Following a virtual message from Nigel Huddleston, MP and Shadow Secretary of State for Culture, Media and Sport underlining the dangers of the illegal market – this stellar panel of expert industry executives dived into the latest key changes from the UK as part of the Betting & Gaming Council’s AGM.
Entitled: ‘Getting the balance right - tax, regulation and the growth of the illegal market’, this panel began with each speaker taking two minutes to provide an opening statement.
Is the UK’s balance broken?
Chris Sanger opened with the EY perspective by posing the hypothetical of what needs to be done in the long-term to get the balance of regulation and the black market right.
Ian Angus of the Gambling Commission stated that they understand the budget has ‘changed the outlook’ for industry operators. He acknowledged that the threat of the illegal market is greater now than it has been previously. He underlined that further engagement with operators for effective evaluation of the market will be vital going forward.
David Williams of Rank Group highlighted that, when it comes to the black market, nobody should be talking about ‘balance’. He stated that the industry must ask itself why this discussion is taking place today.
The black market is a symptom of imbalance - David Williams
Simon Zinger of Entain concurred that the balance is currently broken and has been for some time. He explained that the industry must make a collective effort to move forward from its current position.
Sanger highlighted that whether Rachel Reeves got the budget right depends on what her objectives were going in. He underlined that one of her key objectives was to generate funds. Taxing is, as stated by Sanger, a fine art. However, he believes that the supposed position of Reeves against the regulated industry, specifically, is troubling.
Surviving the budget shift
Host Gloria de Piero queried what we can learn from alternative jurisdictions and sectors that are applicable to gambling. Sanger drew focus on the cigarette business, stating that where people have seen a decrease in illicit movement of products when enforcement comes in – but the balance has to be right. He highlighted that there are certainly lessons that can be learned from other markets and sectors.
Zinger was posed an alternative question by host Liam Halligan, who is asked what his thoughts were when he initially heard the budget at the tail end of last year. He replied that the immediate thoughts of all in the industry was ‘how do we survive this?’ He highlighted that these changes would have a significant impact on operators safeguarding spend and will have a tangible effect on the economy looking ahead. He underlined the massive financial spending power of the black market – acknowledging that the regulated space could struggle to keep up.
Williams builds on this by saying that at Rank Group – alongside the rest of the industry – knew that these tax changes were coming. He stated that no business can survive the tax raise without making significant changes, beginning with ensuring they do the financially responsible thing first, which includes the painful decision to address cost bases – directly affecting people and their jobs.
Collaboration as a catalyst for progress
Angus is then asked by Piero whether the tax raises increase the risk of displacement in the market. He began by saying that the Gambling Commission does expect the illegal market to grow following these imminent changes. He highlighted the complexity of truly understanding the size of the black market, as well as a myriad of reasons around why people may participate in it. He also explained that, in terms of the assessment the Commission has made into illegal site engagement, there has not been a tangible rise as of yet, although he does acknowledge mitigating factors such as the rise of VPNs.
He continued that, irrespective of how much money the Commission gets, they cannot succeed alone. They need collaboration – particularly through tech firms and the financial sector.
The Deal Me Out CEO Jordan Lea explained that, while £26m ($35m) is a lot of money, it’s a drop in the ocean compared to how much is collected by illegal gambling platforms in the UK. He adds that, as part of their work, they track and trace exactly what these unregulated operators are doing. Based on these activity observations, he doesn’t believe the black-market issue is being taken seriously enough by the government. However, he gave credit to the Gambling Commission for the work they are now doing to tackle the black gambling market.
He further highlighted that when he was gambling via the illegal market in 2019 – the sites were highly archaic. Now, however, you can’t tell the difference. Discussing the kind of practical changes that can be made to progress, he drew on collaboration – stating that the government needs to look at working towards better global enforcement, pointing to working more closely with payment providers as a key issue – as well as working with suppliers and putting more effort into understanding why it is people turn to the unregulated space.
As the panel came towards its conclusion, Williams moved on to explore how the regulated operators can compete with the unregulated space. He thinks the credibility of the regulated sector has been eroded by campaigns against it by anti-gambling protesters. Campaigns which, he stated, are applauded by black market operators. According to Williams, regulated operators ‘obsess’ over customer experience. Drawing on the customer perspective, he stated: “They will not tolerate an experience that they perceive to be full of regulations and friction.”
The BGC also debuted a Spot the Difference game which highlights the difficulty of deciphering illegal gambling sites from regulated ones
