Gambling and Sport: The Ethical Issues

By Dr Laura Donnellan, School of Law, University of Limerick, Ireland

The Gambling Commission has announced a ban on betting operators accepting UK customers’ credit cards for the purposes of gambling.

The ban, which will take effect from 14 April 2020, was discussed in the Gambling Commission’s ‘Review of Online Gambling’ (March 2018) and the subsequent ‘Response to the Consultation on Proposals for Changes to Gaming Machines and Social Responsibility Measures’ published by the Department for Digital, Culture, Media & Sport (DCMS) in May 2018.

In the 2018 Review, the Gambling Commission voiced its concerns about the spending of money by consumers on gambling that they could ill afford (‘Review of Online Gambling’, para. 5.41, p.46). https://www.gamblingcommission.gov.uk/PDF/Online-review-March-2018.pdf). However, it was equally concerned that consumers would be prompted to source other ‘risky and higher cost’ forms of credit, including payday loans (ibid. para. 5.42, p.46). It concluded that it would look into the matter further before it would decide how best to proceed (ibid. 47).

The DCMS response came to similar conclusions as those of the Gambling Commission (para. 4.27, p.40 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/707815/Government_response_to_the_consultation_on_proposals_for_changes_to_gaming_machines_and_social_responsibility_measures.pdf). It would not ban the use of credit cards; however, it would seek a deeper understanding of the issues and risks surrounding it (ibid.).

Neil McArthur, Gambling Commission chief executive, referred to research that found that ‘22% of online gamblers using credit cards are problem gamblers, with even more suffering some form of gambling harm’ ( ‘Gambling on credit cards to be banned from April 2020’, 14 January 2020, https://www.gamblingcommission.gov.uk/news-action-and-statistics/news/2020/Gambling-on-credit-cards-to-be-banned-from-April-2020.aspx).

The ban will come into force three months from today (14 January 2020) and will not apply to non-remote lotteries where the payment is made face to face, for example, on-course bookmakers. Nor will it apply to the purchase of National Lottery tickets and scratch cards, as this would place ‘a disproportionate burden’ on retailers when the tickets or cards are purchased along with groceries and household sundries (ibid.). The National Lottery has the lowest level of problem gamblers, a reported 1% (ibid.).

The ban on credit card gambling is one measure that has endeavoured to introduce stricter governmental controls over gambling in Britain. Another example is the Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018, which came into force on 1 April 2019. The Regulations have reduced the maximum charge for a single bet on Fixed Odds Betting Terminals (FOBTs) from £100 to £2 (see Laura Donnellan, ‘British Horse Racing: The Gaming Machine (Miscellaneous Amendments and Revocation) Regulations 2018 and how will they affect the Jockey Club?’, 22 May 2019, https://www.sportsandtaxation.com/2019/05/british-horse-racing-the-gaming-machine-miscellaneous-amendments-and-revocation-regulations-2018-and-how-will-they-affect-the-jockey-club/).

On the one hand, the state has introduced restrictive measures; however, on the other hand, it receives an annual levy from the horseracing industry.

The Horserace Betting Levy Board (HBLB) is a statutory body, established under the Betting Levy Act 1961. The 1961 Act provides for two Levy appeals tribunals, one for England and Wales and one for Scotland. Section 24 of the Betting, Gaming and Lotteries Act 1963 (as amended) outlines the role and powers of the HBLB. According to Section 24 (1), the HBLB role is to collect ‘monetary contributions from bookmakers and betting exchange providers’ for the purposes of

  • the improvement of breeds of horses;
  • the advancement or encouragement of veterinary science or veterinary education;
  • the improvement of horse racing.

The current levy of 10% was set by the Horserace Betting Levy Regulations 2017, which amended section 27 (A) of the Betting, Gaming and Lotteries Act 1963. Amounts up to £500,000 are exempt from the levy. A useful guide on how the levy is assessed and collected is provided on the HBLB website, https://www.hblb.org.uk/page/4.

The HBLB is a non-departmental public body (NDPB) which is sponsored by the DCMS (‘Background and Statutory Responsibilities’, https://www.hblb.org.uk/page/1). It receives neither direct state nor National Lottery funding (ibid.). According to its most recent published annual accounts for the year ended 31 March 2018, the HBLB total income was £94.7 million, an increase from £65.1 million from the previous year (Annual Report and Accounts 2017/2018, page 11, https://www.hblb.org.uk/page/21).

