Geoff Banks Online Reports

Anti Gambling lobbyists don’t waste a penny on reports, do they?

Regulus partners disassemble an incompetent report, funded by Derek Webb, by Nera Consulting

The 2021 report was written by George Anstey, Soren Christian and Sofia Bittari – three economic illiterates from Nera Consulting (a think tank). It was commissioned by the Peers for Gambling Reform, who were funded by Webb. The 2023 report on New Jersey was written by Soren Christian (again) and Duncan Broadie and was funded by the Campaign for Fairer Gambling. It relied heavily on the bs NIESR report in 2022, which was funded by the Gambling Commission (nuf said!) and led by James Noyes and involved the archangel of anti – Heather Wardle. The NIESR report relied on the entirely unsubstantiated assumption that being economically inactive due to ill-health and WINNING £500 from gambling over two years was a proxy for ‘at risk’ gambling. It’s a case of bs begetting bs.

Derek Webb

Regulus Partners

Introduction

In, May 2021, NERA Economic Consulting published a
report on the economic impact of implementation of five
proposals for legislative reform contained within the 2020
report of the House of Lords Select Committee on the
Gambling Industry
The report was commissioned by the Peers for Gambling
Reform (the ‘PGR’), a House of Lords based lobby group
The report was funded by Las Vegas resident, Derek
Webb, who is described as a “benefactor of the PGR”
The report’s central claim is that while the
implementation of the five reforms would have a
substantial impact on Britain’s licensed gambling industry,
they would be economically beneficial in terms of
increased jobs and taxation at the level of the national
economy
This report examines the NERA report in terms of factual
accuracy and methodological coherence

The Five Reforms

structural limits on online stake sizes and play speed
affordability checks for online play
the introduction of a Mandatory Levy for gambling
operators
the classification of video game loot boxes as gambling
a ban on direct sponsorship by gambling operators.

Executive summary I

Our analysis raises a number of concerns with regards to NERA’s report.

The presence of a number of relatively basic factual inaccuracies that reveal a lack of understanding of gambling
regulation, problem gambling and Britain’s tax system. As well as betraying a paucity of expertise, these errors have
material effects on NERA’s economic impact calculations.
Highly speculative use of data and highly selective use of research to inform modelling
The use of completely untested assumptions to model the effect of legislative interventions – for example the
assumption that expenditure by people with gambling problems will switch entirely into shopping, food and drink, the
arts and sports in the event of greater online restrictions (and not to unlicensed gambling)
A complete failure to consider counter-factual scenarios (e.g. the possibility that spending might be shifted into activities
that result in as much or greater harm such as excessive consumption of alcohol or unhealthy food)
The implausible implication that the remainder of the recommendations in the House of Lords report would have no
material economic impact
A failure to consider negative wellbeing impacts on non-problem recreational gamblers and a reduction in consumer
surplus
What appears to be a complete lack of interest in whether the reforms sought by the PGR will in fact result in reduced
harms

Executive summary II

Over and above all the factual and methodological problems
with the NERA report, there is also the question about how
valid such projections are.

It is not the role of businesses or consumers to create
jobs;
It is not the role of Government to intervene in the lives
of its citizens in order to channel their spending into
sectors with the highest rates of employment and wages
The key issue on gambling reform is how the Government
should seek to balance the freedom and enjoyment of
citizens against the need to protect them from harm
The NERA reports provides no illumination on this question
(see opposite)

“If the assessed reforms are effective in reducing harmful
gambling activity, some of [the] excess fiscal costs could be
reduced. The extent to which this is true depends on:

“How effective the reforms are in reducing harmful
gambling activity; and
“The extent to which gambling harm is itself the driver of
the excess costs listed in Table 4.8. For instance,
individuals with harmful gambling habits may also be
more likely to exhibit other characteristics that require
greater NHS treatment (e.g. alcoholism), and these other
characteristics may not disappear even if the harmful
gambling activity does.
“We do not consider in this report the extent to which
either of the conditions above are true”

Overview

We analyse NERA’s report in three areas:

Inputs – the data and research considered by NERA in making its report
Methodology – how NERA produced its estimates of economic impacts
Inconsistencies

The inputs I: overview

Much of the information used by NERA in the report is highly speculative, as the authors admit:
“Throughout this report, we base our analysis upon the most reliable data available to us. In many cases, especially for data
specific to the gambling industry, the data sources are few and far between, and may be based on incomplete samples.
Where better data exists in house with gambling operators, this has not been shared with us, and so we cannot rely upon it.”

What the authors do not disclose is the extent to which they attempted to obtain “better data” (e.g. by asking licensed
operators to share information).
This is critical – if the data inputs used in the report are unreliable, we must exercise extreme caution when considering
any of its outputs.
The report is also based upon highly selective and unverified inputs from other sources, as NERA admits:
“Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been verified
This is negligent – particularly given the presence of a number of conflicts of interest. Our analysis shows that it was
unwise for NERA to assume without checking that the information supplied to them by others is reliable.
In certain instances, the NERA report reveals an absence of basic understanding of gambling regulation, problem gambling
and – perhaps most surprising of all – how Britain’s tax system works.

The inputs II: basic errors (taxation)

NERA seems to misunderstand the way that value added tax (‘VAT’) works

On page 37, NERA describes the differences between betting and gaming duties and VAT as follows:
“The loss in consumption-based tax revenue is due to the difference in how RGD and VAT are assessed. For every £1 a person spends on online gambling, £0.21 is directly recovered as tax revenue, and the gambling operator would additionally pay VAT to its upstream suppliers.
For every £1 a person spends on other activities, they are charged £0.20 in VAT, but a portion of that is used to offset VAT paid by the company to its upstream suppliers. Therefore, a smaller portion of expenditure in other sectors actually makes it to the Exchequer through consumption taxes.”
This description is however incorrect. VAT of 20% is charged on top of expenditure (it is an “added” tax). The passage
therefore should have read “For every £1.20 a person spends on other activities, they are charged £0.20 in VAT….”
It is highly surprising that an economic consulting firm should misunderstand the basis for the application of VAT.
The error has a material impact (c.£50m) on NERA’s calculations of revenue lost to the Exchequer.

The inputs III: basic errors (duty)

Basic errors

On page 28, NERA describes online gambling taxation as follows:
“All online operators must pay 21 per cent RGD on GGY from customers who live in the UK.74 For each £1 reduction in online GGY, therefore, we assume that the industry saves £0.21 in RGD”
This is incorrect – expenditure on online gaming is subject to RGD at 21% but expenditure on online sports betting is
subject to General Betting Duty at 15%.
This error has a material impact (c.£40m) on NERA’s estimate of operator cost savings (as well as on projections of lost tax
receipts).
Elsewhere in NERA’s report, we also find examples of factual errors in relation to maximum stakes on terrestrial slot machines (p.5) and problem gambling (which is incorrectly conflated with gambling-related harm – p.6 and elsewhere).
While these latter mistakes have no bearing on Nera’s calculations, they do betray a lack of expertise and domain knowledge.

The inputs IV: unverified claims

The Nera report is based upon a surprisingly thin selection of evidence.

What is more, some of the sources are drawn from parties with clear vested interest – interests that Nera chooses not to declare in its report..

Source Undeclared conflict of interest
Noyes, J. & Shepherd, A. (2020) Gambling review and Reform: Towards a
new regulatory framework. Social Market Foundation.

Funded by Derek Webb who also funds the PGR and who paid for the Nera report

Cowen, T. & Blond, P. (2018) Online Gambling: Addicted to Addiction.
Respublica.

Funded by the Campaign for Fairer
Gambling, a lobbying organisation funded by
Derek Webb (see above)

Newall, P., Weiss-Cohen, L. Singmann, H., Boyce, W., Walasek, L. & Rockloff,
M. (2021) A speed-of-play limit reduces gambling expenditure in an online
roulette game.

Philip Newall was expert adviser to the
House of Lords Select Committee (and
claims to have influenced its report).

Muggleton, N., Parpart, P., Newall, P., Leake, D., Gathergood, J. & Stewart, N.
(2021) The association between gambling and financial, social and health outcomes in big financial data. Nature Human Behaviour

Philip Newall was expert adviser to the House of Lords Select Committee (and
claims to have influenced its report).

The inputs V: unverified claims

Reasons to be cautious

•Source Issues
Newall et al. (2021) Unpublished paper with no evidence of peer review and no funding or conflict of interest disclosure. The paper itself is based upon a simulated gambling experiment rather than actual data. Despite these issues, NERA states that “We rely heavily on this research…”

Muggleton et al. (2021) This study of gambling expenditure revealed in bank account data is flawed in a large number of ways – but principally the fact that the researchers looked only at cash outflows and ignored cash inflows. As a consequence the report is based upon a substantial overstatement of expenditure.

Thorley, C., Stirling, A. & Huyn, A. (2016)
Cards on the Table: The cost to Government associated with people who are problem gamblers in Great Britain. IPPR.

This report has been criticised by both the Government’s Regulatory Policy
Committee and the DCMS.

Cowen & Blond (2018) Produced demonstrably false estimate of the distribution of revenues by PGSI classification (See slide 11) 10

The inputs VI: unverified claims (illustrative example)

An example of how NERA perpetuates claims from misleading research
“According to the think tank Respublica and cited in the Committee Report, 24 per cent of the online gambling industry’s profits derived from 0.8 per cent of the UK population it classifies as ‘problem gamblers’. A further 17 per cent comes from the 1.0 per cent of the UK population it classifies as ‘moderate risk gamblers’.’”

The estimate of revenue from problem gamblers cited was first produced by Landsman Economics, an organisation also
funded by Derek Webb
The underlying data derives from a PwC report published in 2017 – ‘Remote Gambling – Phase II’
The PwC study deliberately over-sampled problem gamblers: “We can accommodate the above in our approach by our segmentation which deals with product bias, and the fact that we intentionally selected more active gamblers to increase the sample of potential problem gamblers.“ (PwC, 2017, p.18)
The PwC report revealed staking levels by PGSI classification (i.e. problem gambling, moderate risk, low risk) – it provided no information at all on revenue or profit. It is unscientific to assume that share of stake is the same as share of revenue or profit
The House of Lords Select Committee was made aware of this error – but the PGR continues to use it, suggesting perhaps a wilful attempt to mislead

The inputs VII: unverified claims (illustrative example)

In a deliberately skewed sample, PwC provided information on mean staking levels and online gambling frequency by PGSI classification
Extrapolation indicated that around 60% of total stakes were bet by 29% of the sample (6% problem gamblers; 23% moderate risk)
Landsman Economics made the baseless assumption that the distribution of stakes in the PwC report was nationally representative and so applied it to the PGSI classification distribution from the combined Health Surveys 2015. This is
methodologically unsound. This was presented to show that 41% of stakes were bet by 12% of online gamblers (5% problem gamblers; 7% moderate risk gamblers)
Respublica (Cowen & Blond, 2018) rebadged ‘stakes’ as ‘profit’ and changed the base from online gamblers to all adults (irrespective of whether they had gambled online or gambled at all).
By a series of sleights of hand, ‘60% of stakes from 29% of online gamblers’ magically became ‘41% of profit from 1.8% of the population’.
This is statistically illiterate.

Methodology I: spending substitution (i)

NERA fails to provide any evidence for its spending substitution calculations and simply ignores unlicensed market risk

NERA models the economic consequences of the PGR proposals on the assumption that “100 per cent of money not spent
on online gambling diverts to” general retail (59%), eating and drinking (28%), creative arts (5%) and entertainment and sports and recreation (8%).
No explanation or evidence is offered in support of these assumptions.
This is problematic given the clear implication from Nera that reductions in gambling expenditure would come from those experiencing harm (which Nera mistakenly conflates with DSM-IV/PGSI ‘problem gambling’).
In other words, NERA seems to make the counter-intuitive assumption that changes to online stakes and speed of play and the imposition of ‘soft’ affordability checks will result in those with gambling problems switching their expenditure to shopping, eating and drinking; while recreational (non-problem) gamblers will continue to gamble.
The idea that someone with a gambling problem will switch from gambling to shopping as a result of stake or speed of play restrictions (and not for example consider continuing to gamble with an unlicensed provider) seems to misunderstand the nature of the disorder.
NERA gives no consideration to the counter-factual possibility that harms may arise from switching expenditure from gambling to – for example – the consumption of alcoholic drinks or HFSS foods. Given that problem gambling is typically a ‘secondary disorder’ and often described as a ‘coping method’, it seems plausible that if expenditure by problem gamblers is diverted to other activities, this may happen in a way that also leads to harm (for example through compulsive buying behaviour, alcohol dependency, obesity or internet use disorder) and imposes costs on society. 13

Methodology II: spending substitution (ii)

NERA appears to assume that the utility of every Pound of expenditure is the same
However, the purpose of the economy is not to supply jobs but rather goods and services which deliver maximum welfare.
If good x is prohibited, and everyone then switches to good y, with expenditure and employment the same, the change is not neutral.
Economic welfare has been lowered because individuals had been signalling from their previous purchases that x gave them more satisfaction than y.
This is the true economic impact.

