Flutter Entertainment Plc – Written evidence (GAM0055)

Flutter Entertainment plc (“Flutter”) is a FTSE 100 international betting and gaming company comprised of six trading brands. In the UK we operate through our European brands Paddy Power and Betfair. Our board and senior management share the Government’s desire to create a responsible industry that generates employment, enjoyment and investment whilst also protecting young children and the vulnerable from harm. Q.1. Are the three primary aims of the Gambling Act 2005 (to prevent gambling from being a source of crime or disorder, to ensure that gambling is conducted in a fair and open way, and to protect children and other vulnerable persons from being harmed or exploited by gambling) being upheld? Yes, licensed gambling in Great Britain is almost entirely free from criminal involvement, the vast majority of gambling is carried out in a fair and transparent fashion, the available data shows that there are very small levels of fraudulent activity and the UK has been relatively successful in protecting children and vulnerable adults. We refer to the submission provided by The Betting and Gaming Council for detail. Q.2. What changes, if any, are required to bring the Act up to date with new technology and the latest knowledge about how gambling harm is distributed? The 2005 Gambling Act established the Gambling Commission as an industry regulator to uphold the primary aims of the Gambling Act. Through the Licencing Conditions and Codes of Practice (“LCCP’) the Gambling Commission regularly evaluates and regulates new industry developments and emerging evidence on the most effective ways to promote responsible gambling. As the LCCP is continually reviewed and updated, emerging developments are already considered and factored into updates. Given the speed of technological change, new regulation or a new Gambling Act will become quickly out of date and limit our collaboration with supporting partners such as financial institutions and payment providers. The industry has also introduced several self-regulatory measures to address societal concerns around gambling. Clear examples include the work done through Senet on the Markers of Harm; our own work around affordability that the rest of the industry is now adopting; and more recently, the industry’s ‘whistle-to-whistle’ pre-watershed TV advertising ban and its voluntary commitment to increase funding toward treatment by £100m by 2023. This level of industry collaboration is significant and we believe it has real potential for effective industry change that can meet new technological challenges and emerging developments about harm. Q.3. Is gambling well regulated, including the licensing regime for both on- and off-shore operations? How successfully do the Gambling Commission, local authorities and others enforce licensing conditions including age verification? What might be learned from comparisons with other regulators and jurisdictions? Yes. Gambling is well regulated in Great Britain for both on-shore and off-shore operators, with rules introduced in recent years helping to even the playing field between UK-listed businesses and those operating abroad but targeting a UK customer base. Central to this were the regulations introduced by the UK Gambling Commission in 2014 which included a point of consumption tax (POC) payable on all bets made by UK customers irrespective of where the online operator is located. This has had an impact on operators who had previously moved their operations offshore to territories such as Gibraltar and Malta and were as such exempt from paying betting duties in the UK previously. The Gambling Commission frequently shows that it has the ability and appetite to enforce rules. It issues regular public guidance on the outcomes that should be achieved to identify and intervene with problem gambling. This is having an impact on operator strategy and promoting collaboration in areas such as customer self-exclusion and verification. Regulators in Sweden, Denmark and Spain require customers to register with a national identification card which removes the responsibility of Know Your Customer (KYC) age checks for operators as it relies on national databases. Such a system could be introduced in the UK through the National Insurance scheme but requires the UK national database to be up to date. Instead, recent rule changes by the Gambling Commission require remote licensees to verify, as a minimum, the name, address and date of birth of a customer before allowing them to gamble. Operators are also required to take reasonable steps to ensure that information on their customers’ identities remains accurate. These measures have been welcomed by the industry as they naturally enhance age verification processes, while being commercially viable and in-line with the goals of consumer protectionism. Q.5. What are the social and economic costs of gambling? These might include costs associated with poor health and hospital impatient services; welfare and employment costs; the cost of benefit claims; lost tax receipts; housing costs through statutory homelessness applications; and criminal justice costs.

Social and economic costs tend to be the result of several interlinked factors that cannot be easily isolated. We refer to the submission provided by the Betting and Gaming Council for more detail.

Q.6. What are the social and economic benefits of gambling? How can they be measured and assessed?

