Vicious Games

Capitalism and Gambling

Rebecca Cassidy

• Publisher: Pluto Press
• Year: 2020
• Print ISBN: 9780745340395
• eBook ISBN: 9781786805874
• Edition: 1
• Topic: Computer Science
• Subtopic: Computer Science General
• Index: Computer Science

Gambling is everywhere, on our TVs and phones, on billboards on our streets, and emblazoned across the chests of idolised sports stars. Why has gambling suddenly expanded? How was it transformed from a criminal activity to a respectable business run by multinational corporations listed on international stock markets? And who are the winners and losers created by this transformation?

Vicious Games is based on field research with the people who produce, shape and consume gambling. Rebecca Cassidy explores the gambling industry's affinity with capitalism and the free market and how the UK has led the way in exporting 'light touch' regulation and 'responsible gambling' around the world. She reveals how the industry extracts wealth from some of our poorest communities, and examines the adverse health effects on those battling gambling addiction.

The gambling industry has become increasingly profitable and influential, emboldened by thirty years of supportive government policies and boosted by unnatural profits. Through an anthropological excavation, Vicious Games opens up this process, with the intention of creating alternative, more equitable futures.

1

Gambling’s New Deal

We have … set out a new deal for the British gambling industry. It will take away unnecessary, outdated restrictions that stop the gambling industry from operating and marketing itself on the same basis as any other legitimate leisure industry. (Tessa Jowell, Secretary of State for Culture, Media and Sport 2002)

In the final decades of the twentieth century an attempt was made to transform gambling in the UK from an activity that was tolerated, to a business to be encouraged. A new way of thinking about gambling became normative among some politicians and parts of the industry even though it was not widely supported by the public. A survey by the Office of National Statistics in 2002, the year in which Tessa Jowell was describing gambling as an increasingly mainstream leisure activity, showed that 80% of people had not changed their attitude to gambling over the last ten years, 15% said it was more negative, and 6% said their attitude was more positive (Gambling Review Body 2001: 239).¹

This chapter explores the background to these changes, and their relative success. It sets out the most important events in the transformation as interpreted by the people involved: bookmakers, casino operators and politicians. Its broader purpose is to shine a light on the ways in which gambling can be partially and perhaps temporarily, domesticated. Gambling legislation has also been rewritten since the 1980s in Australia, South Africa, the Netherlands, Canada, New Zealand and, more recently, in Singapore, each driven by different priorities and with different outcomes. The US remains resolutely undecided about gambling – casinos and poker are relatively acceptable while sports betting and online gambling continue to be controversial (Katz 2019). Japan has been deliberately inconsistent – tolerating a multibillion dollar pachinko industry (Chan 2018) while claiming to ban gambling (with the exceptions of betting on horse racing, and a few other sports). In 2018 casinos were finally legalised in Japan after years of lobbying from American companies. The new casinos will be subject to strict conditions, and must be part of a wider entertainment complex – the so-called ‘resort’ model pioneered in Las Vegas and reinterpreted in Singapore (Kyodo 2016). The UK is an interesting case because it was the most comprehensive attempt to create an open market for gambling at a time when most other jurisdictions were taking a far more cautious approach.

Until the 1990s, the supply of gambling in the UK was limited to fulfilling existing demand in order to inhibit the development of an illegal industry. Advertising was banned, membership rules prevented people from entering casinos on a whim, and betting shop windows were blacked out, creating their unique, some might say ‘seedy’ atmosphere. In the 1990s a completely new approach was embraced, culminating in one of the most striking examples of New Labour’s commitment to using market solutions to answer social questions, an approach described by Tony Judt (1998) as ‘opportunism with a human face’. Some of those responsible for the policy, including David Blunkett and Harriet Harman, have since admitted that they got it wrong (Woodcock 2012; Press Association 2012). The purpose of this chapter is to better understand how discussions about gambling were shaped and reframed and, crucially, to assess the lasting impact of these changes on gambling in the UK and elsewhere.

Despite the best efforts of its promoters, gambling has been even less successful than other financial services in decoupling itself from moral questions about the relationship between risk and reward. It also has historical and ongoing relationships with the grey and black economies.² For these reasons, the positions taken by those involved in gambling tend to be articulated with particular force and urgency. In this chapter I use interviews with policy makers, politicians and gambling executives to capture the partial transformation of the gambling industry from a pariah to a partner in ‘UK plc’. I show how the industry and successive governments attempted to reframe gambling, from a tolerated working-class habit to a rational expression of individual economic choice. By ‘reframing’ I mean the attempt to set the terms on which meaningful discussions about gambling could take place and to embed this framework in legislation (Preda 2009; Rose 1999). I start by describing how gambling was recast in 2001, from a potential source of crime managed by the Home Office, to a leisure activity which is the responsibility of the Department for Culture, Media and Sport, dubbed ‘the Ministry of Fun’ by David Mellor, its first Secretary of State (Brown 2001).