Methodology III: jobs and income tax

NERA provides estimates of growth in employment as a result of consumer expenditure switching from gambling to other activities
It models a net increase of 20,000 to 30,000 new jobs – predominantly in retail and food and drink
Aside from serious concerns regarding the extent to switch consumers would substitute shopping or drinking for gambling, NERA also appears to consider that every incremental Pound of expenditure generates an equal number of new jobs –failing to consider the fact that some industries require relatively high fixed levels of employment and that productivity gains would be expected from large increases in expenditure
In addition, given the huge heterogeneity in terms of average wages and labour intensity attempts to estimate employment and wages based upon historic means is likely to be so imprecise as to be useless
This causes us to question NERA’s estimates of both the numbers of new jobs that would be created and the marginal impact on average earnings (particularly when many of the more highly paid jobs in industry are likely to be found in the fixed employment based)
This suggests that NERA is likely to have substantially overstated estimates of both job creation and income tax generation
While NERA attempts to model the impact of job losses within the gambling industry, it fails to consider impacts on jobs
associated with gambling – notably the significant losses from the horseracing industry likely to result from the imposition of affordability checks

Methodology IV: impact on licensees

“The gambling industry could lose between £696 million and £974 million as a result of the proposed reforms, but industry profits are most likely higher than this at present.”

Any assessment made at the level of the industry will fail to recognise that different companies are in different positions with respect to profitability (and balance sheet strength). The impact therefore of measures designed to reduce consumer expenditure and increase operating costs will vary significantly between different licensed operators.
Nera seems to assume that the profits generated by the basket of gambling companies from whom it derives its industry profit estimates relate solely to customers and operations in Great Britain whereas they are in fact global.
As a result, NERA fails to explore whether revenue reductions in Great Britain would make that particular market unprofitable (in which case, companies would likely withdraw). This is shown most clearly in its assumption that the
licensed online gaming (casino/slots/bingo/poker) market would remain viable following the loss of 76% of its revenue.
In any case, NERA seems to assume that the industry could bear a substantial margin reduction (of the order of 150% to 200% basis points) and still generate value – in other words that the industry as a whole may still be viable so long as it generates some level of profit, even if that profit is lower for example than the cost of capital.
Nera fails to recognise the fact that substantial margin erosion will impact the customer experience and offer a significant advantage to unlicensed operators (who will be in a position to offer far greater rewards and incentives).

Inconsistencies I – mandatory levy

NERA considers the imposition of a Mandatory Levy to raise £150m a year from licensed gambling operators.
It assumes that this would be roughly equivalent to 1% of total industry GGY (including National Lottery) and that this would be calculated on a ‘smart levy’ basis (although how such a levy would be constructed is not explained)
Of the funds raised, £20m would be used to fund a new gambling Ombudsman. This is strange as one would normally expect a regulatory body to be funded by licence fees.
The balance of £130m would be collected by HM Treasury. NERA suggests that these funds would be used to support general Government spending rather than being hypothecated to pay for treatment of gambling disorder – or research or
education. In other words, it is simply an additional tax rather than a safer gambling levy.
Nera suggests that HM Treasury might subsequently elect to spend £68m to £87m of this £130m on research, education and treatment (‘RET’) – and does not explain what would happen to the balance of £42m to £63m
In assuming that a 1% levy would capture c£150m in payments, Nera neglects to incorporate its own calculations regarding the effect of the PGR reforms (maximum stakes, speed of play and affordability checks) on GGY – reforms that Nera believes may reduce GGY by as much as £2.1bn.
This may in turn have a disproportionately outsized effect if the smart levy is weighted towards online gambling (which, given the PGR’s hostility towards online gambling seems feasible).
NERA fails therefore to consider the ease of collecting £150m via an ad valorem levy while at the same time implementing reforms with the conscious aim of reducing gambling expenditure.

Inconsistencies II – sponsorship ban

NERA admits (p.26) that it has modelled no negative impacts on the gambling industry as a consequence of implementing a ban on sports sponsorship.
“For revenue effects, we assume that the gambling sector in aggregate will not see a loss in revenue from not being able to advertise their brand via sponsorship of teams.”

Thus NERA assumes a substantial benefit to the licensed gambling industry as a result of cost savings on sponsorship but assumes no loss of revenue.
This invites the obvious question that if sponsorship has no effect on consumer spending (and in particular, spending by problem gamblers), why is it considered necessary to ban it?
In considering the impact on sports leagues and clubs, NERA suggests that foregone sponsorship revenue might be offset by “requiring gambling companies to pay for rights to have bets placed in certain leagues.”
The cost of this sports levy on the licensed gambling industry is however not included in Nera’s impact assessment.

Inconsistencies III – speed of play (slots)

On page 53 of its report, the House of Lords Select Committee recommended that it should not be possible to play gambling products quicker online than in landbased premises.
“We recommend the equalisation of speed of play and spin, so that no game can be played quicker online than in a casino, betting shop or bingo hall.”
By the time that NERA published its report, the BGC had already announced that its members had adopted a 2.5 second maximum spin speed for online slots games – consistent with the regulations for slot machines in land-based venues. The Gambling Commission had also announced that this would become mandatory from October 2021. For reasons which are not sufficiently explained, Nera chose instead to consider the impact of a 5 second maximum spin speed.
If “equalisation” is the goal then this would suggest that the PGR may plan to recommend a 5 second maximum spin speed for land-based slot machines.
In the end, NERA elected not to produce any revenue impact assessment for slowing the maximum speed of play for online slots. Instead, it simply assumed

Inconsistencies IV – speed of play (table games)

On page 14 of its report, NERA appears to reinterpret the House of Lords select committee recommendation to “equalise” speed of play by moving away from what is legally permissible to what might be considered typical.
In so doing, it assumes that most casino games in land-based premises are played at 60 seconds a game or slower – irrespective of the fact that there are no statutory speed restrictions on such games.
It is unclear what the basis for this change is and no benefits (in terms of harm reduction) are quantified in either the NERA report of the House of Lords Select Committee report.
This also raises the prospect that – in the interests of “equalisation” – casino table games in land-based premises would also be required by law to restrict play to a maximum of one game every 60 seconds. NERA provides no assessment of the
impact of such a rule change.

Appendix
Detailed critique
Possible questions

Detailed critique

Page Statement Analysis
i “We estimate that Government spends £270-£1,170 million in
additional costs on individuals who experience gambling-related
harm, primarily through healthcare costs, primarily through
healthcare costs. It may be possible to reduce those additional
costs through the recommended reforms and an effective RET
programme, though it is not possible to say precisely how much
could be saved on the basis of the evidence reviewed.”

In fact NERA has produced no such estimates. It has simply
repeated estimates produced in a 2016 report from the IPPR.
NERA accepts the IPPR’s estimates uncritically despite the fact that
the report has been criticised by the Government’s Regulatory
Policy Committee and in a Government Regulatory Impact
Assessment. NERA provides no explanation of how the costs might
be reduced.
NERA also conflates ‘problem gambling’ (a mental health disorder)
with ‘harm’ (a much broader and looser concept). This error is
repeated throughout the report and indicates a lack of domain
expertise.

ii
(& 2)
“Throughout this report, we base our analysis upon the most
reliable data available to us. In many cases, especially for data
specific to the gambling industry, the data sources are few and
far between, and may be based on incomplete samples. Where
better data exists in house with gambling operators, this has not
been shared with us, and so we cannot rely upon it. This
qualification also underscores the need for greater independent
research into gambling-related harm, funded by the Mandatory
Levy.”

This is critical as it highlights the speculative nature of the data
used by NERA. The report fails to reveal the extent to which NERA
sought better data from operators or others.
The linkage between the unreliability of NERA’s data and the need
for a Mandatory Levy is not explained – indeed, NERA’s proposed
Levy would not necessarily involve any increased funding for
research.

Detailed critique

Page Statement Analysis
ii “As Figure 1 shows, online gambling is increasingly prevalent as
a driver of industry-wide GGY, though its growth in the Figure is
distorted by a change of regulations in 2014 that required
online gambling operators to hold a licence with the Gambling
Commission.”

This is a confused explanation. The distortion (which makes
comparison of GGY before and after 2015 problematic) is down to
the fact that the Gambling Commission only collected GGY data
from domestically licensed operators prior to November 2014 – at
which point it became mandatory for all operators to hold a
domestic licence.

Iii
(&5)

“The online segments have been subject to comparatively less
scrutiny than their terrestrial equivalents. For example, there is
no maximum stake that can be placed on a single draw of an
online slot machine, while terrestrial equivalents have a
maximum stake of £2 or £5, depending on the type of machine
and its location.”

It is questionable whether online gambling has in fact been subject
to less scrutiny (particularly in the light of a thematic review by the
Gambling Commission, a slew of parliamentary reports and an
online-weighted Government review of gambling legislation.
In any event, stake limits are structural controls rather than an
example of scrutiny.
NERA offers an over-simplistic description of stake limits here as
they can be set at 10p, 50p, £1, £2 or £5.

iv “In all scenarios, we assume that a Mandatory Levy is imposed
on gambling operators that will recover £150 million per annum
across the sector, or roughly 1 per cent of current GGY. We
assume that this will be levied on a “polluter pays”-basis, in
which potentially more harmful products pay a higher rate.
Revenue from the Mandatory Levy would be used to fund a new
Gambling Ombudsman and new Research, Education and
Treatment of gambling-related harm.”

NERA does not explain how a smart levy would be constructed
(which is necessary in order to determine impact by sector) – nor
how the “pollution” would be attributed.
Later in the report, NERA suggests that with the exception of a
payment to fund an ombudsman, the funds raised would not be
hypothecated – meaning that there would be no guarantee of
funding for research, education and treatment.

Detailed critique
Page Statement Analysis
Iv – v
(&6)

“A 2018 study on gambling-related harm in UK online gambling
by ResPublica found that 24 per cent of the online sector’s
revenue came from “problem gamblers” and a further 17 per
cent from medium-risk gamblers. Therefore, our estimated GGY
reductions are broadly consistent with a mechanism that
prevented all and only high- or medium-risk gambling
activity.”

The Respublica report was not a study but rather a report
commissioned by the Campaign for Fairer Gambling (and was
therefore also funded by Derek Webb, who funded NERA’s report).
The claim with regard to the distribution of revenue is incorrect
and in fact based upon a Landsman Economics (also funded by
Derek Webb) extrapolation from a PwC report in 2017.
A detailed explanation of the problems with the Respublica
estimates may be found on slides 11 & 12.
NERA seems to suggest by association that its projected impacts
on industry revenue reflect a reduction in spending by problem
and medium risk gamblers. This is inconsistent with the way that it
has modelled the effects of legislative tightening – particularly in
relation to likely substitution effects.

vi “This would be a substantial increase on the existing expenditure
(£19 million funded through voluntary contributions from the
industry), but fall short of the £106.5 million needed which we
estimate would bring gambling treatment on par with treatment
of drug and alcohol addiction. Government could of course
achieve this level of expenditure if it chose to, but at a loss to the
Exchequer of £20-£38 million.”

NERA offers no explanation for why per capita treatment costs for
problem gambling should be the same as for two very different
disorders (alcohol dependency and drugs).

Detailed critique
Page Statement Analysis
vi “Additionally, if the proposed reforms are successful in reducing
the incidence of gambling harm, Government could achieve
further savings in reduced expenditure associated with gambling
harm. On behalf of GambleAware, the Institute for Public Policy
Research estimates an excess fiscal cost associated with these
individuals of between £270 million and £1,170 million annually.
If the assessed reforms are effective in reducing harmful
gambling activity, some of these excess fiscal costs could be
reduced. These savings may be more likely to occur through a
more robust RET programme, with an increased standard of
treatment for gambling harm.”

