Why Government Regulation of Gambling Often Fails

  • 2022-01-25

Every state in every nation does what it can to regulate the retail and online gambling industries. They typically do this through regulatory bodies that are charged with monitoring the activities of gambling providers and protecting vulnerable parties like children and problem gamblers.

In the UK, that responsibility falls on the shoulders of the UK Gambling Commission (GKGC). It's a fact that the UKGC has some of the strictest guidelines and rules in the world. At the same time, the UK still faces more than its fair share of gambling issues. This is referring to issues like predatory advertising practices, rogue online operators operating without licenses, and as
many as 10% of the online gambling population reportedly experiencing problem gambling issues.

All of this begs the question, why does government regulation of the gambling industry fail?

About GamStop

Before we discuss the topic, we thought it would be prudent to talk about one of the top problem gambling protection resources in the world.

Several years ago, the UKGC introduced a program or scheme called "GamStop". GamStop is a self-exclusion program that allows problem gamblers to seek help from UK online gambling sites. The help comes in the form of being denied access to any UK online gambling website that has subscribed to the GamStop program.

For the most part, the program works. With that said, even a good self-exclusion program can't stop regulators from failing in the regulation of gambling in their respective counties.

Problem One: Beating the System

Gambling operators and problem gamblers can be highly-motivated entities. When they want to provide access or take advantage of access to gambling resources, they will typically find a way.

In the case of gambling operators, the internet provides a great shield for rogue online gambling operators against detection. It's near impossible for government regulators to catch every rogue gambling website because the numbers of them have gotten too large. A lot of rogue operators can take bets without detection until they mess up and prompt an angry gambler to contact the authorities.

As it relates to protecting problem gamblers, we will use GamStop to show how difficult is it to stop motivated gamblers. Remember, GamStop is a voluntary self-exclusion program. While the program works, it has limitations (see the next section). These limitations provide gamblers with a way around their own decision to stop gambling online.

One way UK GamStop gamblers can beat the GamStop scheme is to simply access a casino website like NonGamStopWager.com is not on GamStop. If a website is not a GamStop subscriber, they have no vested interest in saying no to anyone on GamStop. Other ways gamblers can beat GamStop include:
- Taking their gambling activities to other jurisdiction
- Gamble through cryptocurrency gambling sites that don't verify account information
- Do more gambling in retail gambling facilities
- Gamble through new online accounts opened under the names of friends or relatives

Problem Two: Making Regulations That Work

Sometimes, rogue gambling operators are able to avoid scrutiny because regulators have failed to go far enough when establishing laws to protect citizens. These failures often lead to low fines that don't deter and detection issues that are created by the lack of resources to monitor retail and online gambling activities.

We'll go back to the GamStop program as an example. So far, the UKGC has not made GamStop membership mandatory for UK online gambling operators. The regulatory body's "strong recommendation" is simply not strong enough to entice some operators into cooperation. If vulnerable problem gamblers can access licensed operators who aren't subscribed to GamStop, it serves to weaken the effectiveness of the program.

Addressing Issues

As the online gambling industry continues to grow at record levels, this is prompting regulators to look more seriously at potential problems. Their hands are being forced because gambling addiction is starting to have a negative effect on far too many communities.

In the UK, the UKGC is on the verge of making GamStop membership mandatory as a provision for getting an online gambling license. They have also taken steps to prohibit the use of debit/credit cards to fund gambling accounts.

All of this seems to be a race against time. It's now or never for gambling regulators that are operating in a world where online gambling is fast becoming a favorite form of adult entertainment.