The UK’s Gambling Nightmare Is Heading to the US

is a big issue now. The US is loosening its own online gambling laws, and with it comes concerns that the problems gamblers in the UK are experiencing will soon play out on an even larger scale in America. A little later, I talked with two of my Bloomberg colleagues who have written a deeply reported story on the pitfalls of online gambling. But first a conversation with Stuart Kenny. He made a fortune as a founder of Petty Power, one of the UK's largest gambling companies, before he walked

away from it. He's now one of his industry's most vocal critics. Stuart Kenny, thanks for being here. It's a pleasure to be with your Wes Stewart. I wanted to ask you why, after being so successful in building a very large company, Petty Power, which is one of the most recognizable companies in online gambling, you chose to step away from it. In it was thirty nearly thirty years I was on the board. I just thought I was talking to myself that I thought that we were becoming

the new cigarettes. We were getting a stench due to gambling addiction, and we were not taking the measures that we were going down a route trying to hunt the addicted or find people who are addicted and trying to route them out the system. But in fact the product needed to change and the safeguards need to be put in place, and the board would have to accept we would make less money, but we would have a sustainable business.

They'll go into the future. Since then, the stench from gambling addiction has become larger and larger, and I don't regret the decision, and more and more governments are now seeing that they have to step in, and in fact it is a government issue. It is really expecting publicly owned companies to do their own to the police themselves. It's too much of conflict. The governments need to step in, step up to the plate and bring in restrictions. People

think of gambling at just one huge thing. I mean, coming on having a flutter in the Grand National or having a bet from the World Cup is not that addictive, But getting onto the highly addictive online casino is highly addictive. You had been in this industry for a long time. What changed from the time you started to the time you decided to leave that made you think you could no longer do it? What change was probably online and the rise of casino type products in net bedding shops.

The fixed starts bedding terminals became a scourge of the high street. And why is that? In order to understand addiction in gambling, the two elements that are foremost in it are how quickly between investment and result? And how quick can you repeat the dose? So you bet on Donald Trump win the next presidential election, it is two years away. Therefore, that is not an addictive product. You have to wait two years, whereas you've been on this

spin of a coin and it's very quick. And the fixed arts spending in terms of the government forced them to put in a twenty second time delay between spins because it were so addictive. But even that didn't solve it, so you're really what we're looking for in anything is to slow down the process so people have time to think. Am I self distructing on the online casino? The whole process needs to be slowed down because the online casino is much faster than a normal to say. Now, now,

may I say I made huge mistakes. I should have seen it earlier, and the finger can be pointed rightly at me that I did not put my hand up earlier and say, look, these concerns are real and we need to do something about them. I campaigned against fixed starts betting terminals coming into Ireland, but I should have left the board at that point because fixed dots betting terminals had no social benefit whatsoever. It was just an highly addictive product. It was the crack cocaine of gambling.

And the truth is the online casino has become the crack cocaine of gambling for people who aren't familiar with gambling. Can you define what fixed odd betting is and why it's so different and why you say it's it's such a big problem. The fixed ads betting terminals were basically putting fixed odds onto a casino product. Fixed odds are you buy a lot of take that you don't know what you win or what that's not fixed ots. You bet Donald Trump for the next presidential election. It's a

round of a four to one shot. So you put on a pound and you get back four pounds plus your pound backs. You get five back. That's a fixed OTS. So what they did was they made a casino product into a fixed odds betting product, and it became a huge political hot potato. Bookmakers were opening up shops, specifically in impoverished areas because the fixed odds betting terminals went so well. So you can win a whole lot all at once or lose a whole lot all at once.

Then if you lose, you want to do it again to maybe win, and if you win, you want to do it again to win. And so you just keep going round and round, round and round. And there were many things they could have brought in, such as every five spins you had to cash out, take your money start again. That would have given people time to think. The whole point of this is giving people time to

think before they self destruct. And one of the things I suppose that's especially problematic is that it's just on our phones. It's with you all the time, so that you don't actually have to be in one location. You can gamble and be enticed to gamble no matter where you are. That's right. Some of the measures that in order to stop people self distructing is to make gambling a little bit less accessible to everybody. You don't want to take the fun away from gambling, because the vast

majority of people aren't gambling addicts. You want to make the product available because that's what society wants, but you don't want to make it so available that vulnerable people get sucked in. So for the average population, it is fine to be offered about. But if you make it too accessible to children and too vulnerable people, it becomes a problem. It will be a huge problem in the United States. Why do you say that. What do you see happening in the United States that makes you believe