NERA appears to consider whether the reforms are effective in
reducing harm as a side issue (“additionally, if the proposed
reforms are successful…”) when it is in fact a primary
consideration.
The IPPR cost estimates are highly speculative and the report has
been widely criticised.
Furthermore, it is far from clear how spending more on something
will reduce costs.

vi “The gambling industry could lose between £696 million and
£974 million as a result of the proposed reforms, but industry
profits are most likely higher than this at present.”

NERA fails to mention that its cost impact estimates fall heavily on
online gaming and online sports betting in Great Britain – whereas
its profit estimates are both multi-national and multi-sector (i.e.
not online-only). To assume for example that online gaming could
sustain a 76% reduction in revenue and remain a viable
commercial business – and that unlicensed operators would not
benefit substantially from this decline – is fanciful.

1 “Following the release of Committee’s report, the all-party Peers
for Gambling Reform (PGR) was created with the purpose of
implementing the recommendations contained in the Committee
Report.”

It is surely not the role of a group of peers to implement
legislation.

Detailed critique
Page Statement Analysis
1 “Funding for this report has been provided by Derek
Webb, a benefactor of PGR.

This seems a remarkably reductive description for a man who has funded
gambling reform activism in Great Britain for more than a decade.

5 “industrywide GGY has grown by around 40 per cent since
2013-14, driven almost entirely by the implementation of
the Gambling (Licensing and Advertising) Act 2014, which
required online gambling operators to hold a licence with
the Gambling Commission. Before 2014, the Industry
Statistics omitted a large segment of legal gambling
activity – since then, all legal gambling activity is captured
in the Industry Statistics.”

This is wrong. GGY did not grow by c40%. What happened was that from
November 2014 onwards, the Gambling Commission started collecting
GGY data from all licensed online operators. It would have been more
accurate to write that “the reported growth in GGY was the result of
changes to legislation that required all online operators to be
domestically licensed and thus allowed the Gambling Commission to
collect GGY data on a more comprehensive basis.
It is only from 2015/2016 (and not “before 2014” as NERA states) that
total market GGY is collected.

6 “According to the Government’s written submission to the
Select Committee, approximately 340,000 individuals, or
0.7 per cent of the adult population of Great Britain
experience gambling-related harm.”

NERA conflates ‘problem gambling’ (a mental health disorder) with
‘harm’. This is incorrect.

“Incidence of harmful gambling is higher amongst younger
players – 2.0 per cent of boys between 11-16 (too young
to gamble legally) are classified as such…”

This is incorrect. It is perfectly legal for boys aged 11-16 to gamble – on
Cat D slot machines for example, playing cards or having private bets
with family members and (for 16-year-olds) buying National Lottery
tickets. These are also the most common gambling activities for those
aged 11-16 years. Also, the problem gambling classification referred to
here is distinct from adult ‘problem gambling’ – something that ought to
have been made clear. 26

Detailed critique

Page Statement Analysis
10 “Following the publication of the Committee Report, the Social Market
Foundation (SMF), a think tank focussing on economic and social fields,
released a report further developing some of the recommendations of the
Committee Report…We rely on this report to further clarify what an
affordability check could look like in practice.”

NERA fails to disclose that this report was also funded by the “PGR
benefactor”, Derek Webb who also funded NERA’s report.

10 “Dr Philip Newall et al conducted an experiment of the effect of minimum
speed of play in UK online roulette, in which UK gamblers were invited to
play an online roulette game designed to look and feel like a typical online
roulette game, and with real money at stake…We rely heavily on this
research to define our assumptions regarding the revenue effect of placing
a maximum play speed on online table games.”

NERA fails to disclose that Dr Newall was an expert adviser to the House
of Lords Select Committee on the Gambling Industry (and has claimed
publicly that he influenced the report).
The study itself is a simulated gambling experiment that has not been
replicated, has not yet been published in any journal, has not (to our
knowledge) been peer reviewed and which contains no statement of
funding (the experiment will have cost several thousand Pounds as a
minimum) or conflict of interest.
Despite all of these factors, NERA “relies heavily” on the paper.

10 Dr Naomi Muggleton analyses detailed, anonymous individual-level
financial transactions from 6.5 million UK customers of Lloyds Banking

Group. Dr Muggleton correlates each customer’s volume of gambling-
related transactions with various markers of financial, lifestyle and well-
being outcomes (e.g. the customers with the highest amount of gambling

activity are most likely to take out a payday loan, and spend the least
amount on education). We do not directly rely upon Dr Muggleton’s work
in this report, but note its contribution to the understanding of gambling
harm.

NERA fails to disclose that Dr Newall (see above) was also involved in
this study.
NERA fails too to acknowledge the fact that this report has been
discredited as a result of a number of methodological flaws – the
principal error being a failure to consider cash inflows alongside cash
outflows (which resulted in a substantial – c200% – overstatement in net
gambling expenditure)

Detailed critique
Page Statement Analysis
13-14 “This analysis does not seek to quantify any substitution effects which
players could adopt in reaction to a new maximum level. For example,
players could respond by playing longer sessions. Alternatively, a player
who previously placed their stakes both above and below the new
maximum stake may increase their lower bets towards the new maximum
level.”

This is a surprising omission. Forrest & McHale for example found that
maximum stake reduction on gaming machines in betting shops
resulted in longer sessions at lower levels (with no net reduction in
spending).
NERA fails to acknowledge the risk that forcing people to play at lower
stakes may result in riskier (i.e. longer odds) play.

14 “We assume that online slots will have a minimum play speed of 5
seconds per play, and online table games will have a minimum play speed
of 60 seconds per play.”

It seems likely that NERA means “maximum” rather than “minimum”
speed of play.

14 “…it is apparent that at least some play on online slots occurs at a rate
faster than once every 5 seconds, but it is not possible to estimate how
much. We therefore do not estimate the amount of revenue lost from the
introduction of a minimum spin speed for online slots.”

It is unclear why NERA is considering a 5 second/spin maximum game
speed when a) land-based machines operate on a 2.5 second maximum
speed; and b) the House of Lords report recommends “equalisation”.
To propose a different spin speed on a seemingly arbitrary basis and
not to attempt to estimate impact is strange.

14-15 “Dr Newall’s report summarises a range of evidence showing that average
play speed for roulette played in a casino is around 60 seconds. This
average depends on the number of players at the table, with a one-player
table having an average speed of 32 seconds. However, casinos rarely run
roulette tables with only one player, as this is not economical. We
interpret Dr Newall’s 60 second assumption to reflect the Committee
Report’s recommendation that no table game can be played faster than it
would be in its terrestrial form.”

NERA shifts here from proposing that online technical standards should
be set at the same rate as offline (as the House of Lords report
recommended) to the idea that online technical standards should be
set in reference to typical play in land-based venues.
In any case, the assertion that casinos rarely run roulette tables for a

single player is incorrect. It is relatively common for example in high-
end casinos. Also, it is a mistake to assume that blackjack, poker or

punto banco are played at the same speed as roulette. 28

Detailed critique
Page Statement Analysis
18 “From the Forrest and McHale distribution, we estimate that
around 80 per cent of total non-slots revenue comes from players
with a net expenditure of greater than plus or minus £100. These
players would be subject to an affordability check, although many
of them would not ultimately be affected by it.”

NERA fails to explain why someone winning £100 would be
subject to an affordability check.
NERA fails to acknowledge that the non-slots data may
represent only a small part of an individual’s gambling
behaviour.
NERA seems to define ‘not being affected’ by an affordability
check as ‘being allowed to continue gambling’. In fact, research
indicates that a large proportion of gambling consumers would
be affected by an affordability check (in terms of loss of privacy
etc).

18 “The ONS publishes distributions on equivalised household
disposable income… The median annual income by this measure is
£29,000 and the mean is £36,900. We assume that this distribution
is reflective of the annual income of online gamblers.”

NERA fails to recognise that data from Health Surveys shows
that online sports betting participation is weighted towards
people on higher than average incomes.

19 “Furthermore, the introduction of affordability checks and the
imposition of structural game changes (maximum stake or play
speed) are related concepts, and will drive many of the same
revenue reductions. For example, if players are not able to stake
high amounts on online slots, or play online roulette at a very rapid
speed, they will be less likely to reach the levels of expenditure
which would be affected by an affordability check.”

This may well be correct. It does, however invite the question as
to why both affordability checks and structural games changes
are required if they achieve largely the same results.

Detailed critique
Page Statement Analysis
20 Extrapolating the unit costs of gambling treatment, RGSB
estimates that it could cost £20 million to treat each 10 per cent of
affected gamblers in a year. RGSB also notes that “30 per cent of
drug users and people with alcohol dependency in England present
for treatment”. We assume, therefore, that an effective treatment
programme would cost £90 million. In total, we assume that an
optimal RET programme would cost £106.5 million per year,
though a more scaled-back programme could still be a substantial
increase on the industry’s current expenditure on RET
(approximately £19 million)

The assumption seems to be that there is a standard unit cost
for treatment of problem gambling – but this is likely to be
incorrect. At present the mean PGSI score for those entering
treatment is 19 out of 27 – illustrating the fact that typically
those with more severe gambling problems present for
treatment.
It is also the case that in jurisdictions with highly accessible
treatment services, problem gamblers present for treatment in
much lower numbers than is the case for alcohol dependency of
substance misuse. Assumptions of parity are therefore likely to
be arbitrary and unreasonable.

22 We assume that all sponsorship of professional football and rugby
league by gambling operators is prohibited. This includes
advertising on kit, sports programmes, at or near sports venues
and of leagues themselves (such as the Sky Bet English Football
League).
We have been advised to focus especially on professional football
and rugby league. We assume that sports with close ties to the
betting industry are unaffected. This includes horseracing,
greyhound racing, darts and snooker.

The assumption here seems to be that one should not advertise
gambling in the streets around Bramall Lane but that it is
perfectly acceptable to do so in the streets around the Crucible
Theatre. No explanation is offered for this.
NERA fails to mention that horseracing will be significantly
affected by the proposed affordability checks. No attempt is
made to model the impact on racing.

Detailed critique
Page Statement Analysis
25 “Potential alternative funding models include:
▪ Requiring gambling companies to pay for rights to have bets
placed in certain leagues;
▪ For football, re-allocation of revenue earned at the highest levels
of sport (e.g. the
Premier League) into lower leagues and grassroots football;
▪ Teams may be able to increase jersey sales to the public if
gambling companies are not featured on them: for instance, in
season 2020/21 EFL Championship’s Swansea City has replaced its
previous betting sponsor on its jersey with Swansea University,
seeking the partnership of a ‘local, prestigious brand’.”

NERA raises the prospect of instituting a ‘betting right’ but fails
to include this in industry impact assessment.
NERA also indicates that removing gambling brands may
increase sales of replica kits – but fails to provide any evidence
in support of this.

26 “For revenue effects, we assume that the gambling sector in
aggregate will not see a loss in revenue from not being able to
advertise their brand via sponsorship of teams.”

NERA assumes no revenue impact as a result of a sponsorship
ban.
This invites the question as to why a ban is deemed necessary (if
it is assumed that it would have no behavioural consequences).
This is further confused on page 30 where NERA states that “by
removing the ability of gambling companies to advertise in
sport, the proposed reforms limit the risk of the unintended
negative consequence of a diversion to sports betting.”

28 “All online operators must pay 21 per cent RGD on GGY from
customers who live in the UK. For each £1 reduction in online GGY,
therefore, we assume that the industry saves £0.21 in RGD.”

RGD is set at 21% but this only affects online gaming. Online
sports betting is subject to General Betting Duty which is levied
at 15%. NERA however applies 21% RGD to all of online
gambling revenues

Detailed critique
Page Statement Analysis
30 In response to Government’s 2018 announcement of the reduction
of FOBT stakes from £100 to £2, the Association of British
Bookmakers (ABB) released a statement that “we expect
over 4,000 shops to close and 21,000 colleagues to lose their jobs”.
We have not assessed employment patterns in the two years since
the £2 maximum stake has been in place, but according to Industry
Statistics, there were 639 fewer LBOs at the end of FY 2019-20
(7,681) than at the end of FY 2018-19 (8,320), before the new limit
went into effect.

