Vice Nation: Gambling

This final part of the Vice Nation series looks at something that when you get right can be fun and profitable, but when you get it wrong can leave you out in the gutter or, at best, in a Louis Theroux documentary.

Gambling has been discussed on this blog and in the Senedd before:

As you can see I’ve already covered The Lottery/lotteries. The focus of this post will be on betting, casinos, high street bookies, gambling’s socio-economic impact and regulation/legislation.

Gambling & The Law

Gambling law in Great Britain is set out in the Gambling Act 2005. Betting/gambling/lotteries etc. are non-devolved to Scotland and Wales – with some exceptions regarding fixed-odds betting machines – but are generally devolved to Northern Ireland (with the exception of the National Lottery).

Although most types of gambling were legalised in 1960, prior to the Act – which came into force in 2007 – gambling laws were archaic, with the industry attracting an organised crime element. Attempts to crack down on that were successful, but following the introduction of the National Lottery in 1993, technological changes – such as online gambling and fixed-odds betting machines – mean the law needed to be updated.

The Act created the Gambling Commission, a Great Britain-wide statutory body tasked with regulating the gambling industry to make sure games were fair, that criminal elements were kept out of gambling and to prevent exploitation of children and vulnerable adults.

The Act also handed local authorities the responsibility of licensing gambling businesses.

According to their 2015-16 annual report (pdf), the Gambling Commission raised £19.21million (mainly from licence fees) and spent £19.59million, resulting in a (somewhat ironic) slight deficit of £363,000.

There are multiple gambling duties/taxes levied, including specific ones for bingo, machines, lotteries, betting and casino gaming. There’s too many to list here, but HMRC estimate the total raised across the UK in 2015-16 was £2.67billion (pdf – p52).

Gambling in Wales

In a Gambling Commission report from October 2016 (pdf):

Around 1.1% of people are considered problem gamblers/gambling addicts (as categorised by psychiatric guidelines), while around 3.8% in total are considered low to moderate risk gamblers. Those most at risk of developing a gambling addiction are 16-35 year olds while, as you might expect, the problem is worse amongst men with rates of gambling addiction (1.9%) about ten times that of women (0.2%).

People considered to be at risk gamblers are more likely to use slot machines, casinos, fixed-odds machines and bet on dog racing. The opposite is true for the National Lottery, other lotteries and bingo.

In terms of the economic contribution, in 2013 it was said gambling supports 2,000 jobs and contributes at least £100million to the Welsh economy. In addition, according to disaggregated HMRC figures (pdf – p52), Wales raised £123million in gambling duties in 2015-16, which as a proportion of the UK-wide share (4.6%) is slightly below our population share (4.9%).

Powers over new licenses (as opposed to existing licenses) for fixed-odds betting machines with a maximum stake of £10 (B2) will be devolved to Wales in the Wales Act 2017. As usual when it comes to devolution this is a salami-slicing of relevant powers which render them near useless, as challenges by the Welsh Government or local authorities could lead to lengthy legal battles with betting companies.

Why Wales can have control over this very precise matter, but do nothing material over betting shops or gambling itself is just typical of how the UK works.

The Problems of Gambling

Gambling addiction – Gambling addiction (formally called gambling disorder) is a recognised psychological condition that includes behaviours over a 12 month period such as: gambling with increased amounts of money, making unsuccessful attempts to cut back, returning to gambling after losing a significant amount of money, relying on others to fund their habit. As mentioned earlier the number of problem gamblers is relatively small, but the introduction of no-limit stakes betting machines (where nobody can tell you “you’ve had enough”) is believed to make the problem worse.

Match-fixing – There’ve been a catalogue of incidents where sports matches have been rigged to favour one result, sometimes to the benefit of the players. No sport is immune: cricket, horse racing, football, tennis and boxing have all had high-profile incidents of match-fixing. The close relationship between betting and sport inevitable fuels it, though it’s mainly down to….

Organised crime and off-shore accounting – The Russian Mafia, Sicilian Mafia, Triads and Yakuza have all been implicated in illegal betting syndicates, and despite dramatic portrayals in the likes of The Godfather it is true to say the Cosa Nostra played a big role in the development of Las Vegas and Atlantic City as gambling havens. One of the few organised crime syndicates not to be implicated thus far is Carmarthenshire Council, so I don’t think we should expect a stallion to race against donkeys at Ffos Las any time soon.

Rigged games – Any game that operates outside of the laws of probability is probably rigged – like the Champions League draw. This is more a potential problem with online casino games than at a casino table itself. However, most bookmakers and casino operators don’t need to rig games due to the house edge – as long as they get the right volume of customers and bets, the odds will always be in the house’s favour because they’ll always take a certain percentage of each bet. So the answer is games are unlikely to be rigged, but are simultaneously always rigged. You only win when you’re “up” and know when to walk away – but people don’t work like that.

Concentration of bookmakers on the high street – High street bookmakers are to the 2010s what the card shop was to the 2000s. Rules which kept betting shops further apart from each other were radically altered in 2008 meaning they could open pretty much wherever they liked, with the idea being it would improve competition. It’s not a question of numbers – according to the Association of British Bookmakers the number of high street betting shops has halved since the 1980s – it’s about whether having rows of them encourages gamblers to go out of one shop and straight into another.

