The offshore money says the government is bluffing!
Campaign for Fairer Gambling
The Campaign for Fairer Gambling looks at the most recent developments in the debate around problem gambling including a new group Labour for Gambling Reform which has recently had its first meeting.
An offer of up to £3.9 billion was made for Ladbrokes Coral last week by GVC, which saw the Ladbrokes Coral share price escalate by around 30%, GVC share price increase by 5% and no negative impact on valuations for rivals William Hill and Betfair. The offer was interesting in that it was £3.1 billion if the FOBT maximum stake is reduced to £2, but rises to £3.9 billion if it is only reduced to £50. With FOBT stake being the only contingency, it implies that other considerations in pending DCMS consultation are inconsequential.
The relevant aspects of the review should be the operation of remote gambling, TV advertising of remote gambling and the “social responsibility” agenda. Also getting in on the action is the Competition and Markets Authority regarding whether “bonus offers” by Ladbrokes Coral, amongst others, have been in breach of consumer protection law.
GVC is an Isle of Man-based entity which operates the following remote gambling brands: SportingBet, bwin, gamebookers, partypoker, partycasino, Foxy Bingo, Gioco Digitale, CasinoClub and other assets. It would be interesting to learn how many jurisdictions each of these sites have operated in and then pulled out of. Also, which affiliates and which payment processors have they ever associated with?
The Gambling Commission has yet to take any substantive action against any remote operator for obtaining revenues from jurisdictions where they did not have legal approval to do so, or for having relationships with questionable affiliates or payment processors. Therefore, GVC must have a high degree of confidence that any noise from the Gambling Commission is just a PR exercise.
GVC is a member of the Remote Gambling Association, which in turn is a member of the Industry Group for Responsible Gambling. This body represented to DCMS that “responsible” gambling advertising is worthwhile and that an annual spend of £5 million per year would be adequate counterweight to an annual spend of around £360 million on gambling advertising. But, as Lord Chadlington said in a Lords debate recently - “when the fun stops – stop” is “childish and silly.”
Meanwhile at the annual GambleAware conference, Chair Kate Lampard disclosed that she was shocked by the attitudes of some senior executives towards the first media interview she conducted with the Financial Times. She expressed criticism of the testosterone driven executives. The big swinging testosterone factories are based on a culture of going offshore, avoiding tax, doing business everywhere regardless of local laws, and having relationships with whoever to help make all that happen.
At the same conference, Tim Miller, Executive Director of the Gambling Commission headlined his speech with “Problem gambling is a public health issue”. He stated that there is now increasing support for a mandatory levy. This is part of the agenda of Labour for Gambling Reform, which had a first meeting recently, with Campaign consultant Matt Zarb-Cousin being a speaker. Matt also featured in a timely Novara Media video about gambling companies becoming so dominant in our economy. If the GVC proposal goes ahead it will achieve higher valuation than M&S!
Tom Watson MP has set up a Labour gambling review which includes the public health and levy aspects. Tom was disappointed to learn that the Department of Health has not had any discussions with DCMS on this subject. However, Jeremy Hunt was critical of FOBTs when DCMS shadow but did nothing about them when at DCMS. Until Mr. Hunt takes a public position on gambling, it will be hard to imagine that he genuinely cares about mental health.
Both Ms. Lampard and Mr. Miller were critical of gambling sector infighting, ignoring that each of GambleAware and the Gambling Commission has failed to address FOBTs, the most obvious malignancy on the gambling sector body. While industry-funded GambleAware welcomed a FOBT stake reduction proposal when it was announced, its 2016 submission to DCMS did not advocate this.
As ever, Fairer Gambling will be looking at all the cards played in this game, but it’s likely that operators know the proclaimed “existential threat” to the gambling sector is just a bluff - unless the government has an ace up its sleeve.
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