As the microscope that the industry finds itself placed under becomes ever more tightly focused, can a path to potential rejuvenation in the eyes of the public be envisaged and, perhaps more crucially, achieved.

With a ramp-up of regulatory activities having been witnessed on a global scale, it could be argued that the changing public perception of gambling has not been evidenced in a clearer fashion than it has in the UK.

This hasn’t been helped by a ramp-up of regulatory action which saw 16 operators, during the 11 months to November 30, 2022, pay out a total of £45m due to failures identified by the UKGC. This included a record £17m settlement paid by Entain.

For comparison, in fiscal year 2016/17 action was taken against just three operators that paid out £1.7m for regulatory failures.

This is also a trend that has continued into the current year, with the UKGC having issued penalty packages of £337,631, £442,750 and £6.1m to Vivaro, the BetConstruct B2C subsidiary, TonyBet and Intouch Games, respectively.

To delve into the issue of compliance amid a deluge of regulatory crackdowns, the latest edition of the SBC Leaders publication spoke to Licensing Expert David Clifton to gather insights on if lessons have been, or are being, learned, and if a precedent has been set that would later be observed elsewhere and more.

SBC Leaders: We have seen an uptick in regulatory action across numerous regions as 2022 has progressed, with this particularly evident in recent times in the UK. Why do you believe this is so?

David Clifton: As a newly-qualified solicitor, I first started advising British gambling operators in 1983, shortly after evidence of skimming, junketing, fraud, corruption and the provision of unlawful credit led to the closures of several London casinos. 

In many ways, it was a different time then. 

1983 was six years before Tim Berners-Lee invented the World Wide Web. It was 13 years before the first money was staked on an online casino, resulting in fears that gambling on the internet was akin to the lawlessness of the American Wild West of a century earlier.

It was 18 years before the USA Patriot Act was passed in the immediate aftermath of the 9/11 attacks on the World Trade Centre. At the same time, the UK Government considerably strengthened the provisions of its Terrorist Act 2000 and, hot on the heels of that, introduced the Proceeds of Crime Act 2002.

It was 21 years before casinos were brought within the ambit of the UK’s money laundering regulations for the first time. 

It was 24 years before the UK’s Gambling Act 2005 came into force with an assurance from the UKGC that it would apply a ‘light touch’ and ‘proportionate’ regulation in relation to the three new licensing objectives focusing on crime prevention, fair and open gambling, and protection of children and the vulnerable. 

In that same year (2007) Apple released the world’s first smartphone, enabling people to carry a casino around in their pocket, always open for business 24 hours a day, seven days a week.

It was 30 years before the UKGC started to take serious enforcement action to uphold those objectives, having identified operators’ AML and social responsibility failings for the first time. It was 33 years before the UKGC’s then CEO famously announced that the regulator wanted gambling companies to do much more to put consumers at the heart of the businesses.

Why have I delivered that history lesson? It’s because the answer to this first question lies in all that happened over that very same period of time. 

Competition grew rapidly as online gambling spread across the globe. Regulatory boundaries got pushed as commercial considerations outweighed compliance responsibilities. In the UK, public trust and confidence in the industry declined dramatically as negative stories about FOBTs, gambling-related tragedies, consumer complaints and the sheer volume of gambling advertising started to grab media headlines. 

The UKGC’s actions soared (culminating in this year’s record sanction of £17m for AML and social responsibility failings) as the regulator lost patience with an industry that it believes has not learned sufficiently from its repeated mistakes.

Similar trends, concerns and clampdowns have occurred in other countries, prompting newly regulated jurisdictions to impose more restrictive regulatory regimes and long-established jurisdictions to come down increasingly hard on non-compliant operators.

But was it really such a different time back then in the early 1980s? One only has to look at the cause of the recent casino scandals in Australia to learn that in the field of international gambling regulation, the well-known epigram ‘plus ça change, plus c’est la même chose’ is most certainly applicable in spades.

CB: This increase undoubtedly has a detrimental effect when it comes to the public’s perception of the industry, so have lessons been learned or are they being? And why?

SBCL: Lessons have very definitely been learned for all of the reasons I have mentioned above. However, have operators learned from those lessons?

Whilst he was the CEO of Mr Green, Jesper Kärrbrink appeared to have learned from such lessons when he said: “I think we as an industry have a lot to blame ourselves for; being too aggressive and having a business model of buying new customers all the time. It’s not sustainable in the long term and we come across as greedy and loud.”

More recently, outgoing Flutter Entertainment CEO for UK & Ireland, Conor Grant, was quoted as saying: “I think we have to acknowledge that what has happened in the past in some instances hasn’t been right, and we have made mistakes – but I think we have to move the discourse on,” adding: “We have to be part of the solution.” 

The final part of that quote chimes with the UKGC’s repeated call for ‘collaboration’, the buzz word of its last CEO Neil McArthur. 

The challenge for the industry is that, in the eyes of many regulators, law-makers and the public alike, trust in gambling operators has been lost forever, that the online gambling sector in particular was given a ‘rope of opportunity’ to self-regulate effectively but proceeded instead to use that same rope to hang itself. However, even if some believe that such a suicide has been committed, surely something can still be salvaged from the situation?

For example, although Entain was the unfortunate recipient of a UK record £17m penalty earlier this year (incurred by reason of regulatory failings during 2019 and 2020), it is widely regarded as now leading the way on both sides of the Atlantic in terms of setting the highest standards in player protection and social responsibility. 

In addition, UKGC statistics published this year have indicated not only continued maintenance of lower problem gambling rates in the UK but also significant increases in more positive public perceptions of gambling. All is not yet lost.

SBCL: Could these actions potentially set a precedent that could be witnessed elsewhere? What could newly regulated, or those looking to regulate soon, learn?

DC: UKGC Deputy CEO Sarah Gardner accurately summed up the opinion of many in a speech delivered in mid-November when she said that “gambling has changed radically in recent years, looking more like a global tech industry than the traditional gambling sector many people think of when they think about gambling”. 

I have long held the belief that the more robust regulatory standards set by the UKGC would become a benchmark for other newer gambling jurisdictions. That is why I have warned in several international conference speeches of my own in recent years that both operators and regulators in new online markets should learn from UK precedent – both what has worked and, sadly more often, what has not worked.

In October this year, the UKGC’s present CEO, Andrew Rhodes, issued his own warning when addressing an audience of international gambling regulators. He said: “In Great Britain we have the largest online gambling market in the world and one of the most liberalised. So, what happens in the UK will likely happen in your jurisdiction, if it is not already happening.”

He explained the reason for that comment with the following forecast: “Many of us will be dealing with the same operators and groups of operators. We will be tackling the same issues too, whether you are a newly-regulated market, licensing online gambling for the first time or a large and mature market,” adding: “… and ultimately, we all want the same thing too – operators who are compliant with our regulations and rules. But we know as well as you, in such a volatile and innovative environment, it can be hard to keep pace. And a lot of the time, that story suits all too many operators in the gambling industry.”

His speech concluded with the following appeal to his fellow regulators: “If we can crack ways to better work together – sharing data and intelligence, adopting common approaches and co-ordinating actions where possible – we can achieve globalised progress across a globalised marketplace.”

I believe it is inevitable that will happen, and that it will happen sooner than many may think.