NERA ignores the probability that some LBOs were closed pre-
emptively before the reduction of FOBT stakes.

Given the timing of the ABB statement (May 2018), it would be
more accurate to use the March 2018 figure (8,559 LBOs) than
the March 2019 figure (8,320). This would indicate a net closures
figure of 878 rather than 639.
By September 2020, the number of LBOs had reduced further to
6,735 – or a loss of more than 1,824 18 months after the FOBT
stake reduction. This may be partly attributable to Covid
restrictions – but it is impossible to estimate by how much.
The ABB estimates may have been exaggerated but NERA’s
attempt to vindicate its own estimates looks very shaky.

31 “We assume that revenue lost from GGY diverts to the industries
below, in proportion with each sector’s gross output, as reported in
the ONS Blue Book National Accounts:
▪ Retail Trade, Except of Motor Vehicles and Motorcycles (“Retail”)
▪ Food and Beverage Service Activities (“Food/Beverage”)
▪ Creative, Arts and Entertainment Activities (“Creative/Arts”)
▪ Sports Activities and Amusement and Recreation Activities
(“Sports/Amusement”)”

NERA offers no evidence in support of what is an assumption
pivotal to its modelling.

Detailed critique
Page Statement Analysis
32 “It is outside the scope of this report to estimate the amount
of revenue that could divert to illegal gambling activities.
Instead, we refer to the evidence submitted by then-CEO of
the Gambling Commission Neil McArthur to the Select
Committee: “There is no great sense of a burgeoning illegal
market”

It seems remarkably complacent to ignore the likelihood of growth in
unlicensed gambling – particularly given NERA’s suggestion that
revenue reduction would occur principally in relation to problem
gamblers (who may be least likely to substitute gambling for coffee).
Based upon comparisons with other jurisdictions, it seems likely that
the limited nature of Britain’s unlicensed market is the result of a
relatively liberal regulated market.

33 &
38

“The revenue from the Mandatory Levy which is not already
allocated t the Gambling Ombudsman is directed to the
Exchequer.”

The implication here is that the Levy will not in fact be a hypothecated
tax but a general tax with no requirement for HM Treasury to allocate
the funds to addressing gambling harms (although NERA dos suggest
that c50% of the funds might be allocated to RET). In other words, this
is simply a new tax with no higher purpose other than raising funds for
Exchequer.
NERA’s calculation of the Levy (table 4.4) fails to show the impact on
any ad valorem charge of a substantial reduction in revenue.
35-36 Macroeconomic Effects Tables NERA uses an unexplained and fixed model of spending reallocated
away from gambling with 59% to retail; 28% to food and beverage; 5%
to creative arts; and 8% to sports/amusements. The implication is
consumers will reallocate fix proportions of their spending to these
categories on a straight line basis.

Detailed critique
Page Statement Analysis
37 “Employment outcomes: We estimate that the reforms could add
20-30 thousand jobs and increase total employee earnings (i.e.
salaries and wages) by £276-£399 million.
This positive effect occurs because the gambling sector employs
fewer people and pays them less per unit of expenditure than any
of the four industries examined here. In fact, of 105 industries
listed in the National Accounts, the gambling sector ranks 76th in
terms of employee earnings per unit of expenditure in 2018. The
two largest comparator sectors, Retail and Food/Beverage, rank
22nd and 18th, respectively.”

In determining employment effects, NERA assumes that every
marginal Pound spent in retail, food & drink, creative arts and
sports would create the same number of jobs and salaries as
was previously the case. It therefore assumes no productivity
gains, economies of scale or sunk/fixed costs.
In any case, the use of averages in sectors with huge
heterogeneity is extremely questionable.

Q&A

On 29th June, the House of Lords will discuss the NERA report and associated matters as part of a debate (oral PQ) tabled by
the Bishop of St Albans. It may be worth considering whether this analysis provides opportunities for peers to contribute to
that debate in a constructive fashion.
For example…
“How much credibility should be given to a report which demonstrates a misunderstanding of how VAT works?

FROM A LAND OF TIC TACS, TO THE DIGITAL AGE

Many of you will have read, no doubt, of an overpayment made to a ‘customer’ at York races. The overpayment amounted to ten times what the punter had won, and he stuck his hand out, without shame, to collect what wasn’t due to him

To me? Well, it was what online we can, and do win, in a dog race, in terms of cost. But to the long standing member of staff on track, it was a crushing incident. Calling his integrity, and competence, despite an unblemished record, into sharp question.

Of course, any question of malfeasance on the part of any member of my team, is fanciful. Not up for debate. Predictably, a few twitter idiots tried to portray it as such. Some will say anything for effect. What angered me was the blazen manner in which this ‘customer’ took the money, without care for the effect on my people. It’s morally wrong. And for those who argue on Twitter for fairness between bookmaker and punter? Two blacks never have made white.

I was going to call out the punter, we have seen him before, and we will see him again no doubt. He needs to know what decent people think, and plenty weighed into the debate in that vein. And we will pursue him, until he does the right thing.

There were a few who speculated, without foundation, as to the lawful position here. Some argue that what amounts to theft is excusable, because it was gained off of a bookie. For those interested, the law of legal restitution would guarantee the return of funds handed out, which were errant. You cannot just accept monies not due to you. Romantic notions dispelled.

What was notable even graphic was the level of vitriol from mostly anonymous twitterati. It was clear some people had posted the comment I made on Twitter in various football, and bot trading based forums, and the like, and the anonymites came out in force to vent.

Of course almost none of these individuals bet with me either on track where this occurred nor online. Most of those who commented gamble, however. They were venting into modern bookmaking attitudes. Nothing personal from many.

Most gambling these days takes place between three or four supergiants in the betting world controlling more than 90% of the market so we as independence of very much are very much hostage to their behaviour. We are tarred with the same brush. Yes, there is some common ground in the world of online between Geoff Banks Online, for example, and Bet365. But the crossovers in behaviour are modest. For instance, we pick up the telephone to clients, and we are not licensed in China

Punters these days broadly fall into two categories, and we must understand why so many are disaffected.

The first is what one would describe as genuine punters, some of whom profit from their gambling, by a combination of skill and hard work. Analysing form and beating the bookmaker essentially on their odds. I fully understand and sympathise with this group of gamblers when they complain that they are either not paid on time , or cannot get their bets on because they are winners.

Bookmakers should expect people to win off them – after all it is a win and lose game. But times have changed and today’s corporate bookmaker has grown decidedly cynical. They view their business much like an accountant, only answerable to shareholders, and short term gain. This of course has made them ambivalent to the criticisms they so often receive, in this vein.

Little wonder the modern brand of anti gambling zealots prosper in such an environment, both gamblers, and media won’t support what they see as a predatory industry.

But is it as simple as the evil gambling empire, and we are all callous? Because if bookmakers reduced their bottom line, restricted less punters, would our PR improve markedly?

The short answer is no. The problem has become insurmountable.

As an independent we do not banish winning customers to the ether. It is simply bad policy,and we accept both winners and losers equally, because we know in balance we are still going to make substantial profit. To some, such a statement appears without logic, but it is central to our business plan. Annually some 30% of our client base show a profit. On track at York, we were the ONLY bookmaker betting to a 1/4 the win odds in handicaps, with the same win odds. Noone praises us for acting different.

There is a second group however that has grown up with the advent of betting exchanges, trading tools, and advanced websites highlighting bookmakers odds in real time, using scalping bots, to gain a commercial edge. Our odds are compared against the exchanges to the second against exchanges. These tools are highly advanced and give these bot traders a massive competitive advantage against the modern day bookmaker, and to retain them as customers would be commercial suicide full stop.

In Broad terms people employing these methodologies, whichever is there favoured trading medium, from actual software, to whatsapp groups, almost 100% guarantees the user a long term profit by beating the bookmaker on odds in every trade. This never used to be true. To understand the problem, you need to accept this point.

To put bot trading into perspective it’s like walking into Waitrose filling up your shopping trolley every day and walking out without paying, and expecting the supermarket to welcome you with open arms for the rest of time.

For big corp employing highly advanced trading software to counter bot traders, they can readily identify such individuals extremely quickly, sometimes before the user places a bet! For the Independent sector, however, we are mostly down to a system of hand management of accounts. Over the years my own company has become far more skilled employing Excel based tools and the like to analyse our customers pattern of behaviour, not only to control their gambling levels, but also to identify customers who routinely best the firm at the odds. With experience – comes experience.

And when you beat the bookmaker consistently and we are talking not less than 90% of every wager that is placed, you will profit in your gambling, sometimes very substantially

My point in this is to explain to people that aren’t very informed about gambling these days that the world has changed. the age of Tic Tacs and bookmakers that never turn down a bet, died when the betting exchanges exploded into the market and created an army of bot traders, with opportunities to guarantee profit from every bet they placed. How this is managed, by the users concerned, is up to the user. Some play the long game, and accept losses, as would a bookmaker, but by consistently beating the odds, they generably create more wealth than straight up arbing

I sometimes hear some media types, who throw a blanket over the entire community of gamblers, as if they are all victims of predatory tactics. This is an incredibly naive stance. The world of bookmaking is fundamentally different since Steven Little took on all comers. It is an online product, and matters are governed by sophisticated online practices, on both sides. Elements of the media and racing pods need to wise up.

So how do we, as a company, deal with such traders, many of whom of course are a collection of accounts amassed quite often by one individual. This is the practice known as ‘multi-accounting.’ People being paid so a super trader can gain access to many bookmaker accounts. The advanced trader, in this case garnering many clone accounts can make hundreds of thousands of pounds, even millions, in profit every year.

It is a constant battle between today’s bookmaker and these super traders to expunge them from our systems. It is a new war, with new rules

My own company policy is never to offer a wager to any individual which is insulting. Such as I hear about constantly. The Bet365 – £3.65 joke. What we will seek to do is control when such accounts can wager at earlier prices thereby levelling the playing field, to such a degree that the trader loses his commercial advantage over us. The job of the bookmaker is to lay the right price, for the weight of money and selection. If todays cyber tools mean that even an army of staff working our website cannot begin to compete with the bots scanning our markets and pages in real time, every market and selections (there are 165 betting opportunities in every premier league game for example) then we have to manage such customers by limiting their access to odds, until nearer the ‘off.’ They still get a bet on, and a decent one, but at a fair market price, reflective of the w.o.m. My business ethos is to lay a bet. Not lay a bet at the wrong odds over 90% of the time.

There will, naturally, be the odd village idiot, who argues that bookmakers should ‘lay every bet at the price advertised.’ Such individuals, residing in the cesspit that is Twitter, haven’t morphed since the world wide web appeared

Of course when we time manage an individual account on prices-we very often find the account becomes inactive because the commercial advantage has been removed. It is incredibly rare that we close an account, nor make them starting price only

Are some people caught in this bot trader net unfairly – when they are genuine hard working form judges? Yes there will be examples of individuals like that, who have been restricted. The system for eradication of bot traders isn’t bullet proof.

How accurate are we in practices to hold such customers to later odds? In practice it proves, in the vast majority of cases to be a very easy case of management. Most traders beat the odds in 100% of cases. They’re greedy. Or part of a multi accounting group, where the tricks are a constant across the community – like fake utility statements. It is childlike in its approach, but for them, ‘profit at all costs’ is the mantra. They’re not so different from the bookmakers they criticise, for ‘restricting’ them

Most customers in practice disappear quietly off to another gambling firm after a change of account terms, but some individuals inevitably turn to Twitter to vent their frustration at an avenue of income which has now been closed down.

When they do, to protect their identity to other bookmaker targets, they choose anonymity. Now you can say what you like about gambling companies and their practices, and very often the ventings are riddled with expletives and insults! They follow each other, with like minds. They become inured to their point of view. Everyone they follow agrees with them, except me, of course, i’m afraid I don’t follow the narrative of silence which grips other gambling companies

So I understand the vitriol from both quarters, who couldn’t care less if we gave some punter too much money. The circumstances I have outlined above have created an environment in which bookmakers have never been so unpopular. I don’t condone some of the behaviour of big corp, and those that view that follow me no I am highly vocal at what I see as unfair business practices from time to time, but all bookmakers, to differeing degrees, simply have to remove certain elements from their books, in the online world.

