WE are bigger losers than the Irish screamed one Australian media outlet this week. The context was a discussion in the federal parliament on restricting online sports gambling advertising. Last year a parliamentary report entitled ‘You win some, you lose more’ highlighted the dangers it said emanated from such advertising – normalising the association of sport with gambling; the targeting of children and vulnerable adults; the exploitation of consumers with ever easier ways to part, electronically or otherwise, with your money.Australians do, per capita, lose more on gambling than any other nation on the planet. That is mainly because of the ubiquity of ‘pokie’ machines in pubs and clubs around the country. These one-armed bandits are little more than regressive tax machines on the poorest in society.
Australians also like to bet on sport. As with Ireland, it was traditionally on racing (gallops, harness and the dogs) but now on any sport. Match odds are quoted at halftime and commercial breaks during AFL and NRL games. This writer loves a punt, particularly on horse racing which is now entering peak Spring Carnival season, culminating in the Melbourne Cup in early November. I like the industry but am clear-eyed about its relationship with gambling. No gambling; no racing, at least in any viable commercial form.
The debate on the proliferation of gambling advertising in sport in Australia, Ireland and elsewhere is however much wider than horse racing. The most extreme proposal on the table in Australia is for a complete ban on such advertising. The push back from the industry has been ferocious and is threefold. First, the gambling industry says that in Australia (as in other countries such as the US and UK), leading sports are financially underwritten by broadcasting deals.
To sustain such deals, TV companies must sell advertising around them and one of the most lucrative sources of media advertising comes from sports gambling companies. If you restrict gambling advertising, so the argument goes, you tighten TV networks’ budgets and there is less money to spend on sport, and less money for sport to spend on players’ wages. Second, the gambling industry has pointed out – to some squirming silence – that state governments and leading Australian sports (not just racing) do very well out of gambling.
Governments raise quite an amount of tax from gambling levies and the controlling sports bodies are permitted in law to sell the right to bet on their sport to gambling companies, which is a lucrative revenue earner for them. This is the right that the FAI would like to be given in Ireland. If there was a levy on every football bet made by Irish consumers, then the FAI’s finances would be transformed instantly. The third argument is one familiar to any regulatory or government worldwide that seeks to engage with the gambling industry: if you over-regulate the industry, increase taxes and restrict advertising, consumers, they say, will simply move to unregulated, offshore betting.
This might be called the ‘dodgy box’ argument. If subscription prices are too high, consumers will risk engaging with illegal providers.The analogy that the gambling industry likes to use is with the Prohibition era in the States – the banning of alcohol in the 1920s and ’30s led to loss of revenue for the government of the day, illegal production resulted in health risks and the experiment benefited only the bootlegging gangs who morphed into organised crime. But that comparison is, to use an Australian expression, a furphy.
The current debates in Ireland, the UK and Australia on the regulation of gambling are about advertising not proscription. Increasing regulation so that gambling companies are held to account about problem gambling – yes; increased taxes on gambling to fund research into prevalence and treatment – yes; restricting advertising so that gambling is not parasitical to watching a game with your kids – yes. But banning it – no.
In any event, this idea that if you make it more difficult for Australian or Irish consumers to bet with licensed operators that they will move to illegal outlets online, is patronising. Illegal betting is a means for international syndicates to launder and move money. It is a bad business but there is little evidence yet from countries that have actually restricted gambling advertising (Norway, Belgium etc) that consumers have been tempted by it.
As Stewart Kenny, former Paddy Power executive, has rightly said – consumers are not so desperate and dumb that they will suddenly start to give their debit or credit cards to an illegal bookie operating online from somewhere in southeast Asia. In fact, where governments do tighten regulation, the evidence is that it is the licensed gambling operators that have changed their behaviour. Flutter (the global betting giant) recently downgraded its expectations of (translation: less profit in) the Australian wagering market because of fears about increased regulation. Flutter like other gambling companies has moved its gaze to the US, where the future of sports betting lies. Gambling has a long, largely illicit but lucrative history in the US, apart from Donald Trump whose business acumen is such that he uniquely went bankrupt not from entering too many casinos but from owning too many.
Since a US Supreme Court decision in 2018, legal sports betting has exploded across the States. As regulation lags and sports organisations, even those as powerful as the NFL and NBA, remain beguiled by its revenues, gambling companies are profiting. The volume of betting turnover in the US is a torrent and betting companies from around the world have a wet sail. Gambling companies are clever. Their marketing campaigns are inventive. Their assessment of financial risks and future trends sophisticated. Their use of technology and algorithms is done with mathematical and profitable precision. And they have changed sport.
Attending race meetings, you see the demise of on-course bookies who now appear more like the Beefeaters at the Tower of London, part of the past and pageantry of racing but not really of its present. An online bookie can fit in your pocket and is willing to empty it at a push of a button. Another way of neatly illustrating the links between gambling (illegal and legal) is to watch the Premier League where over half of the teams have a gambling company as a shirt sponsor. Some of the sponsors offer bets of a type and from jurisdictions that those who attend the games cannot legally access. And to bring it all back home, the most expensive house in Australia is one renovated recently here in Melbourne by the co-owner of Stake.com, an online casino and sports betting company, which sponsors Everton. Everton may be in trouble already this year, not Stake.
The house is safe because it always wins.