The Future of Gambling in Europe

1
The Future of Gambling in Europe

• Presentation by
• Professor Peter Collins
• in Visby, Sweden

2
Objectives and Overview

• To identify
• The determinants of how commercial gambling
  develops generally focussing on the role of
  public opinion and political decision-making
• The political challenges facing gambling in
  Europe
• My hopes and fears in relation to good public
  policy about gambling in Europe
• What, I think needs to be done

3
Four key determinants of how commercial gambling
develops

• General economic developments affecting the
  leisure and luxury goods industries (esp
  increases and decreases in discretionary spend
  and leisure, variations in price due to
  competition, technological innovation, changes in
  costs of capital)
• Technological developments (dice to slot machines
  to internet etc)
• Operator ingenuity (in exploiting technology,
  cutting costs, influencing the law, identifying
  and exploiting loop-holes)
• Changes in public opinion resulting in changes to
  laws and regulations

4
The Future of the leisure economy, technology,
and entrepreneurship irt the gambling industry

• Gambling spend generally shadows retail spend in
  theory world economic growth should lead to more
  discretionary income, more leisure and more
  gambling but who knows?
• Gambling and e-commerce increased
  user-friendliness increased opportunities for
  entertainment and socialising by staying in as
  opposed to going out
• Internationalisation and increased competition
  new business models (e.g. betting exchanges) new
  products, e.g. internet poker resort casinos
  new marketing, e.g. smart cards new loopholes,
  e.g. FOBTs

5
Why politics is the most important determinant of
change in the gambling industry

• Short answer All the above changes have to be
  approved by governments and this is not easy to
  secure
• This because, although the gambling industry is
  not very important in the greater scheme of
  things, it arouses strong passions and is always
  controversial
• Although it is very popular and a majority of
  citizens typically participate in some form of
  gambling, a majority also feel quite deeply
  (albeit vaguely) uneasy about the dangers of
  excessive gambling and think that we shouldnt
  have too much of it
• This means that profits in the gambling industry
  depend more than anything else on persuading
  governments that your business should be allowed
  to cater for the popularity but your competitors
  should be banned because otherwise we have too
  much gambling and problem gambling

6
Politics, Gambling and Conflicts of Interests

• In democracies, politicians are interested in
  votes they therefore need adjudicate between
  conflicting interests (regarding gambling and
  everything else) so as to maximise their
  popularity
• The most powerful interests irt gambling are not
  actual and potential consumers (as with food) but
  prohibitionists, existing leisure service
  (including usually gambling service) providers,
  would-be new entrants and politicians who need
  tax revenues in order to provide the public
  services which will get them (re)-elected
• In general, prohibitionists and protectionists
  oppose liberalisations and potential tax
  beneficiaries and would-be new entrants support
  them (cp new casinos in UK)

7
Four notes on interests

• Note that prohibitionists and protectionists are
  in alliance against liberalisation but in bitter
  opposition about clamp-downs or increased
  taxation.
• Note also that ostensibly the argument focuses on
  how much extra problem gambling will result from
  liberalisation but really it is about conflicting
  interests and values
• Note finally that most taxpayers even if they
  gamble have an interest in high gambling taxes
  but not in taxes which benefit a particular
  region or group (cp super-casinos and lotteries
  for good causes)
• Note that politicians like abnormally high
  gambling taxes because those who pay them dont
  much resent them

8
Conflicts of Principle

• (Platos) totalitarianism versus (Mills)
  Liberalism
• Liberalism versus democracy
• Local versus national democracy
• Promoting prosperity (by increasing consumer
  surplus and/or (e.g.) by enhancing tourism or
  local amenities
• Reducing poverty
• Promoting equality
• Consumer protection
• Promoting competition
• Legitimate vested interests
• Encouraging respect for the law

9
The Problem with Europe

• Gambling policy needs to be shaped by sensible
  policies about consumer choice, harm prevention
  (externalities) and taxation all European
  countries understand this in general but have
  radically different specific policies in respect
  of these objectives
• The European Court and the Commission dont
  understand this and especially dont understand
  why you can never have a free market in gambling
• More generally, the EU does not understand a)
  that it is not and b) that it needs to be
  governed democratically
• This is because democracy means governments must
  conform their behaviour to public opinion but in
  Europe there is means of expressing, shaping or
  determining common public opinion hence no
  democracy

10
Hopes for Europe

• A common policy on
• What should be determined centrally and what,
  nationally
• Problem gambling and other negative social
  impacts including provision of counselling
  services by phone, internet and face-to-face and
  a comprehensive public awareness campaign to
  alert people to the dangers of gambling and how
  to avoid them
• Gambling privilege tax, i.e. the of GGR (player
  losses) captured by government over and above
  general earnings, consumption and property taxes
• Remote gambling regulation exp across borders
• Advertising and marketing regulations
• Research too much current research is
  uninformative, shallow, of no help to either
  policy-makers or treatment-and-prevention
  specialists, and corruptly driven by commercial
  or ideological agendas

11
Fears for Europe

• It is, however, to be feared that
• In general, Euro-federalism in Brussels and
  amongst national elites will increasingly clash
  with xenophobic, nationalist populism, leading
  to massive inefficiencies, more bureaucratic
  tyranny and the erosion of democratic control
• In respect of gambling there will be destructive
  interstate competition on regulation and taxes
  leading to expensive, acrimonious litigation
  issuing in wrong-headed and contradictory
  verdicts

12
Conclusion Why governments in large developed
democracies find it so difficult to design and
implement good gambling policy

• Gambling is not very important to voters as a
  source of concern or to governments as a source
  of tax revenues
• But good gambling policy is highly complex
  requiring the accommodation of many different and
  competing interests and values
• A lot that needs to be known for evidence-based
  policy-making is not yet known esp., irt problem
  gambling
• The media hate complexity but love
  sensationalism, scare-mongering and moral
  self-congratulation
• Hence nobody is incentivised to acquire the
  necessary knowledge (and, in the absence of
  knowledge, to exercise the necessary judgment) to
  tackle the complexity, formulate good public
  policy, sell it to the public and to special
  interest groups and then implement it with
  intelligent regulation and effective regulators
• P.S. Are there lessons here for what goes wrong
  in relation to more important issues like
  education, health, transport, law enforcement
  climate change and waging war?