But let us be absolutely clear about one thing in the world of betting exchanges the age old battle between bookmaker and punter has radically changed, and not for the better

Inevitably there will be a few individuals who will claim they are not traders that they’re particularly clever that beating the bookmakers odds through skill. Such folk tell each other they’re ‘punters.’ which in many cases is a fantasy.

I’m afraid in that regard you are on a losing wicket because as the decades have gone past bookmakers have become highly competent in spotting bot traders. When you beat the odds 100% of the time? That’s neither luck nor skill on your part, or incompetence on the part of the bookmaker. A price can change in a dog card in a second from 5/1 to 5/2. Digging out that rick for a bookmaker faster than an exchange can change is practicably impossible.

So, I hope the above is helpful. I accept the vitriol will continue, from some. Like a car driver, flicking V signs from the relative anonymity of their vehicles, Twitter offers a platform to swear at the world, even if you’re normally ‘quite a nice chap’

It is time for everyone to grasp the nettle of realism, because the practice of management of those engaged in any form of trading isn’t going to end soon. I see some argue for a minimum bet offered rule. This may well solve the issue for some folk, but for all it would certainly lead to a huge rise in market overrounds. Basically everyone loses. I believe in competitive odds, plenty of returns to my customers. That is what keeps people fully engaged

Related, I would comment on one other, rather uninformed debate. In forty years of bookmaking, I’ve never avoided paying out for any return, that includes those who amuse themselves with the Sheffield greyhounds tale. Those punters, – well more accurately multi accounters, were settled. Several individuals backing 5 different dogs in yankees at the same time and odds, aren’t random. People got paid however, and it amuses me to see some individuals naively chatting about something they have little knowledge thereof. One should take caution in what you post online ‘as fact.’

It suited business to keep those operating multiple accounts guessing, that if they were dug up, their bets would be rejected, although in practice we pay up and move them on. I’ve chosen not to comment, the topic grew dull some years ago

But I say this to anyone thinking of landing big coups at flapping dog tracks, by the use of multiple accounts? There’s always the danger you might not get paid. We have rules and we keep them simple. If you expect the bookie to play fair, Then you have to accept some simple rules for the digital age, and not act as if they shouldn’t apply to you

one man – one account

Good luck to all

The moral collapse of the gambling commission

Great Britain: Regulation – the moral collapse of the Gambling Commission

For those with an inclination to learn, this week’s events offer the Gambling Commission a valuable lesson in authority. The market regulator exercises a coercive authority, mandated by Parliament, over anyone who holds a licence to provide betting or gaming services in Great Britain. Where others are concerned, it must rely on moral authority – but this commodity has been all but exhausted by its own actions.

In an open letter to the Prime Minister published on Monday, a succession of activists, politicians and researchers (categories that have become increasingly indistinct), openly flouted the Commission’s authority while the ink was still dry on its guidance for how results from the Gambling Survey for Great Britain can and cannot be used. In what can only be considered a triumph of hope over experience, the Commission had promised that the issuing of its guidance document would curb the tendency of campaigners to misuse Official Statistics; but the Peers for Gambling Reform (‘PGR’) letter to Sir Keir Starmer (or ‘Sir Kier’ as these Peers appear to have dubbed him) showed this trust to be misplaced. The GSGB is not due out until this morning – but the signatories to the open letter jumped the gun by referring to “a higher picture of gambling harm than existed previously” (a claim that contravenes the guidance regardless of its attribution to the former minister, Stuart Andrew MP).

The role of gambling market regulator is a difficult one – but the Gambling Commission has made its task needlessly troublesome by playing politics. As articles in the Racing Post and elsewhere have revealed, the Commission has in recent years suppressed evidence, manipulated surveys and facilitated the funding of anti-gambling activism through the disbursement of regulatory settlements. As the journalist Christopher Snowdon has observed, the Commission’s decision to publish misleading prevalence statistics while at the same time telling people to ignore them for the purposes of estimating prevalence is irresponsible: “They’re your statistics. Take some responsibility”, he wrote last week.

It is rumoured that at least one media outlet has refused a Gambling Commission request to amend its reporting of the GSGB. In any case, belated corrections on an obscure clarifications webpage provide scant redress for the impact of misleading headlines.

The PGR letter was revealing in other ways. In demanding the imposition of a safer gambling levy, the signatories claimed that “it is widely understood that the statutory levy would give oversight of treatment funding to the NHS, research funding to UKRI and prevention funding to OHID.” The DCMS has stated its intention to allocate commissioning responsibilities to the NHS and the UKRI but has made no such announcement with regard to the OHID, so it is unclear where the PGR is getting its information from. The appointment of OHID to the role would probably spell the beginning of the end for the licensed betting and gaming market in Great Britain. Officials at the department have indicated a desire to impose tobacco-style controls on operators and consumers; and have proposed annual increases in duties (effective prohibition), total bans on advertising and even – as bizarre as it may seem – ‘plain packaging for all gambling products (“no colours, logos or images”). They have shown a willingness to manufacture statistics and mislead policy-makers in support of this ambition.

It has been suggested on social media that the Good Law Project complaint about GambleAware (whose moral distaste for gambling pales by comparison with the OHID’s illiberalism) was designed to knock the charity out of the running to be the prevention commissioner. The Charity Commission’s rejection of the complaint (announced this week) should prompt an investigation into potential wrong-doing by those who involved (including whether the OHID had anything to do with it). Scrutiny of charities is important but requires care. Spurious accusations designed to disrupt the activities of the Third Sector is unacceptable. The Gambling Commission may not be the only ones to discover how quickly moral authority can erode.

Text book misconduct in public office

Primed Numbers: exercises in policy-based evidence-making?

Last month, the Racing Post revealed that the Gambling Commission had withheld for more than three years, evidence of widespread consumer opposition to affordability checks. The story raised a number of questions – from legal experts and others – about how evidence is used to inform regulation. In particular, it prompted speculation about why the market regulator was able to claim a consumer mandate for the imposition of checks when the weight of evidence tilted so clearly in a different direction. In this article, we examine the Gambling Commission’s use of consumer research on affordability checks, how survey responses can be stimulated to achieve the desired effects and why we should be wary of policy-based evidence-making.

The evidence trail starts in 2019 when the Gambling Commission asked the research firm 2CV to investigate consumer attitudes towards the prevention of ‘binge gambling’ episodes. The results of this survey indicated considerable antipathy towards hard interventions with more than 70% of respondents rejecting operator-imposed controls (with one-quarter selecting no action whatsoever).

The Gambling Commission omitted these findings when it published the results of the 2CV study and they were also excluded from the 2020 call for evidence on affordability checks, despite clear relevance. The results of the Gambling Commission’s ‘mini-survey’ in 2021 were even more stark. While three-quarters of respondents (most of whom were online bettors) agreed that operators should be required to take action to support vulnerable customers, 78% rejected proposals for affordability checks, citing consumer privacy, consumer freedom and their likely ineffectiveness in preventing harm. Just 14% of respondents stated that they would comply with checks while two-thirds said that they would feel uncomfortable being subjected to assessments by Credit Reference Agencies (‘CRAs’).

As the Racing Post has reported, these results were kept under wraps for almost three-and-a-half years and were deliberately excluded from the 2023 consultation on Financial Risk Assessments (‘FRAs’). In October last year, the Commission refused a request under the Freedom of Information Act (‘FOIA’) for the survey findings to be released, claiming that it would be too time-consuming to do so and that it saw “no outstanding public interest” in making them while the consultation was open. In February this year, the chief executive of the Commission, Andrew Rhodes, gave a personal pledge that the results would be published. The Commission however, failed to publish the survey results when plans for FRAs were announced in May; and it took a further FOIA request to finally force its hand.

By this point however, the Gambling Commission had released the results from a third survey (a self-selected online panel managed by the polling firm, Yonder); and this time the results were rather different. A large majority (78%) of respondents agreed that checks were “necessary to protect people from gambling harm” and just 6% disagreed. It is true that the 2023 survey related to a modified form of the affordability checks proposed in 2021 – but this seems an unlikely explanation for such a change in views on checks and the use of CRAs in particular (see chart). Is it plausible that consumer attitudes should have altered so dramatically in just two years?

Survey	Sample size
Gambling Commission 2021	12,124
Yonder 2023	1,000

There are two strong contenders for explaining why the Yonder panel yielded such different views from the 2019 2CV survey and the Commission’s own ‘mini survey’ in 2021. The first relates to sample composition. The 2021 survey was responded to by people interested in the issue of affordability checks – people who had sufficient skin in the game to take the trouble to respond. The Yonder panel by contrast, consisted of people who get their kicks (as well as some small financial compensation) from taking part in surveys – but who otherwise might have little interest in the policy (only 14% had personal experience of affordability checks). It is easy to be supportive of controls imposed on others.

The bigger issue however, is likely to be one of response priming. Prior to completing the 2023 survey questionnaire, panellists were exposed to ‘stimulus packs’, including ‘video stimuli’ to “maximise engagement and efficiency”. They were informed that the checks being consulted on were already Government policy and that they would “protect the most vulnerable while allowing everyone else to enjoy gambling without harm”. They were then shown a selection of newspaper headlines, with the explicit intention that these should affect (or stimulate) responses. Some of these headlines reflected concerns about checks while others warned about delays to implementation; but the overall impression was far from balanced.

One of the headlines told respondents that “Gambling addicts will die because of delay to reforms, government warned”; another that “‘There will be more people dying’: mother whose daughter took own life criticises gambling white paper”. In other words, survey participants were encouraged to believe that people would take their own lives if the checks were opposed. They were also exposed to headlines expressing opposition to checks (e.g. “MP urges racing to make its case against ‘crippling’ Gambling Commission proposals”) but such concerns will pale when juxtaposed against self-harm. Viewed in this light, the Yonder panel’s strong support for FRAs appears distinctly unsurprising. The second of the two ‘suicide headlines’ in the stimulus pack did not even relate to affordability checks but instead to advertising; and in fact rejected the idea that “even stricter versions” of checks would prevent loss of life (suggesting that survey respondents were not simply led – but actively misled). A third headline related to a comment piece in The Times written by a director at the activist group, Gambling With Lives; while the author of the fourth is understood to have connections with the same organisation.

Reviewing the stimuli to which the Yonder panellists were subjected, it is difficult not to be cynical about the Gambling Commission’s intent. Having failed on two occasions to obtain the desired response, the Commission left nothing to chance with the Yonder survey. Even if we ignore these issues and take the 2023 Yonder survey at face value, it does not explain why the Commission repeatedly refused to publish the results of the 2021 ‘mini survey’ (or the 2019 2CV study). The Commission’s selective use of evidence is difficult to justify – and so far it has made absolutely no attempt to do so. Its silence in the face of serious concerns about consultative process appears evasive rather than dignified. If it has reservations about the 2019 and 2021 surveys, it should explain what these are and allow people to make up their own minds about their value. Suppressing inconvenient evidence serves only to undermine confidence in the regulatory process.

In around six weeks from now, a pilot scheme to assess the viability of Financial Risk Assessments will commence; yet the Gambling Commission has still not published details of how this will be evaluated. The criteria for success have not been released and it is unclear how the integrity of the tests will be assured. Having spent the last three-and-a-half years agitating for checks, the Commission cannot be considered a neutral actor; and its reputation for impartiality has taken a battering of late. In the absence of a proper explanation for the withholding of evidence and a commitment to transparent evaluation of the pilot, the market regulator faces the threat of fresh controversy – and possibly legal challenge. It is unlikely that the incoming Culture Secretary, Lisa Nandy, will thank the Gambling Commission for such an avoidable headache.

The gambling suicides myth

The rate of deaths caused by gambling has been foolishly exaggerated

Artillery Row by Christopher Snowdon May 2024

here is one gambling-related suicide in the UK every day. There are up to 496 gambling-related suicides a year. Ten per cent of all the suicides in England are caused by gambling.

These statistics, and other iterations of them, have become mantras for the anti-gambling lobby since January 2023 when the Office for Health Improvement and Disparities (OHID) published a report claiming that there are “between 117 and 496 suicides associated with problem gambling” in England. Activists naturally focused on the larger of these two numbers and started putting it on billboards. The monetised value of years of life supposedly lost to suicide make up most of the “up to” £1.77 billion that gambling is said to cost “wider society” each year.

It turns out that these figures are based on nothing. They are a will o’ the wisp. A mirage. They exist only on a laptop in Whitehall. They are worthless.

