Gambling Review... A Few Suggestions that will Probably be Ignored... by Neil Channing
Last week I talked a bit about the subject of account restrictions, a topic that most people who represent large gambling corporations insist is unimportant and argue the extent of which is exaggerated, whilst those that actually bet with these companies know that restrictions are massively widespread, are applied inconsistently and often make no sense. This week I thought I'd talk about some ideas that could reduce the number of accounts that are getting restricted and perhaps could work for both sides.
Let me first make it clear that I am not a person who believes that all bookmakers should have to lay every single bet they are offered or that putting up a price means that you should be obliged to take an unlimited amount of money from anybody that wants to bet. I explained last week that the internet changed the betting environment as enormously as it did the rest of the world and with the ability to bet instantly at the click of a button comes the ability for robots to search tirelessly for arbitrage opportunities, for operators to face tens of thousands of accounts all attempting to bet the same tipster horse at the same price in the minute after the tip is published and for large gambling syndicates to use hundreds of accounts to simultaneously hit the price they like. The operators are often left engaging in a battle against the "fastest fingers first" and massive liabilities can be built up in seconds. I believe that restricting bets at times when markets are extremely volatile is perfectly reasonable and is necessary for these firms to survive, and for punters to still have someone to take their bets in a year or two. If bookmakers wish to restrict arbitrage players, accounts they believe to be linked and acting together, followers of popular tipsters and those who engage in matched betting or bonus abuse I have no real problem, as they are defending the company's ability to exist. My problem begins when the restrictions extend further than that.
I explained last week that companies have a legal obligation to "promote the success of the company", which doesn't mean they always have to take the action which increases short-term profits, but they should think about their actions and how they help the reputation of the company and the industry, how their actions might lead to increased regulation that might have a detrimental effect, how they might trigger consequences for the staff and for the long-term survival of the company. I would argue that the heavy-handed approach to restrictions puts them in danger of forgetting this obligation.
No operator wants to have a large group of customers who they regularly pay money to every year from whom they get nothing in return. I made the point last week that in an average year quite a lot of bettors do win, maybe 20%. That number can be higher if you include all the people who just have one or two bets, maybe on the Grand National or the Cup Final, have a winner and don't bet again, but of those that bet regularly it will be slightly lower. If we look at all customers over three years the number falls below 10% and is maybe as low as 3% depending on whether you include those very infrequent bettors. There might be just 1% who are making say £20,000 a year and have done that for three years running. I can see some arguments for not restricting those people, maybe if they are originating bets and operating alone, as they could be useful to the operator in helping shape the markets, making their prices more accurate. In reality though most people in this situation are not operating alone, they are not originating the bets and they tend to play on markets where accommodating them and learning what the "perfect" price is won't help much as not enough other people fancy betting into that market. I can definitely see why the bookmakers have no interest in "being told" by 43 people all trying to get £100 on at 9.06am, that they have made an error in the pricing of an unraced horse on the all-weather.
Basically, the people I have mentioned so far are really the only people I believe should be restricted and they definitely include me before anyone accuses me of speaking from a point of view of self-interest.
The levy that horse racing derives its income from will not increase by allowing the above people to bet as much as they want, when they want and nor will the profits of the betting operators.
One solution to the problem of restrictions which is often suggested is a Minimum Bet Limit like the one introduced in Australia where bookmakers are legally obliged to lay horses to lose a certain amount from a certain time. It's my belief that the largest beneficiary of such a rule, whereby bookmakers would be compelled to offer a certain amount on most events to ALL customers whoever they are, would be the people I described earlier, and that the industry would immediately start losing more money to those people. The reaction of the operators would then naturally be to attempt to claw back that money elsewhere in order to maintain their profit levels and thus the choices are to increase the amounts they make from bigger losing clients, something which is very hard to achieve in a world where Problem Gambling is such a hot issue, or to simply take a little from all customers. The obvious way to take away a little from all customers would be to drop Best Odds Guaranteed, something that all operators have been desperate to do, and which would be gone tomorrow if they knew their competitors would all drop it too.
The other "problem" with MBL is that it would almost certainly only apply to WIN bets on bigger markets after a certain time on the day of the race. In Australia the limit is lower in smaller races and bigger only on races run at the bigger tracks. Most accounts that face restrictions are wanting to bet on illiquid markets before the day of race or very early in the day, and often they are taking advantage of favourable place terms. If MBL were introduced for each-way bets then the favourable place terms would soon disappear.
Representatives of betting operators reading this might think they don't need to worry about restrictions, and they might ask why they should care if some people that used to be able to win at betting are finding it harder these days. They might suggest that this is due to them doing their job well. I would argue that those people need to see the wider picture. The reduction in the stakes on FOBTs came about largely because people who didn't bet became aware of something that seemed wrong to them. The whole issue of Affordability Checks and the implementation of draconian policies on people who just want to spend their own money in the way they choose is likely to come in because it's widely perceived that this industry has done a bad job of policing itself and that it exploits people. If it becomes widely known, amongst those that don't gamble, that you are not allowed to win and that people winning quite small amounts, attempting to bet fairly modest amounts and in some cases not even winning at all, are routinely restricted to a fraction of what they would like to bet, then it's possible that there will be a wider perception from the public that this industry is just not operating "fairly". The Gambling Commission are supposed to only allow operators who treat their customers in a "fair, open and transparent way" to hold a license. I personally believe that restrictions are a ticking time bomb for the industry, and they may come to rue the day they decided that they just never want to lay any bet of any size where the customer could possibly have an edge. The day that public opinion, and thus politicians, start to believe that the restrictions placed on accounts demonstrate that operators are not acting fairly or transparently, will be a very expensive day for these companies and they may then reflect that they could have done a better job of regulating themselves.