Setting the scene

In a speech to a conference of media bigwigs in January, Tessa Jowell set out her theory of governance. ‘People often ask me: what is the purpose of government?’ she said. Then she provided her own answer: ‘[To] promote competition and regulate – if we have to – to protect the public, the consumer.’ (Born 2003)

When you look at gambling on TV and in the shops, the scratchcards and all that, not to mention every kind of gambling under the sun a click away on the phone in your pocket, it’s hard to believe what my father did was illegal when he started. The exact same thing as companies on television and quoted on the stock market are doing today was illegal in his day and mine. A boy growing up today wouldn’t have a clue that gambling was illegal not so long ago. (Bookmaker, south-east London, 2006)

The key events in the transformation of gambling in the UK took place over a relatively short period of time, initially under the Conservatives during the 1980s and 1990s and then under New Labour. When I asked bookmakers to describe how this process unfolded, several started by referring to Gilmour’s Act in 1986. At that time gambling was covered by a variety of laws, including the 1968 Gaming Act, which the Gaming Board (responsible for regulating arcades, betting, bingo, casinos, slot machines and lotteries until it was replaced by the Gambling Commission in 2007), the gambling industry and politicians agreed were in need of updating. ‘The law was, in this case, a massive ass’, said one MP, talking to me in 2010. ‘The new kinds of gambling that were coming through, online and in shops, were not a glint in even the most futuristic bookmaker’s eye in the 1960s. [The laws] were hopeless.’ Bookmakers and casino operators also felt that the rather apologetic way in which they were forced to conduct their business was out of step with what they referred to as ‘the modern world’. As one casino operator said in 2001 when describing the changes taking place at the time:

You can’t have the state telling you how to spend your money, looking down its nose at you, wagging its finger and saying, ‘you bad, bad boy’. Fuck that. Times have changed and people want to be masters of their own destinies. They don’t want to be told what to do by the state, the church, authorities like that. Money is king. In the ’80s people had plenty and they were determined to spend it as they pleased.

At a time when the rest of Britain was booming, betting shops were still deliberately dingy, prevented by law from ‘stimulating demand’ and forced to have blinds across the doors and opaque windows to prevent people seeing the delights inside. Incredibly, even though racing had been televised for decades, televisions were still banned from the bookies, a fact which created the odd spectacle of customers trooping out of the shops to watch the races through the windows of television rental showrooms. Bookmakers claimed that this paternalist approach encouraged law breaking by illegal bookies who could operate outside heavy taxes and restrictive regulations. And so, in 1986, Gilmour’s Act permitted betting shops to have televisions with screens of up to 30 inches and to serve hot drinks, biscuits and crisps (but not cakes). The carefully worded concessions preserved the idea that there should be no attempt to promote betting, but questioned whether it really was necessary to make punters leaving a shop feel as though they were leaving a brothel, as had apparently been the intention of the legislation in the 1960s.³

Gilmour’s Act coincided with the 1986 Financial Services Act, the proximate cause of the sudden deregulation of financial services known as the Big Bang. It was based on similar principles: popular capitalism, of the kind championed by Margaret Thatcher (Elliott 2001) and the light-touch regulation favoured by Ronald Reagan and epitomised in the Garn–St. Germain Depository Institutions Act of 1982 (Krugman 2009). Televisions and biscuits may seem trivial but for the bookies they reflected a significant change in parliamentary attitudes towards their trade. Some of the veteran executives working in the UK gaming and betting industries began their careers in the 1950s when cash betting was illegal. They saw Gilmour’s Act as a moment when ‘grudging tolerance’ was replaced by an admission that bookmaking was, at least potentially, a respectable business:

This was an important time for us, without doubt. Other people look at the lottery [in 1994], but this was really the beginning because it was a principle conceded as much as anything. The idea that the bookies could be a comfortable place and a place where you could spend leisure time. That admitted us into the ranks of the cinemas and dance halls from your porn shops and strip clubs. We crossed the aisle then.

Despite the change, betting shops and casinos were still not allowed to advertise, or even list themselves in the ‘Yellow Pages’, the retail telephone directory, until 1999 (BBC News 1999). The creation of the National Lottery in 1994 produced the odd situation in which one kind of gambling could, with the blessing of the government, be vigorously and expensively promoted in a high-profile campaign featuring a gigantic hand coming out of the sky, godlike, to inform potential customers that ‘It could be you!’ at a time when all the others could not so much as tell potential customers of their existence.⁴