The levy receipts in the period 2017/2018 showed an increase of £45.1 million in comparison to the previous year (ibid.). This was attributed to the Horserace Betting Levy Regulations, which came into force on 25 April 2017. Under the 2017 Regulations, the definition of ‘leviable bet’ was broadened to include remote operators based outside of Britain (Horserace Betting Levy Board Regulations 2017, https://www.legislation.gov.uk/ukdsi/2017/9780111155530/schedule). The inclusion of remote operators resulted in a formal complaint by the Remote Gambling Association (RGA) to the European Commission under the rules governing state aid (European Commission, ‘State Aid SA.46216 (2017/N)–United Kingdom Horserace Betting Levy’, Brussels, 21.04.2017, C(2017)2478 final, https://ec.europa.eu/competition/state_aid/cases/267768/267768_1901680_142_2.pdf).  The European Commission dismissed the complaint and held that the Regulations were compatible   with the internal market in accordance with Article 107(3) (c) of the Treaty on the Functioning of the European Union (TFEU).

There were plans to abolish the HBLB in 2018 and replace it with a new body and the Gambling Commission would assume the role of levy collector in the interim ( ‘The Legislative Reform (Horserace Betting Levy) Order 2018’, Explanatory Document, October 2018, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/747015/Explanatory_Document_-_Horserace_Betting_Levy_-_FINAL_pdf.pdf). The Legislative Reform (Horserace Betting Levy) Order 2018 is still in draft form (https://www.legislation.gov.uk/ukdsi/2018/9780111173084/contents).   Thus, the HBLB remains in existence; however, its future is uncertain. A press announcement on its website stated that the collected levies from 2018/2019 had fallen by £17 million to £78 million (‘Levy Income 2018/19’, 12 August 2019, https://www.hblb.org.uk/release/658). The Explanatory Document at paragraph 1.5 explains the rationale behind the proposed streamlining of the HBLB:

‘As a result of expected savings in administration costs, the reforms will ensure that more Levy funding is available to support the beneficiaries of the Levy – including the British horseracing industry and the wider equine population through funding which is provided towards veterinary science and education and the improvement of breeds of horses’.

When and if the Order is passed into law by way of a statutory instrument, it will repeal provisions relating to the levy under the following Acts: the Betting, Gaming and Lotteries Act 1963; the Horserace Betting Levy Act 1969; and the Horserace Betting Levy Act 1981.

Betting is synonymous with horseracing. Horseracing ‘is the second best attended sport in Britain and provides an estimated £3.45bn to the wider economy’ (Explanatory Document, para. 2.6, p.4). The idea behind the levy was to make up for the decrease in on-course betting as 1961 saw the legalisation of off-course betting under the Betting and Gaming Act 1960. The introduction of a levy off-course betting would mean money was ploughed back into racing.

The 2017 Regulations introduced the exempt amount of £500,000; however, this has resulted in the number of operators contributing to the levy decreasing from 600 to less than 50 (Explanatory Document, para. 2.11, p.5). The reduction of the maximum charge for a single bet on FOBTs will also have had an effect on the levy.

The discussion above raises a number of ethical issues.

The state has become increasingly involved in the regulation of betting, in juxtaposition; there is a statutory body that collects levies from the proceeds of betting. The calls for streamlining the HBLB and making it more efficient and profitable is taking place at a time when sports’ partnerships with betting companies is a source of controversy. The Football Association (FA) and its deal, albeit indirectly, with seven betting companies to livestream FA Cup Games until 2024 has attracted the attention of the media, academics and politicians (David Conn and Rob Davies, ‘Revealed: seven UK betting companies are live-streaming FA Cup games’, 8 January 2020, The Guardian, https://www.theguardian.com/football/2020/jan/08/fa-cup-seven-uk-betting-companies-streaming-games). Research has shown that there is a link between mental health and indebtedness due to gambling on football, in what is referred to by Dr Darragh McGee as the ‘gamblification’ of football (David Conn, ‘Revealed: the ‘dire consequences’ of football’s relationship with gambling’, 10 January 2020, The Guardian, https://www.theguardian.com/football/2019/jan/10/football-gambling-dire-consequences-young-men-bet-new-study). See also ‘Football: The Streaming of the FA Cup by Betting Companies’ by Prof Dr Ian Blackshaw, GSLTR website post of 12 January 2020.

The association of sport with betting can be likened to the previous sponsorship by tobacco companies of sporting events. Once the health implications associated with tobacco became more widely understood, it was no longer considered a legitimate or acceptable means of funding.  As new studies highlight the health risks of problem gambling, the connection between sport and betting may suffer a similar fate as the tobacco industry!

 

Dr Laura Donnellan may be contacted by e-mail at ‘Laura.Donnellan@ul.ie’