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Spinning out of control

The last Labour Government – and, in particular, Alistair Campbell – has been widely credited with the triumph of spin over substance in political debate.

Sound bites rather than demonstrable proof became the order of the day and what ministers said in relation to an issue or crisis became, at least in their own minds, more important than what they actually did. And whilst a week has often traditionally been viewed as a ‘long time in politics’, in terms of the civil service it is but the twinkling of an eye. The UK’s Civil Service is an ocean going liner and it is not about to – or even able to – change course any time soon; and nowhere is this more apparent than in its response to gaming.

First of all, it starts with the view that gaming is bad because, for a minority of players, it can become addictive with all the unpleasant inherent consequences that any addiction entails. In that respect, however, it is no different from, say, drinking or smoking. Yet, while Governments make a lot of noise about how they are ‘tackling these issues head on’, the truth is that they are doing nothing of the kind because they have become addicts themselves. They are now too reliant on the income and taxes generated by these pursuits to want to, in any way, put in motion actions that would reduce their income. So they say one thing but then they do another. Within gaming and gambling, though, it is sort of the other way round. The last Government could see that millions were being made in the sector. They noted that online casino and poker had really taken off and observed that Las Vegas was throwing up bigger and more extravagant buildings as fast as it could. But, unlike drinking and smoking, these weren’t bad habits whose revenue producing potential the Government was unable to wean itself off. This was a bad habit with the potential to generate an income stream that the Government wished to wean itself onto. This was their dilemma. Did they encourage it to grow and look to reap fiscal dividends overtime? Or did they tax it so hard that effectively they ran the risk of killing off the UK industry?
In truth, the last government got it about as wrong as it could have done. On the one hand, it introduced a light touch regime to help it grow but, on the other, it applied a vicious tax rate that caused nearly all operators not only to move offshore but also to take their taxable earnings away with them. In other words, the worst of all worlds. And to make it worse, as the note left behind by one outgoing Labour Minister made clear, the Government had spent all its money. Addressing the issue, however, was a lot more difficult than had originally been appreciated both from a substance and a spin perspective. Substantially, nearly all businesses (at great expense) were now located offshore and, from a spin point of view, the government couldn’t just announce big taxes as it did with alcohol on the grounds that the activity was ‘bad’ since, above all, if it was to see a growth in tax revenues then it needed and wanted more people to gamble more often.

As consequence, the Government introduced the cause of ‘better player protection’ to justify its market intervention. That’s why a glance through the results of a new research study by the Gambling Commission and the way its findings have been presented, make such interesting reading. For example, “the proportion of British adults regularly participating in at least one form of gambling has risen to an all-time high of over 57%” writes one magazine. “Steady increase in remote gambling…” writes another. Tonally, both headlines are suggesting that the problems associated with gambling had not only increased but also that they were on an inexorable growth path for the foreseeable future and that, by implication, we are all doomed. However, interestingly, though that may be the impression being given, it is at total odds with the truth.
So while it’s true that well over half the population has participated in gambling in the last month at 57.3% (up from 55.59 in 2010 and 55.2 % in 2009), the lion’s share of both the total and the rise was down to National Lottery sales where National Lottery tickets (47.5%), followed by National Lottery scratch cards (12.7%) and tickets for society or other good causes (9.6%) were the three runaway leaders in terms of participation in gambling. What makes this interesting is that the top two growing gambling activities are both Government backed monopolies where the biggest winner, by a country mile, is the Government.

Since, over time, more and more of the National Lottery Good Cause money has been allocated in line with Government spending – reneging completely on the original promise that Good Cause funds would be supplementary rather than substitutional – the 28% allocation to Good Causes looks more and more like a direct tax which, when added to the 12% lottery duty, makes an affective tax on National Lottery sales of some 40% (on top of which the Government additionally receives any unclaimed prize money). So, if there is a problem currently with an increase in gambling in the UK, it is being directly funded and legislated for by the Government itself for its own benefit and not by any of the other operators within the sector.

If one then examines online gaming in the wider gambling context, it is often perceived to be the worst type of gambling from a player protection point of view. There’s no peer pressure to regulate behavior; there’s huge potential for fraud and money laundering and no effort or journey is required in order to take part. In short, the way the Government – and ‘crusading’ newspapers such as the Daily Mail – reflect on online gambling, they appear to believe that it is not just corrupting our society, it is also demonizing our youth. The results of the Gambling Commissions survey, however, again tell a rather different story. First of all, “the growth in participation in remote gambling is explained very largely by increased online participation on the National Lottery”. Indeed, if those who just play National Lottery products are excluded, it transpires that only 6.1% of respondents had participated in remote gambling in the year to December 2011, compared with 5.7% in 2010, 5.7% in 2009, 5.6 % in 2008, 5.2 % in 2007 and 5.1% in 2006. It’s hardly a runaway train. Moreover, those who gambled online were more likely to be male and to be aged over 45. Again, not exactly callow youth.

This highlights another problem for the Government in the ongoing spin versus substance tussle. The consequence of a ‘nanny’ State is that people get to believe that what the State is telling them is for their own good. Since 1997, the last Labour Governmenthas been consistently telling us that the National Lottery is a force for good. Which it is. It redistributes wealth. It funds much needed and valuable causes, buildings and projects. It raises taxes. It’s fun. It’s classless. It gives hope and so on. All of which are true. But – and this is probably what the Government doesn’t wish to confront – it’s not just gambling, but also, as a direct corollary of the lottery being successful, it is addictive gambling.

The National Lottery has incredibly high participation at 57.3%. Some of that is due to the perception that the lottery is not gambling, because you can buy in a ticket in a petrol station, a supermarket or a corner shop and some of that will be due to the Euro Million Mega jackpot-chasing that inevitably brings in new people when the jackpots roll over to mouthwateringly large amounts. The majority of the high participation, however, will be provided, week on week, by those who have a fixed set of numbers and who dare not miss out just in case their numbers came up. It doesn’t matter what their chances are or even, as American author Fran Lebowitz once remarked, that you have roughly the same chance of winning the Lottery whether you play it or not’, They are hooked every bit as much as the Government. Only it’s the Governments fault.

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