Rallying the troops: How the industry is responding to increased advertising restrictions

For gambling operators, interaction is at the very heart of everything they do, from interacting with consumers, to interacting with the wider industry, regulators and the public alike. Indeed, public affairs departments at many big gambling firms are often as large as any other essential department. At a wider industry level, how individual markets interact with their respective consumer base can shape the whole approach to gambling in that jurisdiction. Evidence of this can be found in many successful jurisdictions including the UK, Malta and Sweden, where the interaction between industry and regulator is visible to both the player and the public.

However, the relationship between regulator, industry and the public can become strained, sometimes to breaking point. Often these changes in relationship stem from increased regulation, changes in public perception or bad publicity in respect of industry firms. You only need look at the change in the tobacco, fast food and alcohol industries to see how a change in perception can completely turn an industry on its head.

For example, look at the ongoing debate around gambling-related harm and you’ll see the signs that the perception of gambling is shifting. Over the last 24-36 months, the perception of gambling in the UK has changed, largely thanks to a combination of negative media coverage and the publicly damaging scandal concerning the use of fixed-odds betting terminals (FOBTs). Moving further afield, rising numbers of problem gamblers, together with concerns about the link between advertising and increased problem gambling rates, are shaping perceptions in jurisdictions across Europe.

The UK

As the world’s largest market for gambling, the UK is a watermark for the worldwide industry, with initiatives being pioneered here often being copied in other jurisdictions across Europe. Delving deeper into this, marketing and advertising form two of the six areas of regulatory concern at the Gambling Commission (UKGC). Its focus on gambling ads, which is to some extent born out of the public focus on FOBTs, has been exacerbated by media suggestions of the link between viewing gambling ads and problem gambling, leading to a negative perception of the whole sector.

Indeed, this attitude was incapsulated in comments made by Ian Angus, programme director for consumer protection and engagement at the Gambling Commission, who called advertising “the lens through which consumers and the wider public judge you, your brand and the wider industry”. Expanding on this methodology Angus added: “It’s the first thing they see or hear; and first impressions matter. The decline in public trust and confidence reflects badly on us all – and it needs to be reversed.” But for Peter Murray head of gaming at Alexem Services, the negativity surrounding FOBTs just added to the negative perception of the sector overall, as “the lack of restraint or coordination around advertising meant it was inevitably something that would come back to haunt us, regardless of other parts of the regulatory landscape”.

Far from sitting on its hands during the debate, the UK industry has been proactive, most notably in the Industry Group for Responsible Gambling’s (IGRG) decision to implement the widely called for “whistle-to-whistle” ban on gambling advertising.  As part of the new rules, introduced by the Remote Gaming Association (RGA) in December, all gambling advertising will be banned during pre-watershed live sport, starting from five minutes before the event begins until five minutes after it finishes.

In addition, gambling adverts during highlight shows and re-runs will be banned, together with a ban on pre-watershed gambling sponsorships of sports programmes. Only horseracing will be exempt from the ban. David Clifton, director at Clifton Davies Consultancy Limited, believes the IGRG’s changes to its Gambling Industry Code for Socially Responsible Advertising represented a “proportionate and acceptable response” to the public’s concerns regarding the proliferation of TV betting advertising.

Despite labelling it proportionate and acceptable, Clifton believes the response was not enough and needed a major operator to take the “brave initiative” to voluntarily cut back the sheer volume of its gambling ads, calling for others to take similar action. This sort of initiative may have prompted others, but Clifton thinks the betting sector has misjudged the public mood in not acting sooner.

The UKGC has recently given itself greater powers to take enforcement against operators who break advertising rules and politicians from all sides are demanding more of a crackdown. The forthcoming GambleAware research findings on the effects of marketing and advertising on children, young people and vulnerable groups may provide justification for just that. Unfortunately for the industry, plenty of room remains for further punching to take place.

Indeed, Murray believes the industry is now playing catch up with the increased regulation coming down from regulators. The challenge now is to raise the bar and work together as a sector and with the regulator. “Regulators will continue to tighten the rules but there are positive signs that the industry is finally coming together to address this, and it will be necessary if we are to regain the initiative,” Murray adds.

