Gambling reform is not easy to do. But it’s worth the risk

We cannot let ourselves be distracted by the dogma of free market fundamentalists. The stakes are too high. 

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New Labour’s 2005 Gambling Act attempted to perform a magic trick that proved impossible to pull off. Announcing “the least restricted, most free-market based regime in Europe” at the same time as “the toughest rules and the most powerful regulator in the world”, the Blair government tried to appeal to all interests: economic deregulation, political devolution and social responsibility. In reality, it satisfied none.

The 2005 Act left loopholes that created the ideal conditions for industry exploitation to flourish over market sustainability. The most famous example of this has been the recent battle over fixed odds betting terminals. And we see it in our daily lives. Betting shops now cluster on our high streets. Football matches are dominated by gambling ads on billboards, squad shirts and television screens. Our social media accounts have become targeted by increasingly sophisticated marketing, much of it coming from affiliate operators based overseas.

At the same time, the number of problem gamblers has refused to go down, leading to a human cost that blights some of our poorest communities. There are up to half a million problem gamblers in Britain today, but only one specialised NHS clinic dedicated to their treatment. Eight years of Tory austerity have not helped, leaving the Gambling Commission with an almost impossible task.

Those of us pushing for reform have never argued for more regulation of the same mess. Rather, we want to see the flawed 2005 Gambling Act replaced with legislation fit for the realities of 2018. We want to see a functioning market. Yet despite the evidence, our critics claim that good legislation equates to a bad nanny state.

Considering that the failures of the Gambling Act are a Labour legacy, one would think that the Tories would be leading the charge for change. But they cannot get their heads around the fact that achieving this change would mean rolling back the failed liberalisation of the market. As a result, we have seen eight years of policy drift. Conservative MPs since 2010 have voted consistently against tighter regulation on issues like self-exclusion bans for problem gamblers, local authority licensing of betting premises, and rules on bookmakers based overseas. This is despite warm words to the contrary from ministers under both David Cameron and Theresa May. 

Following the electoral disaster of 2017, and the collapse of May’s domestic agenda, the balance of Conservatism has tilted away from reform. Tory MPs who never felt easy with intervention have become increasingly vocal in their rejection of government “meddling”. Voices from the free market fringe are growing louder. Regulation is now costed in economic rather than social terms. And even approved changes to legislation, such as the new cap on fixed odds betting terminals, have been made subject to delay.

None of this comes as a surprise. Gambling reform has long been a battleground for free market fundamentalists. We saw this highlighted during the debate over FOBTs, when free market think tanks like the Adam Smith Institute and the Institute of Economic Affairs accused reformist MPs of “paternalism”. It was a line that came straight out of the textbook of 1990s America. When George Bush introduced a limit to sports betting with the Bradley Act in 1992, he too was accused of paternalism – a familiar dog whistle used by libertarians at the time to label someone a socialist.

The mantra of the free market fundamentalists essentially boils down to this. In their view, markets thrive through the balancing effects of corporate self-interest and consumer choice rather than government intervention. Regulation supposedly leads to a rise in prices and a collapse in freedom. This applies even to markets of potential harm. As Milton Friedman famously said, “there is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.”

Friedman applied his argument to the question of automobile safety. Given the freedom to choose between a safe or unsafe car, he said, consumers do not need government to regulate the market. The demand for safer cars, if desired, will lead to greater supply.

Applied to gambling, it is a mantra that makes no sense. Unlike the purchase of a fixed product such as an unsafe car, gambling is a complex process of odds and speculation, gain and loss, investment and reinvestment in an economic context that changes, continually and unpredictably, during the course of play. It is an act of speculative excess not dissimilar to what Adam Smith – the man often wrongly held up as the grandfather of the free market – called “overtrading” in The Wealth of Nations.

The speculative excess of gambling has had a damaging double effect on the UK. On the one hand, gambling has become a ubiquitous part of our daily lives, to a point where even children cannot avoid being exposed to its omnipresent industry. On the other hand, industry omnipresence has been coupled with a constriction of market competition to a small group of big brands. Think about it. When was the last time you saw an independent bookie on your local high street?

This is the effect of a profoundly negative view of human exchange. Society is seen as a concession, kept in check by the mutually-assured deterrence of individual greed. Government is undesirable because it is understood as an extension of that greed. Regulation becomes an act of theft, protection an act of control. The result is self-contradiction.

Faced with the question of gambling, it is clear that the free market fundamentalists are going through an identity crisis. Instead of being champions for enterprise, competition and property, they have ended up justifying big business, addiction and debt. This year in America, the Bradley Act was repealed through the efforts of New Jersey’s Chris Christie, supported by a protectionist, tariff-wielding President Trump.

We cannot let ourselves be distracted by such dogma. The stakes are too high. As Tom Watson recently said in a Labour Party review, Britain’s gambling problem has become a public health emergency. The world has changed since 2005 and our priorities must adapt accordingly. We need legislation which understands that freedom and prosperity can only be achieved through market sustainability. To that end, it could be argued that we need a new Gambling Act. With the Tories continuing to stall, it looks like we must turn to Labour for initiative.

A radical reform of our gambling laws will not be easy to do. It will rely on bringing together politicians and interest groups, individuals and the industry. But with the right political appetite, the signs are that change is possible. Far from being the meddling of a nanny state, such reform would show that change can be a collective endeavour, and that regulation can reflect the common good.

Dr. James Noyes is a policy adviser and the author of several reports on gambling reform.