Nida Broughton
Managing Director, UK (interim)
Whether it’s mobile phone contracts, energy tariffs or gym subscriptions, we all know that fairness is crucial to making markets work well. Whilst we all might instinctively think we know, or at least feel, what fairness is – it can actually be pretty tricky to define at times.
And it’s one thing to think about fairness when you pay money in exchange for a service or product, but what does it mean in the context of activities like gambling where the overwhelming likelihood is that you will lose money overall?
Take the following two scenarios, how fair do you feel they are?
Scenario 1:
You see an advert for a new online slot game, offering a £10 welcome bonus. You sign up to the gambling website, deposit an additional £10 of your own, play a few games and get lucky, turning your combined £20 into £50. But when you’ve finished playing, you’re informed that there is a ‘10x wagering requirement’ applied to the bonus. That means you have to stake £100 before being able to withdraw any winnings. This was actually mentioned in small print at the bottom of the advert, as well as the website T&Cs, but it wasn’t obvious so you missed it.
Scenario 2:
You find out that a quarter of gambling industry profits come from ‘problem gambling’, i.e. people who are at high risk of experiencing harm due to their gambling, such as financial difficulties, problems at work and in family life or mental and physical health issues.
Most likely you would feel that neither of these scenarios sat quite right with you – even though they are very different examples.
The two scenarios above are examples of two very different types of fairness. In the example of the £10 bonus, the question is whether you were provided with the information you needed to make an informed decision in a clear and easy-to-understand way. It’s an issue of openness and transparency. Was this individual transaction fair?
The information about where industry profits come from is about what is known as ‘distributive fairness’ – are the benefits and harms of an activity being shared equally or proportionally across a group of people? Is the social outcome fair?
What type of fairness should we be regulating for?
The Gambling Commission requires that licensed operators ‘must comply with consumer protection laws and treat customers in a fair, open and transparent way’. This extends to operators’ terms and conditions and practices. Its recent Corporate Strategy sets out a plan to put more resources into understanding issues that “pose a risk to the fair and open licensing objective”.
But before thinking about the risks, we have to ask whether we actually know what ‘fair and open’ means in practice.
What type of fairness do people want?
When we ask people who gamble, we hear many different ideas of fairness depending on the context.
Some describe certain practices as unfair: confusing terms and conditions, adverts that pressure and overwhelm and ‘trap’ people into gambling or spending more than they want to, and the practice of gambling companies suspending bets with good odds.
But experienced users of gambling sites are more sanguine about the extent to which they may win more because they understand how the games work. They see themselves as having a competitive advantage in a world that is confusing and unfamiliar to new users.
Moving the onus from consumers to providers
Early consumer protection law often focused on openness and transparency: for example, making sure that consumers had the right information, that adverts weren’t misleading and that terms and conditions were accessible.
But in recent years, there’s been a greater recognition that doing these things only places a heavy burden on consumers. Citizens Advice has previously estimated that consumers would each need to spend 107 minutes per week to make good decisions about products and services they buy – gathering all the relevant information, evaluating all options and then deciding which action to take.
More recent cross-sector market regulation such as the new Digital Markets Act and the Financial Conduct Authority’s new Consumer Duty go beyond pure transparency and begin to factor in outcomes. For example, not just whether terms and conditions are presented clearly and visibly, but whether the average consumer would be able to understand them. There’s also an explicit focus on the vulnerable – consumers who might be especially likely to lose out.
Understanding what counts as fairness in the gambling world
In gambling, it is not immediately obvious how to go about making trade-offs between different types of openness and fairness. How do we weigh benefits like enjoyment and fun of the game against the risk of losing money?
One approach is to try to measure consumer outcomes across different groups, and regulate in a way that in some way maximises consumer welfare overall. But what if, for example, there are genuine trade-offs between benefits to less experienced users at the expense of more experienced ones? Betting exchanges are the most obvious example here, where players bet directly against each other. How far should the experience of everyone be limited to protect the most vulnerable?
Actually understanding how people view fairness in practice is vital to answering these questions. It’s all too easy for researchers and policymakers looking in from outside the world of gambling to unwittingly bring their own assumptions and ways of seeing the world to their work. Often we can misunderstand the consumers and citizens we’re trying to help, overlooking how they experience the world and what their real priorities and goals are.
Using deliberative forums to find the balance
We can overcome this by bringing consumers into the research process itself. Over the summer and autumn, as part of our wider Gambling Policy and Research Unit programme, we’ll be running deliberative forums on what is fair and open in gambling.
Whereas traditional surveys or focus groups can tell us what opinions are out there and who holds them, our deliberative forums will bring together members of the public to help create solutions. We will ask them to consider the evidence and make trade-offs to come to a practical and implementable consumer-led definition of what ‘fair and open’ means, one that can be operationalised by regulators and policymakers.
It is this process, of not only collecting data on what people think, but seeing how their thinking changes as they are confronted with evidence and trade-offs between competing objectives, that makes this approach so powerful. It’s an approach that can be applied in many different areas of policy-making where the ‘right’ solution is not obvious, and where consumer and industry buy-in is vital to making the policy a success.
