U.K. White Paper may have major impact on U.S. sports betting reforms, experts say

Delayed more than a year amid political turmoil, the 336-page document sets new standards on online player protections, sports betting marketing, and advertising targeted to vulnerable populations, among numerous other areas. Across the Atlantic, the lengthy review has been closely watched by responsible gambling advocates to determine if the standards will have a discernible effect on the sports betting ecosystem in North America.

Keith Whyte, executive director at the National Council on Problem Gambling, believes the U.K. report likely will have significant implications for U.S. gambling policy. “We’re watching the impacts of the white paper very closely and will see which research and recommendations are a good fit with U.S. law, regulations, and culture,” Whyte wrote in an email to Sports Handle. “I think there will be more than a few.”

Last October, former U.K. Prime Minister Liz Truss resigned after 45 days in the office, completing the shortest term in history for a British leader. Truss, the former Conservative Party leader, failed to gain support for a comprehensive tax-reduction budget that roiled financial markets during her brief leadership. Weeks earlier, Boris Johnson stepped down as prime minister amid concerns about his handling of the COVID-19 pandemic.

As U.K. responsible gambling standards rise, companies that are licensed in both jurisdictions will find it increasingly difficult to justify having weaker responsible gambling programs and policies in their U.S. operations, Whyte emphasized.

Affordability checks

Truss’ successor, Rishi Sunak, took office last fall after running unopposed in a Conservative Party election. The rapid succession of leadership changes in the U.K. ostensibly delayed the gambling white paper for months. By February, Sunak appointed Lucy Frazer, a British politician and barrister, to serve as the nation’s secretary of state for culture, media, and sport.

“At the heart of our review is making sure that we have the balance right between consumer freedoms and choice on the one hand, and protection from harm on the other,” Frazer wrote in the paper.

While U.K. gambling experts anticipated a thorough document upon publication, the paper released by the department topped 92,000 words. Launched with a call for evidence in December 2020, the department received more than 16,000 submissions over the course of the review.

Frazer heads an agency that is responsible for crafting policy on gambling, racing, arts and culture, broadcasting, sports, museums, the national lottery, and libraries, affectionately earning the entity’s top official the nickname “Minister of Fun.” For leading sportsbooks, though, the thought of conducting so-called “affordability checks” on certain customers is not a fun proposition.

Under one proposal, the standards would require U.K. operators to administer a background check on customers who incur a net loss of £125 ($156 in U.S. dollars) within a month or £500 within a year. On a short-term basis, the commission has proposed checks on customers who rack up a net loss of £1,000 within 24 hours or £2,000 within 90 days.

It is important to note that the background checks will only affect an estimated 3% of customers, according to the U.K. Gambling Commission. The checks, the commission insists, are intended to be frictionless, with requests for further information used only as a “last resort” for completing the assessments.

“We are pleased to see the increased emphasis on safeguards for children and young adults, which are essential in the creation of a comprehensive harm prevention strategy,” wrote Shelley White, CEO of Canada’s Responsible Gambling Council, in an email to Sports Handle. “These proactive investments in harm prevention will reduce the longer-term, more devastating costs associated with extreme gambling harm, as well as contribute positively to the sustainability of the industry.”

Funding for addiction treatment

The U.K. government plans to introduce a “statutory levy” on gambling operators that will compel the companies to fund National Health Service (NHS) treatment for addiction. The commission has not yet determined the total amount that will be raised by the levy.

Back in the U.S., many states already have mechanisms for funding the treatment of gambling addiction through statutory mandates. In Massachusetts, for instance, 9% of taxes on gross sports wagering revenue are allocated to a public health trust.

While such mandates are common in the U.S., nine jurisdictions currently put no money and resources into problem gambling, said Brianne Doura-Schawohl, a consultant who is one of the nation’s foremost experts on problem gambling and formerly served as vice president of U.S. policy and strategic development at EPIC Risk Management.

Doura-Schawohl is optimistic that the U.K. review will inspire states to examine how much money is being utilized to address the important public health issue. “I hope this is exactly the type of inspiration, guidance, and advice that they look at what happens when you disproportionately underfund this issue,” she told Sports Handle.

One risk of implementing stringent regulatory standards is that they may drive droves of customers to the illegal, offshore market. Across Europe, there are concerns that elevated standards could lead to a resurgence in offshore betting. When asked last month about some of the pain points associated with sports betting, NBA Commissioner Adam Silver responded that the U.S. legal market offers protections not available offshore.

“On balance, in a regulated environment I think we’re all going to do a better job spotting problem gamblers, difficulties, and people trying to manipulate games, in a way we couldn’t when it was all underground,” said Silver at the CAA World Congress of Sports in Los Angeles.

U.K.-headquartered Flutter is the parent company of FanDuel, the definitive leader in the U.S. sports betting market. In response to the white paper release, Flutter CEO Peter Jackson noted that the review will bring the “regulatory framework into the digital age.”