How can we possibly know how many suicides are linked to problem gambling, let alone how many are solely caused by it? Gambling is only mentioned on one coroner’s report a year, on average, which is presumably an under-estimate. In the absence of better evidence, OHID’s predecessor Public Health England turned to a study from Sweden which looked at 2,099 hospital patients who were diagnosed with pathological gambling between 2005 and 2016. Sixty-seven of them died, including 21 who took their own life. The authors noted that the suicide rate among this cohort of pathological gamblers was fifteen times higher than the suicide rate of the general Swedish population.

Upon this sliver of evidence, everything else rested. In 2021, Public Health England simply estimated how many problem gamblers were in England and then multiplied the number of expected suicides by fifteen. This produced a figure of 409 suicides a year which anti-gambling activists then put on T-shirts.

Public Health England was closed down soon afterwards and replaced by OHID. Last January, OHID used the same methodology but produced two different estimates, one based on how many people are thought to have “gambling disorder” (previously known as pathological gambling) and the other based on how many suffer from the less severe condition of “problem gambling”. The figures were 117 and 496 respectively.

You don’t need to be intimately acquainted with basic statistics to see the problem here. People who are being given medical or psychiatric treatment in hospitals are inherently different to people who are not. If you are admitted to hospital, there is already something wrong with you. If you are admitted to hospital and asked to take a survey to diagnose gambling disorder (or any other psychological problem) then you are very likely to be at the higher end of the risk spectrum.

Sure enough, there was a lot wrong with the 2,099 people in the Swedish study. Between 2005 and 2016, 65 per cent of them suffered from “injury, poisoning, and other consequences of external causes”. 60 per cent had an anxiety disorder. 51 per cent suffered from depression. 41 per cent had a substance-use disorder. 29 per cent had an alcohol-use disorder. 19 per cent had a personality disorder. 19 per cent intentionally self-harmed. 12 per cent were bipolar. 9 per cent had schizophrenia. In the context of all this human misery, a suicide rate of one per cent does not seem too surprising and it is absurd to assume that all the suicides were the result of problem gambling. For many of these unfortunate people, gambling may have been the least of their worries.

The authors of the study freely admitted that these hospital patients were unlikely to be representative of the average problem gambler:

It is therefore likely that results may be skewed toward a population of individuals with more severe forms of GD [gambling disorder]. It is likely that this once again implies that this study sample might contain patients with higher mental health comorbidity, as well as individuals with more severe forms of GD, since these individuals are more likely to receive specialized psychiatry care.

Public Health England and OHID ignored all this and extrapolated the suicide rate among pathological gamblers with multiple co-morbidities in Swedish hospitals across the estimated number of problem gamblers in the general population in England. No attempt was made to adjust for the many other risk factors for suicide that these people obviously had.

Last year, however, one of the two authors of the Swedish study did exactly that. Using the same dataset in a new study for her PhD thesis, Anna Karlsson found that “gambling disorder did not appear to be a significant risk factor for the increase in suicide and general mortality when controlling for previously known risk factors”. She concluded that her research “could not determine whether GD [gambling disorder] is an independent risk factor for suicide”.

This does not mean that there is no link between gambling disorder and suicide. History and common sense tell us that people who get into severe financial difficulties are more likely to take their own lives and it is obvious that problem gambling is one way to suffer financial distress, albeit the only one that is now treated as a “public health” issue. What it does mean is that gambling disorder, on its own, was not a big enough risk factor for suicide to show up among the people studied by the Swedish authors using standard statistical practice. If you extrapolated the properly adjusted figures from the Swedish study across the English population, the number of gambling-related suicides would be zero.

It is hard to believe that OHID was not aware that it had made an error that a literal schoolboy could have spotted. Public Health England was closed down because it was incompetent and was too easily distracted by lifestyle issues when it should have been focusing on public health. It was more of an in-house lobby group than a serious scientific agency. It seems that closing it down and re-opening it under a new name with the same staff was not enough to make the leopard change its spots.

The Great Suicide Deception – Part IV – What purpose is served by spurious statistics?

Dan Waugh-Regulus Partners May 2024

This is the fourth and final article in our series on attempts by state bodies to claim widespread suicide mortality associated with problem gambling. In the first three articles we demonstrated why estimates prepared by Public Health England and the Office for Health Improvement and Disparities were irretrievably flawed; we examined the conduct of PHE and OHID, including evidence of bias and inappropriate behaviour; and we considered the role played by the Gambling Commission, the Advisory Board for Safer Gambling and others in either propagating the PHE-OHID claims or withholding concerns about their reliability. We conclude by addressing the wisdom of attempts to boil down a matter as complex as suicide to any single factor.

It has long been understood that people with gambling disorder are at elevated risk of death by suicide. The DSM-5 (the American Psychiatric Association’s ‘bible’) comments on elevated rates of suicide ideation and attempts among people in treatment for gambling disorder (and makes similar observations in relation to a large number of other mental health conditions, including alcohol use disorder). Concerns in relation to gambling disorder and self-harm – and what might be done to prevent suicide by people with the disorder – are entirely valid.

It is also widely accepted that suicidality is a complex matter. In their 2016 meta-analysis of 50 years of suicide research, Franklin et al. made the following observation:

“…any individual with nearly any type of mental illness (i.e. internalizing, externalizing, psychotic, or personality disorder symptoms), serious or chronic physical illness, life stress (e.g. social, occupational, or legal problem), special population status (e.g. migrant, prisoner, nonheterosexual), or access to lethal means (e.g. firearms, drugs, high places) may be at risk for [suicidal behaviours and thoughts]. A large proportion of the population possess at least one of these risk factors at any given time, with many people possessing multiple factors.”

Understanding that people with a gambling disorder are at elevated risk of suicide is helpful when it comes to devising self-harm prevention strategies. For example, Hakansson & Karlsson (the Swedish researchers relied upon by PHE-OHID) conclude their 2020 study with the following recommendation:

“The findings call for improved screening and treatment interventions for patients with gambling disorder and other mental health comorbidity.”

It is questionable however whether studies of discrete associations between any single activity or human characteristic and death by suicide should – by themselves – be used to justify state controls on that activity. By way of illustration, a 2021 study on the prevalence of suicidal behaviour in a group of patients with behavioural addictions (Valenciano-Mendoza et al.) found:

“the highest prevalence of suicide attempts was registered for sex addiction (9.1%), followed by buying–shopping disorder (7.6%), gambling disorder (6.7%), and gaming disorder (3.0%).”

These findings may be useful for addressing risk of self-harm within population groups suffering from these mental health conditions. They do not – by themselves – justify bans on sex, shopping or playing video games. A 2017 study of young adults in England (aged 20-24 years, n=106) by Appleby et al., found that four deaths by suicide were linked to ‘gambling problems’; and this has been used to suggest that 250 deaths by suicide each year are ‘gambling-related’. The study also found that 44 of those who had died “had a reported history of excessive alcohol use. Illicit drug use was reported in 54 (51%)”; seven “were reported as experiencing problems related to being a student” (including five experiencing “academic pressures”. One might therefore estimate (using the same methodology as for gambling problems) that around 3,200 suicides are related to illicit drug use; 2,625 to excessive alcohol use; and 440 to academia. Such findings should prompt concern and policy responses; but it is questionable whether these should extend – for example – to complete bans on advertisements for beer or universities.

Some activists have called for coroners to assess, as a matter of routine, the possible involvement of gambling in deaths under investigation – the Bishop of St Albans has doggedly pursued a Private Members Bill to mandate this. At first blush it seems to be a reasonable suggestion. The problem is that it places an additional requirement on already over-burdened coroners; and risks distortion if other known factors are not also investigated with the same degree of rigour. The presence of Adverse Childhood Experiences (‘ACEs’) is a well-documented antecedent of suicide with one study (Dube et al., 2001) finding that as many as 80% of suicide cases analysed had a history of ACEs. There are also well-documented associations between relationship breakdown and self-harm. The practicality and wisdom of asking coroners to probe into every corner of the deceased’s life should be carefully considered.

Those determined to produce figures on the prevalence of gambling-related suicide should first set out a clear operationalised definition of what this term means. How is the relationship to be characterised (e.g. does the individual need to have gambled in the prior 12 months? Does he or she need to have a diagnosis of gambling disorder?) and to what extent is there evidence of causal contribution to death (e.g. was gambling disorder a significant factor or a minor factor?). Finally, they should be required to contextualise their findings by reference to other risk factors.

Running through some of the institutional responses to PHE-OHID is the idea that unreliable estimates of mortality serve a valid purpose pending the production of more robust statistics – something along the lines of ‘fake it until you can make it’. The chair of the Gambling Commission’s Advisory Board for Safer Gambling (‘ABSG’), Dr Anna van der Gaag, for example has written that:

“Good research, especially if it is on an under-researched area like this one, tends to begin and end in a different place, prompting challenge, replication, debate, and the research in this important area is no different.”

It is a view that overlooks four important points. First, the PHE-OHID work on the cost of gambling harms is riven with errors (including mathematical mistakes) and should not be considered “good research”. Second, the ABSG specifically called for “action” as a result of the PHE estimates – with no suggestion of the need for caution or refinement. Third, rather than welcoming challenge, the ABSG has engaged in ad hominem disparagement of those attempting to apply scrutiny to the PHE-OHID claims (likening this, without substantiation, to the activities of Big Oil). Fourth, it is questionable how far we should trust ‘better research’ if those responsible for it have propagated or tolerated misinformation in the past. As we saw during the Covid pandemic, the production of misleading statistics may in fact set back the cause of harm prevention by undermining trust in authority.

Suicide risk among people with a gambling disorder is a legitimate issue and warrants an intelligent response; but this is unlikely to be achieved through the publication of spurious estimates of prevalence. As the US economist, Professor Douglas Walker has observed;

“If researchers continue to offer social cost estimates, they should estimate costs that are measurable. But for other costs such as psychic costs that cannot be measured…let us identify them without providing spurious empirical estimates. Offering methodologically flawed cost estimates does not improve our understanding nor does it promote sound policy…In areas where research is still quite primitive, perhaps no data would be better than flawed data.”

Coda

We are aware that some individuals and organisations will resent this series of articles on PHE-OHID (not least the OHID researchers themselves). Our intention in writing them has not been to hurt or insult – but to shine a light on the way that some statistics are created and the distortive effect that ‘bad statistics’ can have on government policies. The application of scrutiny to research is an important part of the scientific process; and where state bodies are concerned, an important part of the democratic process too. It is entirely consistent to be concerned about a particular issue (e.g. risk of self-harm in a gambling context) and at the same time to believe that research into that issue should be conducted with honesty, openness and in accordance with scientific principles. In this way, we may hope to reduce the stigma associated with self-harm (such that gambling firms and other businesses gain the confidence to openly confront it); and that, over time, we may apply greater intelligence to the prevention of suicide in a gambling context and more generally.

Unreliable Suicide Claims in Gambling: ABSG’s Questionable Stance

The Great Suicide Deception. Part III – Conspiracy of Silence

Dan Waugh, Regulus Partners. May 2024

The Great Suicide Deception. Part III – Conspiracy of Silence

This is the third in a series of articles examining claims made by state bodies in England about rates of suicide associated with ‘problem gambling’. In the first we demonstrated that estimates of suicide mortality produced, first by Public Health England (‘PHE’, 2021) and then by the Office for Health Improvement and Disparities (‘OHID’, 2023) were irretrievably flawed. In the second, we looked at the behaviour of PHE and OHID, finding indications of a priori bias or inexplicable negligence and unsound governance. In this third article, we examine the conduct of others in positions of authority and ask why so many people who knew that PHE and OHID’s claims were unreliable decided to look the other way. We also recognise those who were prepared to apply critical analysis. Once again, we observe that, while gambling disorder has been recognised as a risk factor for self-harm for more than 40 years, efforts to tackle this are unlikely to be advanced by the use of junk science.

1. Why did the Gambling Commission not ‘do the right thing’?

By April 2022, Britain’s Gambling Commission knew that estimates of suicide mortality published by PHE were “unreliable” and based on “inaccurate” assumptions. This may have been a somewhat uncomfortable finding, given that the regulator had previously described the review as “important and independent”. It had arrived at this opinion despite not having received anything more than an executive summary (which it had not read when it agreed to provide “a supportive quote”). It also knew that PHE was far from “independent”, having been made aware of its intention to apply tobacco-style controls to participation in betting and gaming.