then it is more a free for all society. It is more a society that accepts some people fall through the cracks. Europe is different. I was speaking to our reporters who were working on this story, and they said that one of the things that makes it so addictive is that the minute you stop all of a sudden, your inboxes flooded with offers for free spins, trying to get you back in, offers to lure you back into

the casino. Is that something that you saw when you were in the industry, though, and you were still at Petty Power. Yes, and I put my hands up. I should have been much more aware. Let people gamble if they want a gamble. I'm not saying restrict but don't suck the vulnerable in. We don't allow the cigarette industry to start giving out free cigarettes on the street. We don't allow the drinks industry. We brought restrictions in in

all societies because they've seen the damage. The gambling industry has a danger of becoming the new cigarettes, and that will make it harder for them to get executives. Can you describe the day that you told your company, in the company that you're a co founder of, that you were walking away. I've been involved in the set up

of Party Power. I had been on the board for twenty eight years, and I had made a decision that there was a thing that rose in a board meeting beforehand where they had pulled some advertising to do with what they describe as responsible gambling. Now that's a euphemism. Let's talk call it what it is. It is hambling addiction we're talking about. So they had been advertising very effective. Take a break. It's available on YouTube. You can get

those ads. There were Australia with Sports pat and they had made these wonderful ads. But they were so effective that people were closing down their accounts. Well, I thought that was the whole point of the exercise. And they said that they were too effective and they were pulling them and they muttered something about that people were opening up with other people, and I said, well, look, if that's the journey that they need to make before they become aware that they have a problem, so be it.

And I was the only one who spoke up against pulling these ads. And then I knew, look, I had to speak to myself and say clearly, I either be a completely propriate that they are rather than just been a minor hypocrite if I continue on. And I made my decision to go. So I prepared for the next board meeting and said I was going. It's so you've made a lot of money off the gambling industry. Now that you are raising questions about it, raising awareness about it.

Are you using your own money to sort of fund anti gambling addiction treatment or initiatives? I have funded charities to do with gambling addiction. In fact, some of them refused to take my money on the basis that the money is tainted. What they asked me to do rather than put the money up front. Now there some of them I did and I will continue to give money to, but they asked me to speak out. Stewart Kenny, thanks so much for taking the time to talk to me.

West there was a plasure. Thank you after the break. How did amine gambling come to this? I'm here with two colleagues from London, Gavin Inches, an investigative reporter for a Bloomberg and Harry Wilson is a finance reporter. Thanks so much for being here. Thank you, Thanks for having us Gavin and Harry. You have written this story about what you have called Written's gambling nightmare. For those of us who weren't familiar with what's happening in the UK

and gambling, could you tell us sure? So, there's been a sort of explosive growth of online betting in the UK in the last decade, particularly habit forming casino games like slot machines and roulette, sort of virtual casinos, and these are extremely lucrative games for gambling companies, but not for for punters who are losing on average about fourteen billion pounds a year I think it was over the

last four or five years. And when we say explosive like that, the growth in these games, that's gone from twenty seven million pounds in twenty fourteen to more than four billion pounds last year. And so this is online gambling. This isn't going down in the corner to the little gambling shower. We are going to a formal casino. But this is all taking place in apps that you use on your phone, in your computer. Yeah, that's absolutely right.

This is is something very different to your traditional idea of what gambling might take. Certainly in the UK, the long traditional view of gambling was you had a store on a high street which men emerged from smoking cigarettes, and you went inside there and it was dimly lit. It wasn't a particularly sort of pleasant place to go, and but people went there, you know, were you'd have to be a sort of a commissed gambler. And what's happened in I guess the last ten fifteen years is

that's completely changed. The advance of smartphones has meant that people now have a little casino in their pocket, and anyone with an app store with a bank account can open up a gambling accounts and can begin gambling away on all these variety of casino games that have all these extraordinary names, and it's a hugely lucrative business for

for the gambling industry. So when gambling moved from these little shops where you'd have to go online, was there a rush of companies movie in to capture this new audience. I think there was a realization quite early on that online was going to be the new frontier for for gambling. They were trying to sort of destigmatize gambling and make it more accessible to everybody. Critics would say that the

games that they've designed are intentionally habit forming. One of the big issues that we came across when we talked to gambling addicts and reformed gambling addicts was the extent to which these gambling companies have a hold of people,