The National Lottery

Gambling got short shrift from Margaret Thatcher, who was, by disposition and upbringing, suspicious of merriment. As she told one interviewer, ‘For us, it was rather a sin to enjoy yourself by entertainment. Life was not to enjoy ourselves. Life was to work and do things’ (Filby 2013). The National Lottery was ushered in by John Major, who describes his role in the process in an article entitled, apparently without irony, ‘How I gave hope to the poor’ (Major 1999). He recalls that when he told the cabinet of his plan to include it in the 1992 manifesto, he was greeted by ‘a roomful of raised eyebrows and doubtful faces’. Major placed opposition to his plan into two camps: the first included Liverpool MPs anxious about the fortunes of the football pools and bishops and Conservatives concerned about the morality of state-sanctioned gambling. To Major, these objections were valid. But what made him ‘more determined than ever’ to proceed with a national lottery was the ‘paternalist nonsense’ coming from ‘Labour and Liberal benches as well as from Tories’: ‘In short, they thought the poor needed protection from themselves … People don’t have to buy Lottery tickets. But I see no good reason why they shouldn’t be given the opportunity to do so’ (Major 1999).⁵

The betting industry was slow to react to the National Lottery, but eventually realised that it was both a threat and an opportunity. A report in 1995 by the Henley Centre, commissioned by the Association of British Bookmakers (ABB), the bookmakers’ trade association, painted a bleak future for the industry, suggesting that the lottery would force the closure of 2000 shops and the resultant loss of at least 6500 jobs. They used these contentious figures to argue strongly for a reduction in betting duty which had been in place since 1966 and in 1995 was set at 7.75% (Smurthwaite 2000). With the National Lottery threatening to steal their customers, bookmakers began to argue that these deductions made the industry uncompetitive and encouraged illegal betting.

Simultaneously, in 1997, Victor Chandler moved his operations to Gibraltar, where he could accept bets by telephone and pay much less tax (Doward 1999, 2000). Other firms followed and in 2000, alarmed by the loss of revenue from betting duty and lobbied by friends of racing in Parliament, the government commissioned a review of betting taxation (Paton et al. 2002). In October 2001, betting (and by extension, the racing industry, which depends on a levy on betting turnover to subsidise prize money) faced several huge challenges. As well as competition entering the market from offshore bases, established operators were moving offshore in order to avoid paying taxation, including the levy. Second, Betfair, the betting exchange which allowed punters to bet directly with each other rather than via a bookmaker, was gaining ground and taking custom away from traditional, poorer value bookmakers.⁶ Finally, an outbreak of foot and mouth disease meant that horses could not travel to compete at racecourses, which are spread across the country, causing the cancellation of race meetings and severely curtailing the volume of ‘betting product’. Punters prefer races with large numbers of runners, and have favourite racecourses – foot and mouth played havoc with the established form on which many punters base their decisions.

In 2001, under pressure from both the betting industry and the racing establishment, both of which include influential individuals, the Chancellor replaced betting duty with a tax on gross profits based on the net revenue of bookmakers (Paton et al. 2004). In return, the bookmakers agreed to abolish all charges on bets and to repatriate their operations. Some of the bookmakers who had moved offshore did indeed return (temporarily) and, one year later, HM Customs and Excise (2002) reported turnover as having increased by 35–40%. The amount staked in betting shops jumped to £45 billion, having been stable at £7 billion throughout the 1990s (HM Customs and Excise 2002). William Hill’s profits increased from £32.4 million in 2002 to £170.8 million in 2003 (Bolger 2004). Victor Chandler chose not to return, his spokesman saying that:

The proposed 15% tax on gross profits is simply another ‘stealth tax’. Regrettably, this looks like a hollow victory for the punters, as they will continue to pay – only this time they won’t realise it. (Quoted by BBC Sport 2001)

A year later the effects of the new fiscal and regulatory regime were being felt by the gambling industry: times were good. Ladbrokes posted a 22% increase in profits, William Hill reported a 32% rise and was listed on the stock market, in an offer that was oversubscribed ten times over (Cummings 2002). Mark Blandford, chair of SportingBet, at the time the world’s largest internet-based betting service told the BBC that, ‘The UK is setting out its stall to become the gambling capital of the world’ (Cummings 2002). In an academic paper that assessed the impact of the change, supporters of the shift praised the UK government’s decision to ‘base its betting taxation policy on economic criteria’, adding that, ‘this contrasts significantly with the approach taken by other countries such as the USA and Australia, where an assessment of the social costs of gambling has played a much more important role in the consideration of policies regarding betting activity’ (Paton et al. 2002: F312).

In retrospect, the National Lottery was one of the best things that ever happened to the UK gambling industry, as a consultant told me in 2006:

The lottery was a Trojan horse for us. The government went from meeting unstimulated demand for gambling to promoting it. That put them in a new position. In 1992 they were facing challenges from the EU [European Union] over gambling laws and they also were beginning to realise that direct taxation was much more controversial than raising money through a lottery. Happy days. Once the lottery was in place t...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Series Preface
• Acknowledgments
• Introduction
• 1 Gambling’s New Deal
• 2 Raffles: Gambling for Good
• 3 The Birth of the Betting Shop
• 4 The Rise of the Machines
• 5 The Responsible Gambling Myth
• 6 The Bookmaker’s Lamen
• 7 Online in Gibraltar
• 8 The Regulation Game
• Conclusions
• Notes
• References
• Index