At a meeting in March 2022, Gambling Commission officials admitted that they did not understand how PHE had arrived at some of its estimates (no-one could have been expected to – given the fact that the calculations were mathematically incorrect). In April, these officials circulated a highly critical review of the PHE report, in which they noted that the suicide claims were not based on “reliable data”. The Commission however, elected not to take the matter up with the OHID (which had subsumed PHE upon the latter’s disbandment) or to inform the Secretary of State. The market regulator – which counts “doing the right thing” among its corporate values – elected to suppress its critique. In one rather sinister coda to the Commission’s critique, one official speculated that PHE’s claim of more than 400 suicides might be rescued, if only future prevalence surveys showed a higher rate of ‘problem gambling’ in the population. At this point, the Commission had started work on a new Gambling Survey for Great Britain in the expectation that – as a result of methodological issues – would produce a higher rate of ‘problem gambling’ than reported by tNHS Health Surveys.

When asked by journalists whether it considered the PHE claims to be reliable, the Gambling Commission responded that it was not its role to review the work of other state agencies; but failed to mention that this is precisely what it had done. As late as 2023, its chief executive, Andrew Rhodes continued to defend the PHE-OHID estimates, despite being aware of the problems with them; and it seems likely that the market regulator has been involved in disseminating the misinformation via approval of regulatory settlement funds.

2. the ABSG and the irrelevance of accuracy

In the summer of 2022, the OHID wrote to the Gambling Commission’s Advisory Board for Safer Gambling (‘ABSG’) to ask for its opinion on criticism of PHE’s suicide analysis. In her response, the ABSG’s chair, Dr Anna van der Gaag appeared to agree that there were indeed a number of issues. She wrote: “I see their point about basing calculations on the Swedish hospital study leading to an over estimation of the numbers”. She then proceeded to suggest that accuracy in such matters was unimportant and that attempts to apply scrutiny was “a distraction from what matters to people and families harmed by gambling”. This represented a change in attitude from three months earlier when the ABSG had described PHE’s highly exact estimate of 409 suicides associated with problem gambling as a “catalyst towards action”. The Gambling Commission allowed the ABSG to publish this opinion in the full knowledge that it was based on unreliable data.

The following year, Dr van der Gaag was one of two co-adjudicators responsible for allocating around £1m in Gambling Commission (regulatory settlement) funding for the purposes of research into suicide and gambling. Applicants were specifically directed towards the OHID analysis (i.e. estimates that the ABSG knew were flawed) as well as claims by the activist group, Gambling With Lives (despite the fact that even the OHID had indirectly criticised one of GwL’s claims). One of the successful bids (a £582,599 award to a consortium led by the University of Lincoln) included Gambling With Lives as an active member of the research team.

3. the Silence of the ‘Independents’

Among those who have supported the claims of PHE-OHID are a number of self-styled ‘independent’ researchers. These include academics from the universities of Cambridge, Hong Kong, Lincoln, Manchester, Nottingham and Southampton, as well as King’s College, London, who have cited the estimates uncritically in their work. Perhaps they considered (naively, if so) that research produced by the Government is unimpeachable; yet the errors made by PHE-OHID are so glaring that no researcher of any calibre could have failed to notice them. The failure to subject such serious claims to critical analysis before repeating them indicates – at the very least – an absence of intellectual curiosity. Much is made of the need for research independence (typically defined solely by an absence of industry funding, regardless of ideology or other affiliations); but independence has little value if it is not accompanied by intelligence and integrity.

4. Breaking ground

A small number of groups and individuals have been prepared to apply scrutiny and challenge, despite the circumstances. The Racing Post and the think tank Cieo have published a number of our own articles on the problems with PHE-OHID (as well as other issues with research-activism); and a handful of journalists, including Chris Snowdon, Steve Hoare and Scott Longley have been prepared to challenge the PHE-OHID claims. Figures from trade groups, bacta and the Gambling Business Group have spoken out publicly on issues with PHE-OHID.

Officials at the Department for Culture, Media and Sport have displayed a capacity for critical analysis, notable by its absence elsewhere in Whitehall. Their White Paper on reform of the betting and gaming market acknowledged valid concerns about self-harm but conspicuously omitted the OHID figures. Lord Foster of Bath, a stern critic of the gambling industry, has acknowledged that the PHE-OHID claims are not reliable and – in a show of honesty and humility rare in the gambling debate – apologised for using the figures himself. He continues to make the case for self-harm to be treated seriously in a gambling context; but without recourse to spurious statistics. Philip Davies, the Conservative Member of Parliament for Shipley, has challenged unsound statistics in parliamentary debates; and Dame Caroline Dinenage’s select committee for Culture, Media and Sport noted concerns of reliability in its report on gambling regulation.

One member of the Gambling Commission’s senior management team – Tim Miller – has been prepared to discuss and acknowledge problems with PHE-OHID; an attitude that contrasts sharply with that of his colleagues.

5. ‘Noble lies’ and consequences?

Underlying the PHE-OHID saga is a sense that some people in positions of authority consider it acceptable to publish inaccurate or misleading statistics if the cause is – in their opinion – just. Some have even suggested that scrutiny of misinformation is unethical, rather than its manufacture. In July this year, the Gambling Commission intends to publish statistics on the prevalence of suicidality amongst gamblers. Given its role in PHE-OHID (in addition to major issues with its new survey), it is questionable why anyone should consider these results credible. It has also – via Gambling Research Exchange Ontario – sponsored a programme of research into wagering and self-harm. Given that these studies have been explicitly grounded in the PHE-OHID deception – and the complicity of many of those involved – suspicions of bias will accompany publication. It is the publication of unreliable research – rather than scrutiny of those statistics – that undermines public trust in authority. Attempts to address health harms in any domain will be ineffective if they are based on inaccurate evidence.

An independent and open review should be carried out into the PHE-OHID deception; but it is difficult to see how this will happen. The Department of Health and Social Care and the Gambling Commission are unlikely to embrace scrutiny; and the DCMS will not wish to embarrass either its regulator or another government department. There are too many people in Parliament and the media who have played a part; and too few prepared to break ranks. The gambling industry meanwhile (with a number of notable exceptions) has shown little inclination to challenge. There is one hope – that the Office for Statistics Regulation will be prepared to take an interest in the integrity of public health estimates. Such an intervention would go somewhere at least towards restoring trust in public bodies.

A Very Public Deception: On the manufacture of mortality statistics in gambling

Part II – Why did public health get things so badly wrong?

n the first in this series of articles, we examined the problems with claims made by state bodies – specifically Public Health England (‘PHE’) and the Office for Health Improvement and Disparities (‘OHID’) that up to 496 deaths by suicide each year in England are associated with ‘problem gambling’. We demonstrated that the basis for these claims is irretrievably flawed. Analysis of the Swedish dataset upon which they rely concluded that “gambling disorder did not appear to be a significant risk factor for the increase in suicide” (Karlsson, 2023). PHE and OHID researchers overlooked critical research findings and clear warnings about the advisability of their approach. While gambling disorder has long been recognised as a risk factor for self-harm, the estimates published by PHE-OHID are categorically unsound.

Read Part One: Lost in Translation?

In this second article in the series, we attempt to understand why PHE and the OHID persisted in following such a clearly problematic approach in the face of strong evidence of its unsuitability; we examine a number of issues of governance; and consider whether officials may have deliberately misled policy-makers and the public.

The Tobacco Road: why did PHE make such unsound claims?

In May 2018, at the conclusion of its review into gaming machines and social responsibility, the British Government’s Department for Culture, Media and Sport asked PHE to “conduct an evidence review of health aspects of gambling-related harm to inform action on prevention and treatment”. More than three years later, in September 2021, PHE responded with the publication of five reports on the subject. One of these reports (‘The economic and social cost of harms’) claimed annual costs of £1.27bn a year associated with ‘problem gambling’ – with roughly 50% attributable to deaths by suicide.

It was this rather speculative document, rather than PHE’s more robust quantitative review of evidence from NHS Health Surveys, that officials chose to emphasise – prompting Britain’s Gambling Commission to surmise that PHE’s goal was, “to ensure gambling is considered as a public health issue.”

The Gambling Commission had already been given a glimpse of what “a public health issue” would entail. In a draft press release (seen by the Commission), PHE officials called for:

“a public health approach to gambling…similar to how we tackle tobacco consumption or unhealthy food consumption…”.

In the summer of 2022, the PHE researchers (now transferred to OHID) spelt out what this tobacco-style offensive would involve. Their paper, published in the Lancet Public Health, contained 81 measures for state intervention in the gambling market. The list included prohibitions on: all gambling advertising and marketing (including at racecourses); all in-play betting; and the sale of wine, beer and spirits in bingo clubs and casinos. It also included limits on the number of people permitted on a website at any one time, annual tax increases above the rate of inflation and even ‘plain packaging’ for all gambling products (no colours, logos or images permitted on playing cards, gaming machines, National Lottery tickets and so on).

There were other indications that PHE’s endeavours were not entirely objective – or morally neutral. In 2020, for example, its project leader stated that “more research is required to support advocacy and action” against gambling – hardly a statement of impartiality or scientific rigour. Meanwhile, documents made available under the Freedom of Information Act (‘FOIA’) reveal that PHE had agreed to be part of a research group set up by the activist charity, Gambling With Lives (‘GwL’) during the review period – an engagement it failed to disclose within its report.

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Why did OHID publish its report…and did officials mislead?

In January 2023, the Department of Health and Social Care (‘DHSC’) withdrew the PHE report and published an updated set of cost estimates – this time in the range of £1.05bn to £1.77bn a year (underpinned by a choice of 117 or 496 deaths). OHID described the decision to review PHE’s work as “a standard approach for previously published reports ”; but this seems to be untrue. The decision to re-examine the PHE cost estimates alone (none of the other four reports was reviewed – despite the presence of errors) was taken in July 2022 and announced to Parliament shortly afterwards. We have found no evidence that reviewing state agency reports within ten months of publication is a “standard approach” or that any such policy exists.

Disclosures made under FOIA reveal the true reason for review. On 26^th July 2022, an unnamed DHSC official circulated a memorandum, stating:

“We are going to need to make changes to two of the evidence review reports as an error has been spotted, and as it’s a change to results, its [sic.] probably what you would classify as a major change.”

Given that the PHE report contained quite a few errors, it is difficult to know which particular mistake prompted re-examination; but the decision was certainly not part of a “standard approach”. This raises the possibility that OHID may have deliberately misrepresented the grounds for review.

The Gambling Commission and the Advisory Board for Safer Gambling were both told by OHID researchers that “nothing in the report has changed substantially”; but this is incorrect. In fact, every single line item in the OHID cost estimate differed from the PHE version – in some cases substantially. Its estimate of direct costs to the Government was £234.1m lower than PHE’s – a reduction of more than one-third. This was masked by the introduction of a new area of intangible costs, relating to depression and several revisions to the suicide calculation. OHID’s estimates were also based on a ‘harmed population’ 59% smaller than in PHE. As chart 1 (below) shows, the claim that ‘nothing changed substantially’ appears misleading.

In August 2022, the then Health Minister, Maggie Throup MP advised Parliament that the PHE report would be reviewed and that the calculations underpinning its estimates would be published. The review however, has never been made public and – according to disclosures made under FOIA – no such document is held by the DHSC. Contrary to the minister’s pledge, the PHE calculations have still not been released. To do so would reveal a number of errors, such as the fact that PHE’s suicide figure was based on a 21% over-statement of the population prevalence of ‘problem gambling’.

The mystery of the OHID expert panel

OHID was at least prepared to admit – with a heavy dose of understatement – that its estimates were “uncertain”. It relied on a study of hospital patients in Sweden with a clinical diagnosis of gambling disorder (among many other health issues) to estimate the health risks for people in England with no diagnosed mental or physical health conditions whatsoever. In consequence, OHID leaned heavily on the opinion of its expert panel of health economists and academics who, it is claimed, approved the approach.

There are, however two problems where this opinion is concerned. The first is that one member of the expert panel, Dr Henrietta Bowden-Jones of the NHS had publicly criticised the PHE-OHID methodology. At a fringe meeting of the Conservative Party Conference in September 2022, Dr Bowden-Jones stated: “we cannot extrapolate from Swedish studies, from Norwegian studies – it doesn’t work”.

