In an ominous sign for the burgeoning online gambling markets in the United States, the United Kingdom’s Parliamentary Group on Gambling Related Harm earlier this month issued a report urging action in the online casino sector. The report calls for change on staking and deposit limits, advertising, bonusing, VIP accounts, payments, and game types.
The group’s recommendation is likely to catch the attention of lawmakers throughout the United States, where several states – eager to get their markets up and running after a landmark Supreme Court decision paved the way for legalized sports betting – have found themselves locked into contracts with foreign operators. GVC Holdings, GambleAware, PaddyPad, Bet365, William Hill, Skybet, and others are mentioned in the parliamentary report.
The 45-page report lays out a laundry list of problems and concerns regarding an array of companies, some of which authorities in other jurisdictions have investigated for running online sports betting operations in restricted markets. The report comes just months after the U.K Gaming Commission handed down $5 million in fines against four major companies for failing to prevent money laundering and protect consumers.
According to the report, only around 20 percent of online gamblers will be net winners, while 80 percent will lose money. The parliamentary group calls for reduced staking levels and deposit limits in online gaming, a matter currently largely left to the companies to determine. In the UK currently, offline casinos face stricter limits on game design and advertising that should also apply to online gaming. Additionally, the report calls for more responsible advertising, particularly during sporting events.
The report also suggests implementing “affordability checks” to determine how much a gambler could afford to lose based on his or her means.’’ Online operators in the UK accept credit cards, allowing addicts to go into debt to fund their gambling habit. The parliamentary group believes this needs to end immediately.
The developments are significant for U.S. markets. William Hill, for example, is planning to open a sports betting facility at Capital One arena in Washington, D.C. It would be the first of its kind in the country. The developments also come at a time when another gaming company, SBTech, has questions hanging over it as it attempts to expand its presence in the US.
The report in the U.K. calls for internet service providers to immediately block unlicensed actors from operating. It also identified “clear conflicts of interest” in the sense that much of the revenue generated by online operators comes from vulnerable addicts, who experience disproportionate harm compared to ‘regular’ gamblers. The Gambling Commission also stated that it should evaluate activity in other jurisdictions as well as the UK to confirm that companies are adhering to proper guidelines within the UK and internationally.
While the penalties strictly deal with corrupt activities in the UK, they will no doubt raise concerns in the US, at a time when several foreign gaming companies are seeking to enter US markets.
For example, over the last year, British gaming, lottery, and sports betting company International Game Technology (IGT) has donated $150,000 to the Democratic Governors Association (DGA), the leading campaign arm that supports Democratic governors and candidates for governor in the United States. In August 2019, Rhode Island Democratic Governor Gina Raimondo, who is also the Chairwoman of the DGA, announced that her administration and IGT reached a $1 billion agreement on a 20-year extension to operate the Rhode Island Lottery and control up to 85 percent of the video gaming machines at the state’s two commercial casinos.
In Oregon, an international gaming company, SBTech recently agreed to a contract to operate Oregon’s online gaming services. This agreement was reached despite allegations that the company operates in countries where gambling is illegal. Oregon State police traveled to Bulgaria, where the company is headquartered, to conduct an investigation and interview top executives, but declined to release the official background check of the company.
In an apparent effort to leverage its success in Oregon, SBTech is moving to gain a foothold in the gaming market in Pennsylvania. Some industry insiders fear that by granting approval to SBTech, a big state like Pennsylvania could set a troubling precedent as other states seek to enter the gaming industry.
Some observers say that US lawmakers looking to the UK for lessons on this issue are likely to see the country’s predicament as a cautionary tale. They say some might push for similar safeguards here as a way to avoid the same mistakes.
Richard Tunney, a psychology professor at Aston University who studies online gambling, told the Financial Times: “From a legislative point of view, there are pretty much no restrictions on smartphone gambling and because the companies themselves are often based in other jurisdictions, the job of regulating them is extremely challenging.”