Sweden

The regulation of the Swedish gambling market earlier this year, while a positive boon for the country’s gambling industry in removing grey market uncertainty, has created its own problems in thrusting the issue of gambling-related advertising to the fore. Regulatory ineffectiveness and coincidental operator failures to effectively embrace the Spelpaus national self-exclusion scheme have created a perfect storm of shifting perceptions towards online gambling, particularly the role that advertising plays in potentially encouraging at-risk or problem gambling.  This coupled with market research showing that six of Sweden’s biggest advertisers were gambling companies proved to be a game changer in terms of throwing the media spotlight on so-called “aggressive” advertising by gambling companies following regulation.

Following this change in the Swedish zeitgeist, Ardalan Sherakabi, Sweden’s minister for civil affairs, has challenged Sweden’s operators to “moderate” their marketing or the Swedish government will put severe advertising restrictions in place.  Both the Swedish Gambling Association (SPER) and The Swedish Industry Association for Online Games (BOS) acknowledge the issue of aggressive advertising but as BOS CEO Gustaf Hoffstedt explains: “The challenge for the industry is that the sum of all individual ‘moderate’ advertising gives an aggressive impression of marketing by gambling companies. It’s common with five, six, seven or even more gambling ads in a row. Individually, these are, with a few exceptions, moderate but that doesn’t matter. For the viewers and listeners of commercial TV and radio it all appears to be aggressive, due to the massive total volume.”

The problem for Jenny Nilzon, CEO for the Swedish Gaming Association (SPER), is a lack of explicitness of the definition of moderation as creating confusion for operators, and that the legislation “does not imply any significant differences or clarifications regarding the interpretation of the concept of moderation”. Attempting to address this knowledge gap, the Swedish Gambling Authority and Swedish Consumer Agency (KO) have said they will rely on case law, rather than definitive legislation, a decision which Hoffstedt believes is unworkable. The legislation on gambling is “very young and so far, we only have one example of case law. But the government is impatient and threatens to implement new legislation rather than relying on existing law,” he explains.

Nilzon believes the Swedish government should have aimed to foster a dialogue with operators as doing so would have established the government’s objectives with regulation. This would in her opinion also give operators and associations the opportunity they need to prove they are keen to work towards a healthy and sustainable gaming industry. However, Hoffstedt highlights the importance of state support for operators that are best in class when it comes to compliance in general and compliance with responsible gambling measures. “A government that constantly yells at the industry as such causes the opposite and damages well organised licensed operators in favour of unlicensed cowboys,” Hoffstedt argues.

In response, BOS and SPER have drafted their own code of conduct for operators, seeking to add clarity to perceived regulator inadequacy for its members while also showing its willingness to embrace changes. As Nilzon explains, both associations have “worked very hard to try to define what moderate advertising is within the gambling industry” and are keen to take a “special grip” on the issue of advertising by talking to Sweden’s broadcasters.

In addition to having defined the moderation requirement the associations will launch an education initiative in collaboration with marketing experts to which all licensed gambling companies will be invited. Despite this willingness to take a proactive role in addressing the problem, Shekarabi recently dismissed these measures as being insufficient to meet the desired objective, adding that Sweden had come “a step closer to stricter legislation”.

Denmark

As Sweden has wrestled with the issue of gambling advertising, so has its neighbour to the south, Denmark, but with one crucial difference: Danish operators knew the debate was coming and could plan accordingly. To strengthen responsible gambling initiatives first agreed by the Danish Ministry of Taxation in June 2018, seven political parties signed an agreement obliging Danish gambling firms to work with the regulator, Spillemyndigheden, to develop a code of conduct for gambling marketing.  No timescale was given by the Danish government for this code to be developed. Operators were only given warnings by politicians that they would intervene if the industry did not step up with the code of conduct.

Despite the government welcoming industry help, Morten Ronde, head of the Danish Online Gambling Association (DOGA), believes this decision was an unfounded one due to the “sad fact” that there is very little evidence to substantiate any correlation between advertising and gambling addiction. Ronde highlights the role of individuals working in the gambling addiction sector as convincing certain politicians that less advertising will lead to less gambling addiction.

Nonetheless, Ronde admits that the intensity of gambling advertising on TV has increased, creating the sorts of negative publicity that aided anti-advertising advocates in swaying political opinion. “When politicians are talking about banning gambling advertising entirely, you know that the situation is serious and that the industry has to respond to the threat,” he says. And it has been DOGA which has been the most active in stepping up to the plate. Engaging with Denmark’s three main broadcasters: The Danish Broadcasting Corporation, TV2 and the Modern Times Group, DOGA has first attempted to obtain the agreements of both broadcasters and advertisers before implementing any curbs.

