What to do when no-one believes you

One question I am asked a lot at the moment is why does the gambling industry seem permanently to be on the back foot when it comes to regulation and politics?

The obvious answer – that there are no votes in supporting gambling – is true, but not the whole story. There have never been any votes in gambling, but there was a time when the gambling lobby was very strong.

The obvious back-up is also true: gambling is a lot more visible today than it was. The move into mainstream leisure was made when regulation moved from the restrictive Home Office to the ‘Ministry of Fun’.

But that, too, tells only part of the tale. When you consider how much good the industry is doing (in terms of addressing problem gambling and dealing with the potential for criminality), it ought to be surprising that it has a bad name with the people who matter. It is streets ahead of where it was a decade ago, but gets no credit for it at all. Why not, and what can it do about it?

The reason is that it is breaking Carl Jung’s dictum that ‘you are what you do, not what you say you will do’. When a gambling company says that it doesn’t want problem gamblers, most consider it to be following the Mandy Rice-Davies principle. Public perception is that problem gamblers are actually what feeds the beast, as people who comment on my blog frequently point out.

The solution to this problem of perception lies in a combination of things. Some of them I have seen suggested, such as scoring systems based on set problem gambling criteria. A clear statement of intent on what those numbers should be, with the industry nailing its colours to the mast and making itself accountable by publishing metrics to show it is meeting its targets, would be an excellent start. But the biggest difference the industry could make would be to take a bold step: mirror the approach taken to the value of different revenue types by geography, and apply it to people.

When it comes to valuing gambling companies, it has become standard methodology in the City to give businesses credit for revenues deemed defensible because they come from ‘good’ (that is, licensed) jurisdictions, but none (in terms of a company’s valuation) for risky revenue that comes from elsewhere. The result has been that most well-known companies have pulled out of vast numbers of territories: the money they were getting from them was genuinely seen to be more trouble than it was worth, and was contributing nothing to shareholder value.

Why not take the same approach to people? If bets from, say, Russia are ‘unwanted’, then why isn’t revenue above, say, a percentage of a customer’s annual income not in the same category? If a CEO’s bonus can be tied to an earnings number that has clearly been restricted because a set of countries meeting certain criteria are off-limits, why credit him with revenues gained from people constantly claimed by the industry to be unwanted customers?

It is easy to get a quick and accurate picture of the approximate net worth of anybody: loan companies do it all the time. Not every customer needs assessing (while those over a threshold will be undergoing KYC anyway) and technology can establish who is in and who is out. The solution to the perception problem therefore exists. Not taking it will leave the industry open to the accusation that the public’s point is proved: it doesn’t genuinely not want a problem gambler’s money at all.

 

The blog above is my latest column for Gaming Intelligence Quarterly, which was published this week.

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