Tag: blog

Sample Bias – the new normal

 
Great Britain: Regulation – Is the Great British Gambling Debate heading for a Terminal solution?


Last week’s House of Lords debate on gambling advertising was in many respects the same tired old combination of mistruths and moral indignation; but it was notable for providing a glimpse into the next phase of gambling policy discourse in Britain. Lord Foster of Bath, who instigated the short debate told the House that:
 
“I suspect public concern is about to rise because, in July, the Gambling Commission will release new figures about gambling harm. The Gambling Minister in the other place has already indicated that they are likely to show that 1.3 million people will classify as ‘problem gamblers’ and that a further 6 million are at risk. If confirmed, these figures are far higher than those used to inform the Government’s work on their White Paper. This is a real cause for concern, further strengthening the call for action.”


 
The intent could not be clearer. If the publication of the Gambling Survey for Great Britain (‘GSGB’) in July reveals a markedly higher rate of ‘problem gambling’ than the estimates relied upon by the Government in its White Paper, then the wisdom of the policies contained therein will be open to question. Lord Foster’s point is a fair one. In its White Paper, the Government relied on the 2018 Health Survey for England, which reported a ‘problem gambling’ prevalence rate of 0.38%; and the current Official Statistic (from the HSE 2021) is 0.25%. The Final Experimental Stage of the GSGB reported a figure of 2.5% – between six and ten times higher than the HSE. If the Government and regulator are confident that results obtained from the GSGB are reliable, concern groups will justifiably ask for a re-run of certain policy decisions (and possibly even Judicial Review, given the litigious bent of some activists).
 
The problem is, of course, that the Gambling Commission does not appear to be at all confident that results obtained from the GSGB will be reliable. Each of the new survey’s iterations – from the Pilot Survey in 2022 to the Experimental Stages in 2023 to Wave 1 of the official survey in 2024 – has revealed signs of sample bias. In an independent review (‘independently’ funded by the Gambling Commission), Professor Patick Sturgis of the London School of Economics, commented on the “non-negligible risk” that the GSGB would “substantially over-state the true level of gambling and gambling harm in the population”. He also urged caution, warning that “until there is a better understanding of the errors affecting the new survey’s estimates of the prevalence of gambling and gambling harm, policy-makers must treat them with due caution.” Such advice appears lost on the Commission (which prefers to gloss over inconvenient opinions). In addition to rates of ‘problem’ and ‘at risk’ gambling’, it plans to release survey findings in respect of suicidality, violence and abuse, mental ill-health and use of food banks – in the knowledge that the figures may very well be incorrect and misleading. Just when the Department for Culture, Media and Sport might have thought it was nearing the end of a long and tortuous journey on gambling reform, the Commission is throwing down new track.


 
The threat to the licensed betting and gaming market in Great Britain is severe. The public health establishment (including senior figures within the Department for Health and Social Care) has signalled its intention to “tackle gambling” (all gambling and not just harmful gambling) in the same way that it has dealt with tobacco smoking. Demands for total bans on advertising (including at racecourses), the sale of beer and wine in bingo clubs and casinos and the imposition of ‘plain packaging’ for all gambling products (no colours, logos or images – farewell Queen of Hearts), will intensify. In Scotland, it is reported that the SNP plans to raise the legal age of gambling if it achieves independence (presumably with a carve out for anti-gambling vitriol in its Hate Speech legislation) but this is only a stop along the route rather than a final destination. It is far from obvious however, that the industry realises the perilous nature of its current position. Tone-deaf advertising on bus stops and at railway stations only strengthens the ground for those seeking a terminal solution.

Cracking the Code: Exploring the role of the Regulators’ Code in Britain’s gambling market 

By Dan Waugh, Regulus Partners

To what extent should the Gambling Commission be guided by the Regulators’ Code in discharging its duties? To what extent does it comply with the Code and how would we ever know? Does this matter? This is the discussion that we hope to stimulate with the publication today of our new report, ‘Questions of Principle: Assessing the Gambling Commission’s compliance with the Regulators’ Code and the Nolan Principles’. At present, there is considerable uncertainty about what influence, if any, the Code should exercise on the regulation of Britain’s betting and gaming market; and the perpetuation of this uncertainty, we argue, is unlikely to be in the best interests of consumers.
 
The Regulators’ Code was introduced in 2014 by the Department of Business Innovation and Skills. All statutory regulators in Great Britain – including the Gambling Commission – are required to “have regard” to the Code in exercising their duties – a phrase that accommodates a high degree of subjectivity. Last year, the Commission’s chief executive, Andrew Rhodes described the Code as “not a long document – just seven pages”; and “a sensible set of guiding principles” – a characterisation that drew rebuke from the legal community. On leading lawyer responded: “I am sure Andrew Rhodes wouldn’t like to see gambling operators treating, for example, its seven page Industry Guidance on High Value Customers as just a ‘sensible set of guiding principles’”. The exchange highlighted an unhelpful difference of opinion between the market regulator, its licensees and licensing lawyers.


