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Reasons to be cheerful

This piece was originally written for the latest edition of Gaming Intelligence quarterly, which has just been published.

 

I’ve just returned from a lunch where the topic of conversation turned quickly to what is fast-becoming the question I am asked more often than any other: where is regulation in the gambling industry going? Is the private market winning or losing, and how can it change the dynamic?

The question is usually preceded by a knowing reference to the Betfair share price, with a nod and a wink which is meant to suggest that everyone’s aware that the world is closing in. Surely anyone who’s anyone has spotted that there’ll be fewer markets to play in in future, and it’s getting harder and harder to make a buck?

The evidence, they will claim, is there for all to see: countries regulate in a manner which is unhelpful, and tax bases (much more importantly than rates) make it almost impossible to turn a profit. On top of that, even the UK is set to introduce a secondary licence before offshore players can advertise, for which operators will, I suspect, have to pay a fee (even if not an accompanying level of tax). Doom and gloom everywhere you look.

What a load of old cobblers. It might be true that the industry kissed goodbye to the dream of ‘one licence fits all’ when everyone jumped into Italy (thereby handing the EC the solution it was looking for on a plate, by conceding that Member States could legislate individually), but the idea that we’re in a worse place now than we were five years ago, or that the picture five years hence will be gloomier than today, is, in my view, far-fetched.

Take France. Sure, their legislation is nonsense, and everyone’s struggling to make any money. But they know it’s nonsense, and they are aware of how much of the market they are missing. Indeed, many of those involved in its creation knew it at the time. Two MPs, including one of those instrumental in passing it in the first place, have just published a report suggesting ways to amend it, including – no surprise – a move from turnover tax to GPT.
Likewise, Spain. Their legislation is far from perfect, but at least it’s there. And it will change, as the years progress, for the better. The idea that it will continue to ban one product over another in the coming years flies in the face not just of reason but of momentum, which is all important.

Take an off-the-wall comparison: when Betfair decided to introduce a casino, I fought tooth and nail to make sure that the roulette wheel on the site had no zero on it. The Games team thought I was nuts, and these days, it certainly looks quaint; but at the time, it felt a massive step away from the brand to go from the ‘fair’ product we were to running something with a house edge in line with everyone else’s. You have to make changes by increment.

French legislation was held up around Europe as being the one to follow. Now that they’re moving towards changing it, will countries taking their lead opt for France 2.0 or the original idea? Clearly, it seems to me, the latter; while those countries still arguing for prohibition are fast starting to look silly.

Whatever the markets understand in the absence of being told otherwise, I don’t see the sky falling in. On the contrary, the move, while slow, is inexorably towards a situation where everyone will be able to compete. The biggest drag on it is dysfunctionality within the industry itself. But I’m out of space, so that’s for another column.

 

(Actually, I have addressed it a little on this blog in the past, here.)

Posted in Betfair, Betting industry, Europe, Regulation.

Tagged with , , , .


One Response

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  1. bigdipper says

    Operators like Betfair misjudged the extent of the diseconomies of scale they would face in moving into different European markets, all with their different fiscal and regulatory regimes.

    The problem is worse for any company with a bloated IT department that tends to act quasi-autonomously, rather than at the behest of senior business management. Endless tweaks e.g. like bettors in Austria and Germany being prohibited from betting on specials consume amounts of time and effort that would be better directed elsewhere.

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