Gambling & Independence

As mentioned earlier, some limited powers over gambling – in particular fixed-odds betting machines – are due to be devolved to Wales. Licensing powers are retained by Welsh local authorities, while the Welsh Government can assist in areas like financial education.

However, complete control over gambling – including the law, regulations, setting licence terms etc., as well as the National Lottery – would almost certainly require independence.

Regulation of Gambling

The do-minimum option would be to retain the current Gambling Commission as the regulatory authority in Wales. As it’s effectively self-financing there would be no impact. However, it’s reliant on Wales trying to keep the same gambling laws as we currently do, so it would hamstring the Senedd and Welsh Government’s ability to make changes.

If Welsh gambling laws and rules diverged from England, then a Welsh gambling regulator would be required. That would be best served by a single Gambling Commissioner (based on the Traffic Commissioner, Welsh Language Commissioner etc.). They would be appointed by the relevant Senedd committee, limited to two four-year terms (like other Commissioners).

In terms of the responsibilities:

  • Prevent gambling establishments from being a source of crime or a detriment to their communities.
  • Ensure games are fair and investigate complaints made against betting companies that aren’t resolved by the company to a satisfactory standard.
  • Set licence conditions for arcades, bookmakers, bingo halls, online gambling sites operating to Welsh customers and casinos; work with local authorities on licensing criteria and licensing disputes.
  • Licence, regulate and approve lotteries (including the National Lottery or its successor), and ensure “good cause” funds from lotteries are used appropriately.

The Commissioner would require start-up costs, but would presumably be sustained by licence fee income. Based on the annual accounts of the Older People’s Commissioner, you would expect a Gambling Commissioner to cost ~£1.9million a year, assuming there were up to 20 support staff.

Gambling Law

I’m not in favour of banning betting on sport, banning betting machines or closing casinos and bookmakers – and I doubt many reading this are either. As far as I’m concerned people can do what they want with their own money, but there are measures an independent Wales could take to rein in the industry to protect the public whilst maintaining liberal licensing laws.

  • Like my suggestion for strip clubs, porn shops etc (Vice Nation – Sex III: Pornography) there could be a specific planning use category (i.e B2, B3) for casinos, bookmakers and gaming arcades. Currently they’re considered “sui generis”, but with a specific category they would require planning permission for change of use, which would allow local authorities to monitor where they’re being opened and whether they’re being over-concentrated.
  • Make it a legal requirement for customers to have a membership (including proof of age and proof of ID) with a particular bookmakers to use their high-street stores or online sites for bets over a certain amount (i.e. £50+). This would mean no changes need to be made with regard how many bookmakers are allowed in a particular area as it could cut down on “shop hopping”.
  • As existing rules: lotteries and raffles where the prize fund and/or prizes are worth under a certain amount (currently £500) shouldn’t require a gambling licence. Rules and regulations regarding “small society lotteries” could also continue to apply.
  • Wales could consider running a limited number of (2 or 3) Las Vegas-style super casino/destination casino licences aimed at rejuvenating seaside towns. Local authorities would bid to win a licence.

    There are currently 9 different categories for gambling machines (A, B1, B2, B3, B3A, B4, C, D, SWP). This could be simplified to:

    • Category A – Unlimited stake, unlimited prize machines. Can only be located in licensed casinos, limited in number and restricted to registered members aged 18 and over.
    • Category B – Maximum stake of between £5-10 and prizes of up to £10,000. Restricted to over-18s.
    • Category C – Maximum stake of £5, and maximum prizes of up to £500. Restricted to over-18s.
    • Category D – Maximum stake of £1 and maximum prizes of £100. No formal age restriction but under-16s should be supervised by an adult. This should include “Skills win prizes” (SWP) machines like quiz machines and crane machines.
    • Category E – Maximum stake of either 10p, 20p, 30p or 50p. Maximum prize value of £50. No formal age restriction but under-16s should be supervised by an adult. This should include “Skills win prizes” (SWP) machines like quiz machines and crane machines.
  • There should be a blanket ban on all professional, semi-professional and amateur athletes/sportspeople, coaches, managers and officials from betting on games or outcomes in the same league/competition they play, manage or officiate in – whether in person or by proxy (i.e. a syndicate, with someone else). Any bets under these circumstances would be void and those taking part fined (and presumably suspended by their respective sport governing body).

Dealing with Problems

  • Fixed-odds betting machines could be programmed turn off after a certain amount has been spent by a single player (calling back to the membership bit earlier) and staff will have to physically re-activate it.
  • If a staff member believes someone has spent too much, they should be legally required to refuse to serve them or someone else buying/paying on their behalf (in the same way as bartenders and drunks in clubs and pubs).
  • Financial education – including teaching of betting odds, gambling theory and the impact of problem gambling – should be included in the National Curriculum. Some of this is likely to do so as a result of the new financial inclusion strategy, which is being finalised AFAIK.
  • As suggested by AMs, gambling addiction and statistics on gambling should be collected as part of the National Health Survey.