I would definitely start by eliminating the restrictions which make very little difference. When a customer requests a bet which is referred and following the referral they are granted a smaller amount which is not very much smaller that just causes one upset customer and almost no difference to the company. When a customer requests £110 at 8/11 they should never be restricted to £100 in my opinion although I do understand that this can be due to the maximum market size being applied. Even if that is too much to ask surely having a minimum bet that is offered to reduced bets would be good. I understand that when a customer requests £50 and gets offered £6.77 it's a decision taken by a computer which is restricting to a percentage of the "normal" stake, but I do think the image of the industry would be enhanced, and far less people would be unnecessarily caught up in the net of restrictions, if nobody was ever restricted to less than a tenner. I have no problem with the accounts of people using software to place thousands of £10 bets simultaneously being closed permanently as again, my suggestions here are attempting to help solve the problem of "normal" customers getting caught up in account restrictions.
If you really wanted to be transparent then every market would have a limit and people could see what it was. Most people realise that an all-weather race the night before might not have such solid pricing as the Grand National on the afternoon of the race and they probably realise that betting on the former is getting them restricted. Bookmakers are right to be concerned about customers who only bet on the illiquid markets and who beat the prices but if they are to be truly transparent, they should perhaps give the customer more idea of how they would like them to act and what to expect.
Maybe what is needed is to rip the whole thing up and totally start again and I think I may just have the idea.
All markets have a grading depending on how big an event it is and how popular the sport is. Women's golf is less popular than International Football and friendlies have a lower grading than World Cup matches. The Snooker World Championships has a higher grading than the Scottish Open. It doesn't have to be too complicated, maybe each event has an amount which people can bet and there are set amounts for a "normal account". Some punters are still unwelcome for the reasons I have stated above, but instead of allowing people 1% of the maximum those people are simply closed. Possibly some people are still on 50% of the maximum, possibly even some on 10% and other clients might still get two or three times the maximum. The limits on each market then change over time. Right now we have a situation where many firms do not allow repeat betting. If I bet on a horse to win the Derby in February and on the day of the race I want to press up I will not be allowed a 2nd bet on that horse if my first bet, months earlier, reached my maximum. This means a lot of people get caught up in a restriction that they needn't. If the limit was increased on the morning of the race and again every few hours until it reached it's maximum maybe an hour before then most people would be able to bet their desired amount.
Some operators might see it as a problem that shrewd winning customers will now be able to bet quite large close to an event time as even with 10% of the maximum the limits will be big enough to make it worth it for them. I would argue that closer to the event is the time you want to take bigger bets and you are simply "educating" your clients to bet the way you want them to. The people working in the trading room would then be less anxious about their prices when a market first goes up but will need to be much more attentive and certain of their pricing as the off time is reached and this is as it should be. 90% of punters bet so small that they would still get everything they want at anytime but the bigger players would definitely find they are pushed towards betting later. You could argue that they are still being restricted in terms of not being able to bet their full amount a long time in advance of the event, but unlike the current situation the door would not be firmly closed to them and the market would simply open up as time expires. If there are some markets where traders want to be very careful of the kind of business they see at the early stage then these markets could be totally closed to the factored accounts until nearer the event when the limits open up.
As I am writing all of this I can almost hear people on the other side of the punting fence arguing that the costs of software development would be too high...yet it would save them the huge amount they spend on detecting winning punters and then restricting them. I can hear people saying that the shrewder punters could still exploit this system and it's true they could, just as they currently do with the existing system where they cause a huge amount of extra expense for everyone by using multiple accounts and identities. I think it would be fair to say that letting people go mad in the last hour means that people playing bad each-way races and exploiting extra places would love the changes but you can still close those people as I've explained and they are not too hard to spot.
Again, I should probably reinforce my main point. I do believe that there are good reasons for bookmakers to restrict certain customers and to deter certain practices, but I strongly believe that the way they currently operate causes way too many people to experience restrictions and by totally changing the way they go about trading events they could hugely reduce the people that are getting caught in the net who really shouldn't be.
I can easily see I'm going to get people telling me that restrictions effect such a small percentage of punters and it's only those who haven't the skill to make money by originating their own bets and who need extra places and boosted prices to make a profit, that complain about the treatment they get. I do think if anyone was to really think about their obligations and "promoting the success of the company" then they might try and give some thought to heading off a potential issue here in the way they so clearly failed to do with Problem Gambling. When the industry sees the demise of their VIP schemes and moves away from making such a large percentage of their profits from a small percentage of their customers, maybe they'll realise that they need to replace those profits from somewhere and possibly finding a way to profit from customers they previously discarded as "too much trouble" and "don't lose quickly enough" could be the answer.
Sadly it doesn't look like our "once in a generation" review of gambling will look at any of this, but the one way it could do is if enough people contact their MP and make suggestions.
If you want to write to your MP and tell them what you think about the Gambling Review there is still time. The White Paper showing what will be in the Gambling Act is probably still a few weeks away from publication and a lot of letters going in can create the pressure that brings change. If you want to use my template letter you can click here...
Do make the effort to send off a letter to your MP. I've written one for you here
Neil