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The second issue is that the meeting of the expert panel – to discuss the most significant matter in the OHID report – is entirely undocumented. In February 2023, the DHSC admitted that:

“there was no agenda or papers shared before the meeting or minutes circulated afterwards”.

It is difficult to understand how this panel of experts might have been expected to review OHID’s work without access to any documents; and why officials did not consider it necessary to record the panel’s deliberations on this critical point.

Why did public health get things so badly wrong?

Inappropriate behaviour?

The task attempted by PHE-OHID was always going to be challenging, given the dearth of actual data available. This does not explain or excuse the large number of errors and omissions made by researchers and officials:

PHE and OHID ignored warnings by Karlsson & Håkansson about the representativeness of the sample in the 2018 Swedish study (upon which they relied);
PHE and OHID ignored findings in the 2018 study of high rates of mental and physical health comorbidities.
PHE and OHID ignored the follow-up study by the Swedish researchers (Håkansson & Karlsson, 2020), which found that risk of suicide attempt was significantly mediated by the presence of other disorders.
PHE and OHID ignored the opinion of Dr Anna van der Gaag, chair of the Gambling Commission’s Advisory Board for Safer Gambling, that the PHE calculation was likely to be inaccurate.

A large number of issues with the PHE-OHID reports were brought to the attention of its Director-General, Jonathan Marron in July 2022 and again in September 2023. On both occasions, Mr Marron promised to investigate. Last year, he wrote that he would provide “a proper explanation” for the errors and methodological flaws; but more than seven months later, none has been forthcoming. In what may well be a breach of the Civil Service Code, OHID officials resorted to ad hominem disparagement of their critics – including one national news media outlet – rather than engage constructively.

What is particularly disturbing about the PHE-OHID scandal is not the fact that researchers (presented with an unenviable task) made so many mistakes; but that state officials proved so unwilling to confront them – responding with hostility to legitimate scrutiny.

Next week, in our third article, we will consider the behaviour of others in positions of political or moral authority who variously connived in the deception or turned a blind eye to it. We will reflect on what this means for their future involvement in research and policy-making.

Dan Waugh

May 17th 2024

Regulus Partners

If the Government does not want consumers to be asked to produce bank statements and tax returns in order to spend their own money, why is this happening?

‘If the Government does not want consumers to be asked to produce bank statements and tax returns in order to spend their own money, why is this happening? ‘

Great Britain: Regulation – Will Commission‘s slight return strike a blue tone with bettors?

“You don’t have to have the solution,

You’ve got to understand the problem,

And don’t go hoping for a miracle,

All this will fade away.”

‘Slight Return’, the Bluetones (1995)

The long-awaited publication of regulatory policy on affordability checks for gambling consumers in Great Britain may have provided clarity of a sort – but last week’s announcement was also notable for what it did not contain.

The Gambling Commission’s intention to run a six-month pilot of financial risk checks had been well-trailed. It was surprising therefore that its announcement contained so little information about how the tests would be conducted; by whom; and what criteria would be used to determine success. In 2017, the Gambling Commission’s Responsible Gambling Strategy Board published an Evaluation Protocol, based on the principles of ‘robustness and credibility’, ‘proportionality’, ‘independence’ and ‘transparency’. As things stand, it is unclear to what extent – if at all – the Commission intends to comply with its own protocol (or indeed the Government’s Magenta Book).

The Protocol states, for example, that good evaluation “should include a clear articulation of what an intervention is intended to do, the outcomes it is intended to achieve, and how it is envisaged these outcomes will come about”; and also that it “has data collection which is planned before the intervention is implemented – so that, if necessary, baseline data can be collected before the policy starts.”

The Gambling Commission has stated that the purpose of the new regulation is to create greater consistency for consumers; to regularise the patchwork quilt of trigger points and thresholds for checks that currently exists. At the same time, it has been remarkably incurious as to why this system of checks came into being in the first place and what effects it has had. If the Government does not want consumers to be asked to produce bank statements and tax returns in order to spend their own money, why is this happening? How has the existing system affected consumers, the functioning of the licensed and unlicensed markets and the finances of British horseracing? Without understanding this, how will we know that the Commission’s new system is better? Without robust analysis of the problem the policy is intended to solve, how will the success or otherwise of the pilot and any succeeding regulation be assessed?

The results of the 2021 ‘short survey’ into consumer attitudes towards affordability checks is another significant omission. Last year, the Gambling Commission committed to publish “the results from the survey”, which was completed by 12,125 individuals, thought mainly to be bettors (horserace bettors in particular were encouraged to submit their views). Instead of this, the Commission has published what might best be described as a narrative description of responses to the overall call for evidence – which is not at all the same thing. The market regulator’s reluctance to publish the actual results will prompt speculation that it perceives the views of consumers to be inconvenient or of marginal relevance to its mission. The Commission may find that a failure to do what it said it would, hinders rather than helps its goals of increasing transparency and building trust.

Last year, the Gambling Commission denied a request, made under the Freedom of Information Act, to release the survey results. It claimed that the “necessary preparation and administration involved in publishing the information” outweighed the “legitimate public interest in promoting the accountability and transparency of public authorities”. What had seemed a doubtful excuse at the time now seems highly implausible. It is difficult to believe that the composition of a single webpage on responses to the 2020/2021 call for evidence involved very much “preparation and administration”. Having been forced to wait for more than three years for publication, this single page may strike the thousands of people and hundreds of organizations who took the trouble to respond as a rather slight return. Those who believe that the Commission has no interest in the views of recreational consumers are likely to feel vindicated. In a paper published in 1999, Bill Eadington, the father of modern gambling studies, described the way that gamblers are often treated as “customers whose demands are not fully respected in the public policy formulation process.” He had a point.

—

Dan Waugh

E: dan.waugh@reguluspartners.com

W: www.reguluspartners.com

A Very Public Deception: On the manufacture of mortality statistics in gamblingA study of suicides in gambling, are we being told the truth? Part 1

Public Health England was closed down because it was incompetent and was too easily distracted by lifestyle issues when it should have been focusing on public health. It was more of an in-house lobby group than a serious scientific agency. It seems that closing it down and re-opening it under a new name (OHID) with the same staff was not enough to make the leopard change its spots.

Dan Waugh- Regulus Partners

In recent years, the claim that up to 496 deaths a year in England are associated with problem gambling has become a staple of the debate on gambling market reform. The estimates originate from a 2023 report by the British Government’s Office for Health Improvement and Disparities (‘OHID’) and have been used to support demands for a wide range of additional controls on consumers and the market. There is just one problem – they are based on junk science.

While it has long been recognised that people with gambling disorder are at elevated risk of self-harm, the specific estimates produced by OHID – accepted uncritically by many in Parliament and the news media – rely on a number of ‘flat-Earth’ assumptions.

In this series of articles, we examine the methods used (and errors made) in calculating these figures and consider the conduct of those who have propagated them. In this, the first article, we demonstrate why the OHID estimates are unsound. In subsequent weeks we will describe the behaviour of the public health officials responsible for their manufacture; consider the actions of other notionally responsible bodies; and ask what public benefit is served by the generation of spurious statistics.

The first state-sponsored estimate of gambling-related suicides in Britain appeared in September 2021 with the release of Public Health England’s (‘PHE’) report, ‘Gambling-related harms evidence review: the economic and social cost of harms’. It contended that, in England, 409 suicides a year were “associated with problem gambling only”. In January 2023, the PHE report was replaced (due to identification of errors) by an update from OHID. It offered a choice of either 117 or 496 suicides “associated with problem gambling”.

Both the PHE and OHID estimates were based on a 2018 study of the medical records of patients treated in Swedish hospitals between 2006 and 2016. Dr Anna Karlsson and Professor Anders Håkansson from Lund University found that patients in the dataset with a clinical diagnosis of ICD-10 ‘pathological gambling’ (renamed gambling disorder in the ICD-11) were on average, 15.1 times more likely to die by suicide compared with the general population. PHE applied suicide mortality ratios from this study to NHS Health Survey estimates of the prevalence of PGSI ‘problem gambling’ in England to produce a figure of 409 deaths a year.

In 2023, OHID repeated the exercise, using precisely the same information, and produced figures of either 117 or 496 deaths (the lower figure based on the application of the Swedish mortality ratios to the population prevalence of DSM-IV ‘pathological gambling’). In doing so they ignored critical information and clear warnings that their methods were unsound. The hospital patients whose records were analysed in the ‘Swedish study’ suffered from a wide range of diagnosed mental and physical health conditions (see charts 1 and 2, below). As a group, they were at elevated risk of self-harm, regardless of the presence or absence of gambling disorder. PHE-OHID thought otherwise – assuming that health risks for hospital patients in Sweden with a wide range of illnesses were the same as for people in England with no diagnosed health disorders whatsoever. In other words, they made the ‘flat-Earth’ assumption that there is no association between mental and physical ill-health and risk of suicide.

In making this assumption, PHE and OHID ignored a clear warning from Karlsson & Håkansson. Their paper advised that the hospital patients whose records they had studied were likely to suffer from particularly severe and complex disorders:

“It is therefore likely that results may be skewed toward a population of individuals with more severe forms of GD [gambling disorder]. It is likely that this once again implies that this study sample might contain patients with higher mental health comorbidity, as well as individuals with more severe forms of GD, since these individuals are more likely to receive specialized psychiatry care”.

The PHE-OHID researchers also ignored findings from the follow-up to this study (the second in a series of five undertaken by the researchers from Lund University). Håkansson & Karlsson (2020) showed that comorbid health conditions were even higher within the group of patients who had attempted or completed suicide (see chart 3).

Professor Håkansson and Dr Karlsson showed that risk of suicide attempt was five times higher for patients with gambling disorder if they also had diagnoses of alcohol use disorder and drug use disorder. Of those patients who had made a suicide attempt, 70% had a diagnosis of alcohol use disorder or drug use disorder or both. The researchers at Lund University provided a range of adjusted odds ratios based on the presence of other diagnosed mental health conditions (see table 1). This study – which was published ten months prior to the PHE report – indicated that suicide risk for patients with gambling disorder was halved where no alcohol use or drug use disorders were diagnosed. Even before adjusting for other risk factors, these findings clearly demonstrated the inappropriateness of PHE’s approach.

A third study assessed the effect of socioeconomic factors on risk of suicide attempt. In the fourth study, a control group was used to identify discrete risks associated with gambling disorder. It concluded that:

“gambling disorder did not appear to be a significant risk factor for the increase in suicide and general mortality when controlling for previously known risk factors”.

This finding creates a dilemma for OHID and those who have propagated its claims. If one believes that analysis of the Swedish National Patient register by Karlsson & Håkansson provides a reliable basis for assessing suicide risk in England, then one must conclude that – contrary to PHE-OHID assertions – gambling disorder is not “a significant risk factor”. If on the other hand, one does not believe this is a suitable approach, then the PHE-OHID claims also cannot stand because they rely entirely on the mortality ratios from the first of the Swedish studies.

The fact that PHE and OHID got things wrong does not mean that underlying concerns about gambling disorder and self-harm are misplaced – or that gambling operators, treatment providers and policy-makers should ignore the issue. It has long been recognised that people with the disorder are at elevated risk of suicide, even if the precise nature of the relationship is complex. A number of recent inquests in England have determined that excessive gambling contributed to loss of life. Operators should do more to promote positive mental health and to address risk of self-harm among their customers and employees – whether gambling is involved or not. The PHE-OHID claims are, however, irretrievably flawed and should be disregarded by policy-makers. There is simply no coherent logic that allows them to stand.

In next week’s article, we will consider why PHE-OHID produced such obviously flawed findings and examine potentially serious issues of governance attending their publication.

List of abbreviations

DSM-III: The third edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Health Disorders.

DSM-IV: A screening questionnaire published by the American Psychiatric Association within the fourth edition of its Diagnostic and Statistical Manual of Mental Health Disorders

OHID: the Office for Health Improvement and Disparities. Part of the Department of Health and Social Care.

PGSI: The Problem Gambling Severity Index. A screening instrument developed by Ferris & Wynne (2001).

PHE: Public Health England. A state agency, reporting to the Department of Health and Social Care. It was disbanded in 2021.

Dan Waugh is a partner at the global strategic sports and leisure advisory firm, Regulus Partners.

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