unlike any other kind of industriver ever come across. The v I P s and gambling are the biggest losers, so the more you lose, the more important you are to the gambling company, the more they lavish entertainment on new free flights, you know, tickets to sporting games, all

the rest of it, because you're a valuable customer. We spoke to people where you know they try and stop gambling, and after a day, a couple of days, you know, they would be deluged with emails, phone calls, text from their v I P manager, you know, asking whether they are okay, you know, whether they had provide them with some tips for new bets and and giving them free spins and the casinos and things like that, And it doesn't take much for a gowning addict to succumb again

to his addiction and be brilled back in herry. Are they keeping close track of each of the users and how long they're on and what they're winning or losing. You can't really under estimate how much information they have

on gamblers. So from people we've spoken to, certainly one of the points made to us is that pretty much from your first couple of bets, a gambling company has a very good idea of how good a client you are going to be to them over your life, and only literally takes a few goes, a few spins, and they can pretty much predict whether you're going to be a massive loser for them, which is great, or someone who's going to be a less lucrative clients. The amount

of analytics that they have is incredible. So you talking about incredibly sophisticated technology platforms here that are tracking is actually what people are doing, what they're gambling on, the gambling patterns in a way they know the gambler better

than the gambler knows themselves. And you can see these patterns when when someone stops gambling for a day or two, they all know is actually how to learn someone Back in very one of the things you write is that there has been an increase in the number of children and teenagers who are gambling, spending and losing a lot of money on these apps. Yeah, and that that that kind of speaks to the way the gambling industry has

has changed, right. I mean, if you think in the past, obviously, going back to our stereotypical drab gambling store, right, it would be be a lot easier to spot. And with with the way that gambling has gone online, that that's become more difficult On top of that, if you look at the games, particularly these casino games, they do look very childish. The real big money spinner now for for gambling companies are things that look basically like the kind of games I used to play as a kid in

the eighties. The industry would obviously say that they don't aim these games at children, that they're all obviously you have to be over eight teens to use them, But you just look at them, they don't. They don't look like something that's aimed as a sort of a grain adult. There have been some attempts to help people break their addition to using these apps and losing a lot of money. You read about one called gam stop. What exactly is there? So?

Gam Stop is a national self exclusion tool which all of the UK licensed gambling companies have to sign up to and in sorry, if you sign up to gaun stop and you say I don't want to gamble for a year or two years or three years, then you are not able to access any of the other UK registered gambling sites to put down a bet. Lots of gamblers have said that that has been a game changer

for them. But if you do want to get around it, there are plenty of websites out there that advise people on how you can do that, so it's it's far from fool proof, and it also doesn't cover the entire market. There are messenger based gambling companies that aren't covered by gam stop. When you went to the companies that run these apps, what did they say about how they upgrade about the problem of gambling addiction and what they see as their own responsibility if anything, in all of this.

A spokeswoman for Flutter Entertainment, the parent company of paddy Power, said the firm closed its v I P scheme and reduced the revenue coming from its highest spending customers by fifty The Flutter spokeswoman said the firm had quote invested significantly end quote in its safer gambling capabilities in recent years. A spokesman for gam stop said it has always acknowledged that quote no system can ever be a hundred percent

infallible end quote. The spokesman said that gam stop had helped three hundred and thirty thousand people to self exclude since A Gambling Commission spokesman said that it would quote assess whether the industry's response to the challenge has delivered

the right outcomes end quote. In the last few years, the Gambling Commission has fined quite a lot of gambling companies, quite a lot of money, millions of pounds for various failings around not doing enough to detect gambling addicts and not doing enough in terms of a m L checks and source of wealth checks. Where does a m L anti money laundering? Gavin? You right that the UK is seeing suicides that are connected to gambling addictions. Yeah, that's right.

That was one of the most shocking things I think for us was just the number of people who were killing themselves each year linked to their gambling addiction. So government statistics put it around four hundred and nine suicides a year that can be directly linked to gambling addiction. This is definitely a a mail focus issued by farther. Vast majority of problem gamblings and gambling suicides are younger men.