 
The Code itself consists of six provisions:Regulators should carry out their activities in a way that supports those they regulate to comply and grow;Regulators should provide simple and straightforward ways to engage with those they regulate and hear their views;Regulators should base their regulatory activities on risk;Regulators should share information about compliance and risk;Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply;Regulators should ensure that their approach to their regulatory activities is transparent. 
Regulators are required to adhere to the Code in the context of their wider statutory roles and they may exempt themselves from certain provisions, so long as they explain why. 
 
Our analysis suggests that, while the Gambling Commission (which has not announced any Code exemptions) is often compliant, there have been instances where it appears to have breached code provisions, sometimes on a repeated basis. Our report highlights particular concerns with regard to the Commission’s observance of the first and sixth Code provisions – supporting compliance and growth; and ensuring transparency.
 
The first of these Code provisions is often misinterpreted as a requirement for the Commission to encourage economic growth at all costs – something that is clearly incorrect. The provision is however, more nuanced than this. It asks that regulators “avoid imposing unnecessary regulatory burdens”; and that they “assess whether similar social, environmental and economic outcomes could be achieved by less burdensome means”. They should also “understand and minimise negative economic impacts of their regulatory activities”; “improve confidence in compliance for those they regulate, by providing greater certainty”; and “ensure that their officers have the necessary knowledge and skills to support those they regulate, including having an understanding of those they regulate that enables them to choose proportionate and effective approaches.”
 
These are sensible requirements for any market regulator; and yet we were able to find little evidence that the Commission actively pursues them. Its public consultations rarely (if ever) suggest active consideration of the need to understand and minimise regulatory burdens. Last year, the Commission’s chief executive, Andrew Rhodes observed (correctly) that “growth must come when the business is compliant, not instead of it”. This is undoubtedly true, but the fact is that most licensees are compliant (if they were not then they would cease, at some point, to be licensees). No market – even a monopoly – is likely to be 100% compliant all of the time; and it is clearly not the intent of the Code that regulators should withhold support pending universal compliance. It is also unclear why the Commission would see non-compliance as a reason to ignore its duty to “understand and minimise negative economic impacts” of its regulatory activities, or to “ensure that their officers have the necessary knowledge and skills” – particularly when it is often the customer who ‘pays’ for impacts and deficits. 
 
Our report highlights a number of instances where the Commission appears to have fallen short of the standards set by the Code. These include:The approval of regulatory settlement grants for organizations and individuals openly engaged in anti-gambling advocacy;The misuse of statistics and research – and the withholding of key evidence -in public consultations on regulatory reform;Inconsistent and often opaque approaches to policy determination (arising from public consultations);A failure to apply evaluation or scrutiny to the award of £90m of regulatory settlements between 2019 and 2023. 
In addition, as we note in our article for Cieo this week (Help! I have become an ‘issue’ – Cieo), we have uncovered indications of bias within the Commission’s Advisory Board for Safer Gambling, as well as the existence of secret meeting notes which should, in our view, have been published.  
 
Any review of compliance is necessarily selective – and no organization is perfect. It is important not to lose sight of the many achievements of the Commission in supporting a generally well-functioning market, characterised by low rates of illegal and underage gambling and a world-leading approach to sports integrity. The rate of ‘problem gambling’ is also very low by international standards, with 0.25% of adults estimated to be PGSI ‘problem gamblers’. This, at least, is the case at present – although the Commission’s plan to replace the ‘gold standard’ NHS Health Survey with its experimental Gambling Survey for Great Britain seems certain to result in much higher – and far less reliable – reported rates of ‘problem gambling’. 
 
The Regulators’ Code is a valuable document, designed to help market regulators to focus on their statutory roles, without getting distracted by alternative, often incompatible political agendas. The Commission has the opportunity to make far greater use of the Code by stating explicitly how it guides its strategy; by actively monitoring and reporting on its compliance (as some other regulators do); and by establishing a mechanism for constructive engagement with licensees and others in regard to suspected breaches. The absence of such measures will inevitably give rise to confusion and cynicism – neither of which is in the interests of the consumers who the Gambling Commission was established to serve.Please see our full report here:

Questions of Principle: Assessing the Gambling Commission’s compliance with the Regulators’ Code and the Nolan Principles
Disclaimer; The analysis provided in this report represents the opinions of the authors. Any assessment of trends and change is necessarily subjective. The information and opinions provided herein are not intended to provide legal, accounting, investment or policy advice, nor should they be used as a forecast. Regulus Partners may act, or have acted, for any of the companies and other stakeholders mentioned in this report.
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