The War on Gambling

The cycle of approval that encourages gaming is coming to an end, says David Forrest, a professor of economics at the University of Liverpool. Increased restrictions on the “sin industries,” which includes gambling are being made in the interests of public health. Forrest believes the gaming industry can mitigate these restrictions by making several changes that specifically identifies problem gamblers.

The economist Raymond Sauer took the long view of gambling in America and detected a regular cycle, lasting about 50 years, during which public policy moved from restrictive (including prohibition) to permissive and back again. There is nothing magical about the reference to fifty years but, certainly, Europe appears to be following the model and, over the last decade, to have entered a period of relentless increases in restrictions placed on gambling activity. Multiple jurisdictions have introduced hard or soft limits on how much a player can spend each month (sometimes enforced through mandated use of a player card both online and at land venues), limits or bans on advertising, and increases in the minimum age for gambling, to as high as 25.

The shift to decreased tolerance of gambling has been led by a coalition of actors linked to the concept of “public health,” whether located in universities, national or regional health agencies, or well-funded campaigning groups (often funded by the state). Their stance includes rejection of the very concept of “responsible gambling” on the ground that its emphasis on individuals’ responsibility to control their own gambling detracts from the inherent harmfulness of the product itself.

Indeed, public health activists treat gambling as one of what they term the “unhealthy commodity industries,” along with such as tobacco, alcohol and sugary drinks. Their manifestos effectively demand suppression of these products. The common intellectual justification given is the “total consumption model,” drawn from alcohol research evidently showing that there is a correlation between total consumption in the society and the prevalence of harmful drinking. By extension, it is argued that the volume of gambling should be driven down for all and that this will reduce problem gambling prevalence. As often in public health discourse, whole-population measures are then argued to be preferred to targeted measures (such as aiming to identify and help those experiencing harm).

Leaving aside that the research evidence for the total consumption model appears weak, blind adherence to the whole-population approach is as inappropriate as it would be in policy decisions concerning physical health conditions. For example, it is not obvious that statins should be administered to everyone to reduce cardiac harm, the whole-population approach. A targeted approach would be superior if there were both significant costs to universal treatment (e.g. through side effects for some) and if rigorous risk models were available to identify and treat those most susceptible to adverse cardiac events. By analogy, suppression of gambling would be illogical were this to involve loss of positive consumption benefit for the many while effective tools were available to identify, target and treat those experiencing harm.

The majority of gamblers who choose to spend their own money at the casino or on other gambling activities without getting into trouble are signalling that they enjoy the product more than they would alternative entertainments. The enjoyment they obtain will be different amongst individuals. Wagering may appeal to those seeking intellectual challenge: in a study with Finnish colleagues, I found, based on IQ tests in earlier compulsory military service, that higher IQ predicted a higher probability of betting and a higher volume amongst those who did bet. For other sports bettors, having a stake in the outcome may make the game more exciting: experimental research from economics found that those whose fee for participating in the experiment was in the form of a free bet, rather than cash, reported greater enjoyment from viewing an NHL match and this was true even for those whose bet lost. For casino gamblers, there may be the prospect of excitement in a stimulating setting in an otherwise humdrum life, for others sociability in a gambling venue may appeal. For all these “recreational gamblers,” there would be a clear welfare loss from withdrawing the accessibility of gambling.

But, while gambling may bring a little pleasure to a lot of people, it brings severe harm to a smaller though still significant number of people. The trade-off between the interests of these two groups is always at the heart of any rational debate on gambling policy. Tolerance of gambling to allow the many to enjoy their preferred entertainment is more defensible if there are viable means of identifying those most likely to be harmed or about to be harmed and if effective interventions are available to prevent or mitigate the harm. Technology, most obviously online but also at land venues, is increasingly able to make the task feasible. Targeting rather than whole-population measures then starts to look the better option.

And yet…. still another condition will need to be met to convince politicians and the public that undue restrictions can be avoided. The gambling industry itself needs to demonstrate that it can be trusted to use the technology to address harm without making compromises for commercial gain. For example, in Great Britain, as in other European jurisdictions, licensed operators are required to monitor activity on online accounts. Algorithms flag cases where there are grounds for suspecting harm. But analysis, with a colleague from Liverpool, of 140,000 accounts at seven operators found that meaningful interventions were relatively rare. While population prevalence surveys suggested that 4.2 percent of online gamblers were “problem gamblers” and another 5.8 percent “moderate risk” gamblers, only 0.1 percent of customers received a “safer gambling” telephone call during a one-year period. Again, since 2017, the regulator, either from compliance checks or from individual cases coming to public attention, has issued penalties for breaches of social responsibility rules totalling well over GBP200m, many for egregious failures to interact with customers (online or at casinos) who were very obviously at risk of harm.

Though operators’ performance in Britain appears to have improved somewhat recently, compliance failures are unsurprising since staff may feel a commercial imperative to overlook cases of harm. Everywhere, gambling revenue comes from a small number of high-spending customers. For example, our study found that the top-1 percent of online casino games players by volume delivered 60 percent of operator win while the top-1 percent of slots players generated 50 percent. By no means all heavy players experience harm, but a disproportionate number will be “problem gamblers” and action which may moderate their play clearly comes at a cost in terms of profit. Nevertheless, from history, we know that the industry’s social licence to operate is held precariously and the alternative to demonstrating a commitment to “responsible gambling” (now given the broader title of “safer gambling” in Europe) may be a degree of suppression of the (legal) market, which would represent an existentialist threat to many operators. The risks of whole-population measures driving play to the unregulated sector are real enough, in my view, but this argument from industry trade bodies appears to carry limited traction with the public, whose trust of the industry may slip as the voices of public health grow stronger in America. The industry will need to demonstrate by its actions that it can be trusted to use technology to safeguard its customers and this is likely to include greater transparency in terms of encouraging independent external evaluation of its software and procedures for identifying and mitigating harm.

David Forrest is Professor of Economics in the University of Liverpool Management School (UK) and Honorary Professor, Macau Polytechnic University. He has been an active researcher in the gambling field for 25 years and has worked closely with regulators and the industry. At Liverpool, he is part of a team of five researchers focused on investigating gambling issues, with an emphasis on quantitative analysis.