I think that's probably one of the reasons why this has certainly become such a front page issue in the UK is that you have these these awful stories of of young men who have become addicted to these online casino games and lost vast amounts of money that they either don't have all that they've stolen to fund their gambling addictions. So that raises the question, what, if anything, is the UK government trying to do to get hold of this and help people who are you know, gambling

away are their money. For the most part, successive UK governments have done very little to reign in the excesses

of the gambling industry. Way is that this massive booming in in online gaming can all be traced back to the Gambling Act of two thousand and five, which is the existing legislation that covers gambling, and you know, it's pre smart own legislation at the time, it made us one of the most deregulated major gambling markets in the world, and so it couldn't really foresee this huge boom in online gaming, and the gambling companies have been making hay

taking advantage of that kind of lack of regulatory foresight ever since. And why is that? Why wouldn't the government wanted to be doing something about this? Well, there's a very close relationship historically between various UK governments and the gambling industry. The gambling industry spends a lot of money on hospitality on UK politicians. There are several politicians who are paid to give speeches or provide advice for gambling companies.

There are many sitting members of the House of Lords who have positions on the boards of gambling companies, and they have a very effective, aggressive lobbying arm to the industry that has managed to persuade successive governments to largely leave them alone. When we come back the UK's gambling craze heads for the U S Harry and Gavin, you've spoken about all the problems associated with gambling in the UK and the rise of these online sites and apps.

In the US, we're also starting to see an increase in online gambling. I know that I'm just always surprised at how many advertisements are for it on the radio that I come across online. It seems like more than ever before. Do you first see a similar problems heading across the ocean toward the US. Pretty much all the UK and European gambling companies are really falling over themselves to to enter the S market because the European market

has become so saturated. So as the majority of US states have liberalized the gambling laws in the last few years, you know, there's already a market I think of more than one hundred million people kind of waiting to be

to be tapped in the in the US. And while at the minute most of that's online gambling is is limited to sports bedding in states where it's legal, you know, you do see these companies pitching online casino games to sports spellers by offering them these these free spins, and that's a big worry for for critics of the industry who argue that, you know, these casino games are the really addictive ones, and so you will see the same problems that have happened in the UK happening in in

the US. And there's an important distinction I think between the US and the UK as well, because there isn't one regulator for the for the gambling industry in the US. There's there's lots of them, each different state. Believe is I think over oversights spread amongst like a patchwork of state and tribal governments, some of whom are you know, They've been described by colleagues of ours as captives of the industry who don't necessarily understand the new technology as

well as they might. Where are we seeing gambling really take off in the US right now. I mean, I think one of the real gold rush states at the moment is New York. And certainly when we were talking to people, one of the places that's seen, as I guess as the elder rado currently for for gambling companies right is New York. And despite state taxes being incredibly high on gambling revenues, you've got gambling companies literally queuing up to to get one of these licenses because it's

considered so so lucrative a market. So I think, what what you've you've got are these incredibly well funded, sophisticated companies that see these opportunities in a in a liberalizing market. And my guess is obviously the the US will probably go down the same road as the UK if it's not careful. Talking to Harry's point on the New York.

So the tax rate there is, which obviously is incredibly high, and gambling earnings, yeah, on gross gambling revenue, and yet gross gaming revenue rather and yet as Harry says, there's still this cue going out the door. So it just shows how profitable they see that that business as being.

Since January, gambling companies have signed up one point five million accounts from one point one million customers, almost of them new too regulated sports betting, and just in that first month alone, in that January, one point seven billion dollars was waged on sports games online. In New York Gavin In the US, the Supreme Court ruled in big case that opened the door for more of this sort

of betting. Can you describe what happened? Basically the allowed online gambling or or made online gambling legal on a state by state basis. Breaking news is Supreme Court this morning striking down the federal ban on sports betting. Now it leaves it up to the stat and that really opened the door to a massive influx of gambling companies into the US and in many of the states. Now you are not only able to do sports betting online, but you can also do casino game betting online as well.

And so that that led to a lot of states that before didn't do this now seeing a great increase in the number of gamblers and gambling sites catering to them. Yeah, there's been an explosion of gambling sites in the US and in the online gambling revenues. And if you think about it, it's not so long ago that some of the executives of some UK listed gambling companies were having to avoid going to US because of cases they're under

threat of arrest. So it's really is quite a substantial turnaround in in terms of the openness of the US to to um online gampling. Gavin Finch and Harry Wilson, thanks so much for talking to me today. Thank you, thanks for having us. You can read Gavin Finches and Harry Wilson's online gambling story at Bloomberg dot com. Thanks for listening to us here at The Big Take. It's the daily podcast from Bloomberg and I Heart Radio. For more shows from my Heart Radio, visit the I Heart

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