Sports betting and gaming is an enjoyable leisure activity enjoyed by millions of people in the UK. It has a symbiotic relationship with certain sports, most notably horse-racing, which plays a significant cultural role as the second most popular spectator sport in the UK (10m people watched the Grand National in 2019) and provides vital employment within rural communities across the country.

Our estimates suggest that 16% of UK adults had a bet in the last 12 months, with 8% having a bet in the last month. The average stake size for an online bet is around £11 with the average stake size for a retail sports bet was around £7. Our shops remain popular and show a leading range of live sport, often acting a vital centre of social interaction within communities, many of which have seen a declining trend in pubs and members clubs.

In 2018, we paid £203m of UK Gaming, corporation and other taxes (including PAYE) We employ 500 employees in our Hammersmith office, and employ 1700 staff across our retail estate.

We are also mindful of our responsibility to make a positive return contribution to the sports we take bets on. We make a significant contribution to British horse-racing and greyhound racing through levy, commercial, sponsorship and charity payments. We have over 75 information sharing agreements to protect sports integrity, and supply our leading in-house monitoring systems to sports free of charge.

Q.7. Is the money raised by the levy adequate to meet the current needs for research, education and treatment? How effective is the voluntary levy? Would a mandatory levy or other alternative arrangement be more productive and effective? How should income raised by a levy be spent, and how should the outcome be monitored? What might be learned from international comparisons? It is clear that the current voluntary levy system has been ignored by several operators and is not raising the level of funding needed to address societal and political concerns around access to treatment. A suitable framework needs to be developed to accurately deliver increased funding to the front-line.

In June 2019 we – the five largest operators in the UK; Flutter, Bet365, William Hill, GVC and Skybet – announced that we would raise our current 0.1% voluntary contribution of Gross Gambling Yield (“GGY”) over the next four years to 1% in 2023 for the research education and treatment of problem gambling. This tenfold increase will reach a contribution of approximately £60 million – a level at which we will maintain in the future.

Within this commitment, the five companies will contribute 0.1% of their GGY annually to GambleAware to support its existing treatment commitments and to continue its independent research programme. While this is a self-imposed, voluntary measure, we would welcome participation from other operators and are working with the Government, industry groups and other stakeholders to determine and establish a framework so that the funding is allocated in a constructive and effective manner.

Q.8. How might we improve the quality and timeliness of research in the UK? What changes, if any, should be made to the current arrangements for funding, commissioning and evaluating research in the UK? What might be learned from international comparisons? In order to improve the quality and independence of gambling research in the UK, we would welcome the introduction of an independent academic research body, which is funded in an appropriate manner to avoid accusations of bias. While independence is important in relation to the outputs of research, it does not preclude appropriate inputs from the industry. Operators have valuable insights into the challenges faced in identifying behavioural issues across large and diverse customer bases, as well as experience of what has worked well to date. This knowledge would be of material benefit in identifying opportunities for specific and targeted research to address gambling harm. We also support the Gambling Commission’s ambition to create a data-sharing hub, and we think the industry should play a role in establishing this having spent considerable resources examining customer behaviour and identifying indicators of potential gambling harm. We continually test and evaluate different intervention methods to ensure the highest levels of protection for our customers across our channels.

Q.9. If, as the Responsible Gambling Strategy Boards (RGSB) has suggested, there is limited evidence on which to based sound decisions about gambling by children and young people, what steps should be taken to rectify this situation? We support the development of a research strategy to enhance understanding of gambling by children and young people, and we would seek to assist the development of such a strategy in any way we can. We refer to the submission provided by the Betting and Gaming Council for greater detail. Q.10. Is enough being done to provide effective public education about gambling? If not, what more should be done? Education has a key role to play in preventing gambling-related harm and we are fully supportive of a national prevention approach through a greater focus on education and awareness. As with interventions, the industry has knowledge and experience that can help shape effective approaches to education and awareness based on data and analytics. As members of the Senet Group, we created the UK’s first public education TV campaign about gambling called ‘Bad Betty’. Research conducted in 2016 found that ‘over 1/3 of regular gamblers who recall the campaign say it has led them to approach gambling more responsibly’ and that ‘2.3million have reportedly been helped to stop gambling at the right time by the campaign’ 1. More recently we contributed to the Gamble Aware ‘Bet Regret’ campaign which is recognised by ‘54% of the campaign’s target audience’2 School education is also important, but we do not think the industry can comment or be directly involved in educating under 18s about gambling. Like many other gambling operators, we donate to the Young Gamblers Educational Trust (YGAM) who provide PSCHE lessons in schools and peer education projects in universities. We are aware there are a number of different education providers such as Demos, GamCare and Fast Forward and recommend a joined- up approach to deliver the most effective and practical advice.

