Flutter, now the world’s largest gambling company, raised some eyebrows this week by forging a relationship with a one-time adversary. It will pay former member of British parliament Tom Watson a retainer fee to advise its board on responsible gaming policies.
During his career with the UK’s Labour Party, Watson was known as a vocal critic of the gambling industry. He was in favor of much tighter government controls on the industry, but not of prohibition. He stepped down his position as the party’s deputy leader last year, due to conflict with its leader, Jeremy Corbyn.
In this new role with Flutter, Watson will provide recommendations for responsible practices in its UK betting shops. He may also weigh in on other aspects of the business, such as marketing, customer service and anti-money laundering protocols.
In a press release, Flutter CEO Peter Jackson explained the importance of hearing a critical voice like Watson’s.
“We have to work harder than ever before to find a way to continue to bring great products and brands to our customers while always having the need to protect the vulnerable clearly in mind. Tom will hold a mirror up to help us make sure we are getting this balance right and I welcome the opportunity to work with him and hear what he has to say in coming months.”
Response to the announcement has been mixed. Michael Dugher, CEO of the UK’s Betting and Gaming Council, described it on Twitter as a “smart move” for the industry to embrace its critics. Hard-line gambling opponents, on the other hand, have accused Watson of hypocrisy. To those groups, the move seems like a cynical, hollow gesture by Flutter, done in the name of public relations.
A last-ditch attempt at self-regulation
Whether or not the gesture proves to be hollow, there is something a bit cynical about its timing. The UK gambling industry is currently facing a crisis largely of its own creation.
The UK has a much longer-standing and more permissive relationship with gambling than the US. Until very recently, the UK Gambling Commission (UKGC) had given companies a long leash to self-regulate. Over time, and especially now, in the online gambling era, that has led to widespread gambling problems.
The resulting public backlash has caused a sudden reversal of public opinion, an escalating crackdown by the UKGC, and threats of further intervention from the government. Most disastrous for the industry’s bottom line was a 2018 regulatory change, dropping the stake limit for fixed-odds betting terminals (similar to US video lottery terminals) from £100 to just £2. That change alone has already caused a wave of betting shop closures that the industry predicts could ultimately wipe out between a quarter to half of them.
Flutter presumably hopes that Watson’s advice will help it avoid any more similarly heavy-handed measures by the UKGC and government. Although it comprises several important brands, however, it is only one part of the industry, and the problem is endemic. Furthermore, the best time to work on better self-regulation would, in retrospect, have been many years ago.
Is there a Watson for the US market?
Flutter, formed by a merger of Paddy Power and Betfair, is predominantly a British and Irish company. However, its acquisition of FanDuel in 2018 and this year’s tie-up with The Stars Group make it a challenger for market leadership in the US as well.
Flutter and Watson are still working on the details of their relationship. It’s probably safe to assume, however, that his advice will focus on the UK market, and it sounds as if the main concern will be the retail betting shops. And yet, one big takeaway from the situation in the UK is that the industry would serve its own interests better by acting on criticism before it grows into public backlash.
Finding an equivalent figure in the US would be tough, however. There are third-party organizations like EPIC Risk Management available to help, but far less potential to convert specific opponents of gambling into trusted voices of reason.
Two problems: unfamiliarity and political polarization
Part of the reason it would be hard to find a US equivalent to Watson is that gambling is so new to the US. Legal online casinos and sports betting are only a few years old. However, land-based casinos and even lotteries are also recent additions in many states. It’s largely uncharted territory for even the most veteran lawmakers in the country, with few exceptions.
American political attitudes make it more difficult as well. Much of US opposition to gambling stems from moral and religious objections, which can’t be addressed except through prohibition. Conversely, there are many business and political leaders in the country who see problem gambling as a purely individual responsibility. Neither of these is compatible with the idea of corporate responsibility in the gambling industry.
If Flutter, or its competitors, wish to hire a responsible gambling advisor for the US market, they may have to import one. Fortunately for Flutter, the UK itself might be the best place to look. Someone familiar with the fledgling US market but also experienced with the UK situation could be a good fit. Such an advisor would go a long way towards averting the possibility of repeating the mistakes of the UK on this side of the Atlantic.