I have written this blog for www.lotterydaily.com and it is partly modified by Conor Porter.
The collapse of the gambling industry’s reputation threatens the future of the industry as a whole. In principle, gambling is a dangerous activity, which is why states have always regulated it. The societal debate on gambling problems and other dangerous gambling-related activities has clearly intensified, at least in Europe and especially in its western parts. Gambling has ended up in the same category as alcohol and tobacco. It can be said that gambling is not producing anything positive for people and society.
The deterioration of the industry’s reputation has not yet directly affected gambling’s numbers in games offered and customers. People still want to play as much, or even more, people want to play than before, and the supply of gambling is increasing all the time. There are hundreds if not thousands of gambling operators on digital channels that offer new gambling and better gaming conditions than traditional operators. On the other hand, states have paid more attention to gambling regulation than before, and as a result, there have been more restrictions on licensed gambling companies. Prohibitions on gambling marketing, restrictions on money transfers, mandatory customer identification, and maximum gambling limits are examples of new restrictions in recent years.
In principle, the above restrictions are a good thing for gambling as a whole. They are designed to control the negative things about gambling, of which gambling problems are the biggest. At this stage, it is still too early to assess whether or not the restrictions have been able to prevent gambling problems. At least so far, no clear evidence has been obtained. The big problem for the industry is that the restrictions only apply to part of the gambling activity. Regulators have the possibility to restrict only legal gambling operators licensed in that country. The restrictions do not apply to gambling companies that operate without a legal right to operate in those countries. It is quite easy for companies to stay ahead of regulators in digital channels and continue to operate despite restrictive attempts.
It should be in the common interest of the authorities and the gambling companies legally operating in the country to make a clear distinction between legal and illegal gambling activities. This delineation is certainly different in individual countries, but it does not matter for the big picture. Citizens of each country should easily understand which gambling operators operate legally in that country and which do not. That is not the case at the moment, which is why the whole industry’s reputation is suffering from unethical gambling operators.
Lottery companies have had a strange habit of seeing themselves as better operators than other gambling companies. Over the years, there has been a general perception in the lottery world that lotteries operate ethically and that their gaming (they do not call them gambling) activities do not cause problems. Criminal activities related to gambling problems and other forms of gambling have been blamed mainly on private betting companies and casino operators. Casino games certainly cause more gambling problems than traditional lottery games and criminal activity, e.g., money laundering and match-fixing, related to betting and not lottery games. Today, however, a large proportion of lotteries already run sports betting operations, and some lotteries have also included casino games in their product portfolios. Defining lotteries is much more difficult today than it was in the early 2000s. It seems that in the eyes of customers, all gambling is a big whole. As a result, lotteries can no longer improve the reputation of their gambling activities on their own, even though too many of them still seem to think so.
Legal gambling companies should urgently start working together to improve the industry’s reputation. The old-fashioned division between lotteries, betting operators, and casino companies should be forgotten immediately. All of these groups have their own organizations that need to immediately begin joint planning and action to improve the reputation of the entire gambling industry. Illegal and unethical activities in the gambling industry must be banned. Customers need to understand better which companies are trusted operators and which are not. That would also be in the interest of the countries. The most effective solution could be the cooperation of all gambling industry organizations and national gambling regulators to establish operating norms and standards for the industry. It is in the common interest of regulators, licensed gambling companies, and customers to get illegal and unethical operators out of the industry.
It is clear that gambling causes problems that must be prevented. The extent of the problems varies from country to country and from gambling vertical to gambling vertical. Still, in general, it can be said that gambling causes some degree of problems for about 2-5% of customers—fortunately, serious problems for an even smaller group. Gambling is, therefore, generally a harmless activity for the majority of players. However, care must be taken to identify and control the risks associated with gambling, but there should be no need to ban all activities. In this sense, gambling is easy to compare to the sale and consumption of alcohol. Alcohol causes big problems for some people, but most consume it in moderation and without significant problems.
So not all gambling is bad. Together, the industry needs to find a solution to how we can continue to enable people to gamble entertaining to minimize the problems. I don’t think there is any way lotteries can solve this challenge alone or even together with regulators. At the least, we must abandon old-fashioned thinking and start cooperating with the various actors in the gambling industry. Improving the reputation of the entire gambling industry is in all operators’ interests and their customers. I suggest that organizations such as the European Lotteries, the European Casino Association, and the World Tote Association sit at the same table and immediately launch plans to improve the functioning of the whole sector. Reputation cannot be achieved through information and marketing measures alone but requires real operational reforms.