Last month, DOGA delivered its first binding code of conduct for its Danish members. This agreement, which is to be reviewed on a yearly basis, encompasses 21 individual rules, focusing on areas including advertising, sponsorships, marketing and responsible gambling. It also forms a minimum standard of requirements for operators, which can go beyond these codes if appropriate. The code, which is supplementary to existing legislation, aims to ensure an efficient and uniform regulation of the market with the aim of both promoting fair competition between gambling providers and addresses the potential risks associated with gambling. All operators which sign up and comply with the code will be able to include references to this on their respective websites.

Signatories to the code are required to acknowledge the volume of gambling advertising has reached a “high level” and commit to instigating a “binding dialogue” with Danish TV broadcasters to achieve a significant reduction in the number of gambling ads being broadcast. With DOGA members including bet365, Betsson, Betfair, Danske Spil, Kindred, LeoVegas, Mr Green and The Stars Group, you can see how such an agreement has wide-ranging implications for the way that gambling advertising is conducted in Denmark. But for Ronde, it is more important than just big names, as it shows the “gambling industry has matured and that it is ready to take social responsibility”. As he explains the code of conduct is now “the tool which the industry can use to swiftly adapt to changes in society and public perception, before the situation escalates to a level where government has to intervene”.

All signs point to the code being accepted by both government, regulator and operator alike, which Ronde believes is down to the fact that the industry “has gone beyond what was expected from a political level and what could have been achieved through government regulation”. The limitation of gambling advertising using agreements with broadcasters would, says Ronde, have been “difficult for the government to achieve through regulation without conflicting with basic principles of competition law”.

Italy

If Danish operators have been blessed with ample time to prepare responses to potential advertising restrictions and a receptive government, their Italian counterparts have been involved in an uphill struggle to deal with a government which has jumped the gun before it looked into blanket banning gambling advertising. As Moreno Morasco, president of Italian trade association LOGiCO told EGR in July 2018, the intention of the government to fight problem gambling is “understandable, legitimate and noble. If only the result of its poor execution wasn’t going to end in the diametrically opposite direction”.

Indeed, LOGiCO has been active on multiple fronts since confirmation of the ban hit the headlines, including liaising with Members of the Parliament and the European Commission. It still has several initiatives ongoing aiming to ensure licensed operators stand out from unlicensed operators. But where it has tried to engage with the Italian coalition government, the populous Five-Star movement has refused to come to the table, which Morasco believes is because they are “conscious of their short-term consensus-seeking actions being headed towards failure”. Expanding on this, Morasco explains his belief that the current Italian scenario is consistent with what the industry is experiencing across the EU, “amplified by a populist government needing an enemy to deflect the attention from their inefficacy”.

Morasco describes LOGiCO’s stance as being one aimed at producing “better quality advertisements” pursuant to the European Commission’s free and fair business practices. Morasco believes gambling advertising should follow the same path as the alcohol industry, that of responsibility, where advertising is “aimed mainly to make customers already interested in legal brands, without the communication being overly inductive”.

As part of helping Italian gambling operators to exercise “self-discipline” ahead of the ban coming into force, LOGiCO has developed an ethical advertising self-regulation protocol which aims to reduce the invasiveness of advertising on TV, print and online.  As a part of this strategy, the association invites its members to limit the advertising of winners to its player communications only. LOGiCO also released a 15 and 30-second commercial which highlights the issues of problem gambling, featuring a problem gambling helpline, which it made available to all members.

This strategy of preparing its members for the onset of the ban, rather than fighting a government which it claims has no interest in reversing its course, has already cost LOGiCO one of its members. Namely LeoVegas, which left the group after a disagreement about the best way to proceed.

The way forward?

As businesses, gambling operators occupy an important role in society, catering to the public need for entertainment. It is only the by-products of this recreational activity which can cause harm to individuals. Governments must counterbalance their need to stave off this harm, while also addressing the need to allow businesses to operate and the protection of regulated markets. By the same token, operators need to counterbalance their business aims with their responsibilities under gambling regulation. As illustrated here, it is a challenge made easier by active dialogue between the two, which is the only way that we get to a win-win situation for both.