where consumers have been gambling far in excess of their means.
The financial reality for everyone is also different and it is hard to know what this and all kinds of others effects are having.
Given the number of bets being placed with the largest 5 operators increased by 4 billion and the number of active accounts by some 4 million, it doesn’t suggest there is a flood away from gambling either, but clearly some patterns have changed during the last year.
This does bring me onto one of the more controversial and much discussed topics for us at the moment though – so-called ‘affordability checks’.
There is a significant amount of misinformation circulating about the Gambling Commission’s position on issues like affordability and we still await the Government’s white paper following the review of the 2005 Gambling Act.
For several years our casework has found far too many examples of unacceptable levels of gambling being allowed by a range of operators.
And when I say ‘unacceptable’, this is not about a moral judgement – it is about cases like the one where a customer was able to spend £245,000 in just 3 months, despite the operator knowing she was an NHS nurse earning £30,000 a year. Or the one where a customer was able to lose £70,000 in 10 hours, the day after opening an account. I could go on – but to be clear, there are far too many of them.
All of the operators concerned accepted these sorts of examples are unacceptable and have no place in a regulated industry. It is bad for everyone.
What we have made clear is what the gambling industry needs to do is eradicate these sorts of cases.
For most forms of gambling the rough proportions are that 85 percent of GGY comes from around 5 percent of accounts. So, the customers most at risk are in a relatively small percentage of the 22.5 million people who gamble with some regularity in this country every year.
The Gambling Commission has not imposed blanket so-called ‘affordability checks’ or set limits on what we think anyone should be ‘allowed’ to spend. What we have done is make it clear we do expect operators to consider a range of factors when assessing the risk for a consumer, including the financial situation for a consumer.
It is for operators to set limits themselves based on their customer types, business and risks. It is also for operators to take responsibility for preventing the sorts of cases I mentioned above from occurring in the first place.
Consumer behaviour of course – as our research shows covers a wide array of behaviours that come from as many motivations. And unlike many industries, where you stand on gambling is and always will be for many people a moral issue.
As the gambling regulator for the largest online sector in the world and one of the more diverse as well, we are regularly faced with wide-ranging views from stakeholders and the public. Right the way from outright bans, demands I prosecute any gambling company that refuse someone’s custom through to a preference for an unlicenced free for all.
Neither I or the Gambling Commission accept that you can’t balance protecting people from harmful or unfair outcomes with freedom of choice. But clearly, Government has a big role to play in making the judgement about where that balance should be sought.
It will be an important point for everyone with an interest in gambling in Great Britain when the White Paper is published for the Gambling Act Review. But that hasn’t stopped the Commission taking action where we have felt it necessary to make gambling fairer and safer whilst the Review progresses. And it won’t going forwards either.
But if we’re going to focus on improving outcomes for consumers, it’s more important than ever that we understand what motivates and drives consumers.
We want to understand consumers better, both in the numbers and in person. This will drive better regulation.
Last year we ran a pilot testing a new Participation and Prevalence methodology pilot. Whilst the majority of the coverage focused on the gambling harm numbers, the key outcome for us was that the pilot went well and the methodology proved successful. We are now finishing the experimentation phase and will be looking to launch the new methodology later this year as official statistics.
That might mean the problem gambling rate changes when we do. The pilot data was different as well but that’s okay. We want the best data so we can make the best decisions to support people who gamble and those around them.resp
Last year we also invested in our consumer research for the next three years. We’re excited at what that will bring and will regularly share the outcomes.
And we’re running a one day Conference titled ‘Setting the Evidence Agenda’ in March, bringing operators together with academics and the third sector to look at how we can all improve.
Better evidence will mean better outcomes.
The Gambling Act Review of course will also have a big part to play in our plans. We continue to work with DCMS and will continue to take action to protect consumers where needed.
Better research, better data and better evidence will drive better regulation and better outcomes for consumers. Let’s work together on that.