LONDON — Since the onset of the coronavirus pandemic, gambling companies in Britain have increasingly looked to shore up and expand their online offerings, with lockdowns shuttering betting shops.
The closure of commercial and social venues and the prolonged cancellation of major sporting events fundamentally shifted the gambling landscape around the world.
For instance, despite its physical stores being shut for much of the past 12 months, FTSE 100-listed Ladbrokes owner Entain saw its core earnings rise 11% to £843.1 million ($1.19 billion) for 2020, £803.5 million of which came from a 50% surge in its online gambling offerings.
The company’s stock notched a record high at £17.25 per share in late April and was up more than 36% year-to-date as of Monday’s close. It’s currently up around 124% from its recent low during the initial Covid-induced crash of March 2020. The likes of 888 Holdings, Rank Group and Gamesys have all performed strongly since last March. Meanwhile, Bet365 CEO Denise Coates recorded an annual pay packet of £469 million last year, one of the highest in British corporate history.
But with isolation, boredom, stress, anxiety or financial worries heightened for many people during the pandemic, concerns have also been raised about a potential spike in addiction and harmful gambling.
The Gambling Commission, the U.K.’s regulatory body, found that while fewer people were gambling during the pandemic, many already engaged online gambling consumers were expanding into new activities and spending more time and money betting.
The Commission noted that engaging with a broader range of gambling activities can correlate to higher levels of “moderate-risk and problem gambling,” and has expressed a particular concern about the increased take-up of online slot machines.
Dependence on the vulnerable
Matt Zarb-Cousin, co-founder of Gamban, a software provider that blocks access to gambling sites, told CNBC that with sports fixtures canceled and gambling companies increasing digital advertising threefold since the first U.K. lockdown last March, many casual betters had been drawn toward more intense activities such as slots and casino games.
“Broadly speaking, the business model is to get people signed up to bet on football or racing or sports generally, run that at a very low margin — sometimes at no margin at all, sometimes even a loss leader — and get as many of those people onto the slots and casino games as possible, where there is a significantly higher margin and these are more addictive products,” Zarb-Cousin explained.
He also noted that while gambling companies allow customers to self-exclude from their services should they feel worried about the extent of their gambling, they actually depend on a very small proportion of customers who are most at risk for a substantial percentage of revenues.
A study conducted last year by researchers at the University of Liverpool found that across British gambling companies, the 5% of accounts with the highest annual spending, which Zarb-Cousin identified as those most at risk of harm from gambling, generated 86% of the companies’ GGY (gross gambling yield).
Slots and casino games accounted for 93% of GGY from online gambling across the operators participating in the study, while gambling products were also more likely to be used by people from areas with higher levels of deprivation. Players from the most deprived areas in the U.K. accounted for disproportionately high spend in terms of GGY, the study found.
Meanwhile, most account holders either won money over the year or lost a modest amount, with 84.5% of account holders spending less than £200 over the course of the year. The study found that for 1.4% of accounts, an average betting day featured more than 20 separate bets.
No disruption, little regulation
The British government is currently undertaking a review of The Gambling Act 2005, the basis for all gambling regulation, in order to test its fitness for the digital age.
Gambling companies in the U.K. have grown exponentially over the last decade as smartphones have enabled online gambling to become ubiquitous. Zarb-Cousin, who himself overcame an addiction to fixed-odds betting terminals, said that lax regulation up until now had allowed these firms to become “huge monoliths” in the British economy.
“That does say quite a lot about our economy and our approach to regulation, and usually when you have huge profits being made, inevitably you have more regulation or you have disruption,” he said.
“There hasn’t been any innovation or disruption in gambling at all and the regulation has been pretty poor by all accounts.”
However, he suggested that more stringent regulation is inevitable in the coming years as the government continues to further scrutinize the industry.
Industry body the Betting and Gaming Council has highlighted that its members support 119,000 jobs in the U.K., generating £4.5 billion in tax for the U.K. Treasury and £7.7 billion for the British economy in gross value added.
Along with sizeable contributions to sports sponsorship, BGC members have also committed £10 million toward the Young People’s Gambling Harm Prevention Programme and £100 million for problem gambling treatment services by 2024.
A spokesman for the BGC told CNBC that the body welcomes the review into the Gambling Act and the government’s assurance it will be an “evidence-led process,” noting that the overall rate of problem gambling has been stable for 20 years at 0.5%, according to the latest government data.
“During the pandemic, the number of safer gambling messages on betting websites has more than doubled, while the number of direct interventions where customers have been spending more time and money than before Covid has gone up by 25%,” the spokesman said.
“We hope the Gambling Review strikes a balance between rightly protecting the vulnerable while not spoiling the enjoyment of the millions of British people who enjoy a flutter perfectly safely.”
Help calls becoming ‘more difficult’
Anna Hemmings, CEO of gambling addiction support charity GamCare, told CNBC that after an initial drop-off at the start of the pandemic as people dealt with a range of other issues, the number of people calling for help is now steadily above its pre-pandemic level.
“Importantly, the nature of the calls has become more difficult, so we’re seeing more mental health issues, more safeguarding concerns, more domestic abuse and so on,” she added.
Separately from the Gambling Commission review, the Department for Health and Social Care has vowed to expand and improve the treatment of gambling-related harms, bringing the issue into line with the likes of drug and alcohol addiction.
“There is a serious issue about the amount of funding that goes into research, education and treatment. It is very, very low compared to drugs and alcohol and they themselves have had huge cuts in recent years,” Hemmings explained, noting that further investment in treatment programs was GamCare’s top priority as it awaits the outcomes of the government’s review.
Along with Gamban and GamStop, a free self-exclusion scheme that enables gamblers to restrict their online activity, GamCare operates a partnership known as TalkBanStop, a program combining counseling with practical tools to help those at risk begin their recovery.
“People tend to let things get pretty bad before they seek help and a big part of our work is trying to encourage people to come forward earlier because the sooner you get help, the sooner you can minimize harm,” Hemmings said, noting that help-seeking across the board has declined during the pandemic due to NHS backlogs and reluctance to burden health services.
“We need to get the whole population back into that help-seeking mode that it is legitimate and positive to seek help at an early stage.”
Source: Business - cnbc.com