1 https://senetgroup.org.uk/wp-content/uploads/PDF-Docs/the_senet_group_march_2016_report.pdf 2 qna.files.parliament.uk/qna.../safer-gambling-campaign-update-june-2019.pdf Q.11. Are the services available for the treatment and support of people at risk of being harmed by gambling sufficient and effective? How might they be improved? What steps might be taken to improve the uptake of treatment, particularly among groups who are most likely to experience harm from gambling and least likely to seek help? While the gambling industry has a key role to play in identifying, supporting and directing customers towards treatment, we believe the Government and NHS is best placed to deliver and evaluate the effectiveness of treatment methods. We hope that the aforementioned announcement regarding a commitment to increase treatment funding for treatment by £100m over the next four years will be able to deliver treatment programme through a suitable public health infrastructure for responsible gambling. As part of this commitment, we and the other four operators will work with Department for Digital, Culture, Media and Sport, and the Department for Health and Social Care and providers of existing services - including the NHS- about the most appropriate framework to determine these additional funds are deployed to support increased provision of counselling and other support services for problem gamblers. Q.12. What steps should be taken better to understand any link between suicide and gambling? We find any case of suicide to be a tragedy and sympathise deeply with anyone who has lost a loved one this way. Samaritans have been chosen as our charity partner from 2019 and we’re working with them to educate and train our staff around the topic of mental health.

However, it is dangerous to view suicide and associated mental health as a black and white issue caused by one factor. It’s clear that some people have a specific issue with gambling. We need to make sure there are effective safeguards that protect that minority while ensuring the majority can continue to enjoy the pastime.

Q.13. The RGSB has said that by not taking action to limit the exposure to young people to gambling advertising “we are in danger or inadvertently conducting an uncontrolled social experiment on today’s youth, the outcome of which is uncertain but could be significant”. Do you agree? How should we make decisions about the regulation of gambling advertising? What might be learned from international comparisons?

We fully support efforts to limit the amount of gambling advertising that young people are exposed to. Flutter supports the approach of the UKGC in requiring adherence to the UK Advertising Codes issued by the Committees of Advertising Practice (CAP) and administered by the Advertising Standards Authority (ASA), as well as the advertising code drafted by the Industry Group for Responsible Gambling (IGRG). As mentioned, we are also part of a group that has undertook a voluntary whistle-to-whistle ban on pre-watershed advertising around live sporting events and recently decided to remove Paddy Power and Betfair advertising on perimeter LEDs and interview boards at UK football matches. Our Paddy Power brand also recently launched a campaign to ensure football shirts remain free from sponsorship. The issue of young people being exposed to gambling online is a subset of the broader issues of managing risk to young people across the online world. Social media and telecoms companies are already very focused on this area, and we are exploring opportunities to work with these industries, using new technologies, to address the issue of underage gambling.

Q.14. Gambling is becoming an integral part of a growing number of sports, with increasingly close relationships between operators and sports clubs, leagues and broadcasters. What are the risks attached to this?

Flutter is deeply committed to the issue of integrity in sports. We have a dedicated Integrity team who constantly monitor markets for any unusual betting activity. We have also pioneered a system of Memoranda of Understanding with Sports Governing Bodies, allowing information to be shared with those governing bodies to ensure match fixing can be tackled. We welcome continuing collaboration by gambling operators and sporting bodies to ensure that public faith in sporting events remains absolute.

Q.15. How are new forms of technology, including social media, affecting children’s experiences of gambling? How are these experiences affecting gambling behaviour now, and how might they affect behaviour in the future?

Flutter believes this issue requires a cross-industry collaborative approach, as outlined at Question 13. We have strict age verification controls on all our social media accounts which are audited frequently. We regularly discuss with social media platforms and our media buying partners on how to engage with followers over 18.

6 September 2019