Public Attitudes and the Future of Gambling Law

1
Public Attitudes and the Future of Gambling Law

• Prof Peter Collins
• University of Salford
• IEA Conference April 2008

2
Objectives and Overview

• To explore and explain
• The exceptional importance of managing public
  attitudes to the successful expansion of gambling
  businesses into new jurisdictions
• The deep issues of values in philosophy,
  economics and political theory which underpin
  public attitudes
• The implications for gambling in general
• The implications for expanding abroad
• Some key strategic considerations in relation to
  managing public opinion and public awareness.

3
Democracy and Liberalism Snapshot Definitions

• Democracy requires that what governments do be
  broadly acceptable to public opinion (i.e. what
  most people want)
• Liberalism requires that individuals be free to
  decide how to live their own lives provided only
  that they dont wrongfully harm others and that,
  therefore the business of government is to
  promote (equally) the freedom of individuals and
  to protect (equally) the innocent.

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Liberalism, Democracy and Economics in theory

• Liberalism stipulates that, providing they dont
  employ force or fraud
• Individuals should be able to use their own money
  to buy whatever they wish (regardless of whether
  others approve of their tastes or not)
• Individuals should be able to use their talents,
  energies, material resources and legitimate good
  fortune to sell goods and services to others at
  whatever price others are willing to pay,
  provided they do not engage in force or fraud
• Democracy stipulates that governments should
  regulate economic transactions in accordance with
  the wishes of the majority and/or of what public
  opinion regards as desirable.

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Liberalism, Democracy and Economics in Practice

• According to liberalism government regulation is
  only justified to
• - prevent the abuse of monopolies and
  oligopolies
• - ensure fairness, esp consumer protection,
  certainly irt equality of information and
  perhaps of other resources too
• - prevent or compensate negative externalities
  for harm to innocent third parties
• Acc democracy, government should do whatever most
  people want them to do irt the management of the
  economy which is why democracy has been so much
  feared
• In fact, the fear that democracy will lead to the
  poor majority destroying long-term capacity of
  (liberal) economies to create wealth by
  expropriating both the presently and the
  potentially wealthy have in the main receded in
  developing as well as developed nations. (The
  destruction of wealth-creation by corrupt,
  kleptocratic dictators has proved far more
  devastating). So, on the whole the liberal notion
  of when regulatory intervention in free markets
  is justified is democratically accepted.
  (Liberalism and democracy do not for the most
  part conflict hence liberal democracies where
  most people support liberal principles including
  liberal economic principles).

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Two Regulatory Dilemmas in Liberal Democracies

• Where is the golden mean given that
• - The less an industry is regulated the more its
  managers will seek to maximise their own
  interests at the expense of both customers and
  share-holders
• - The more an industry is regulated the more its
  profitability will depend on the success of its
  managers in pleasing politicians rather than
  customers?
• Are there moral externalities, i.e. harms to
  the innocent which result from offensiveness to
  the beliefs and values of third parties? (This is
  where liberalism and democracy are likely to
  conflict esp iro vice industries).

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Implications for Regulation of the Gambling
Industry

• In most jurisdictions which might consider
  legalising new forms of commercial gambling,
  politicians are likely to insist that gambling
  should be highly regulated
• To placate (somewhat) the vociferous minority who
  disapprove of gambling and think that the less of
  it there is the better
• To conform to the sense of unease amongst the
  majority that gambling is not wholly like other
  leisure industries in terms of its potential for
  negative social impacts
• To justify abnormally high tax rates or tourism
  investment in a manner which secures popular
  approval

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Seven Stages of Gambling Businesses

• Identify a jurisdiction with a good potential
  market and a potentially congenial regulatory
  environment
• Persuade the government to liberalise and
  regulate gambling generally in a manner which is
  hospitable to your particular business
• Secure for yourself a licence
• Develop/construct your infrastructure
• Start trading
• Cut costs
• Expand by reverting to stage one somewhere else

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Expanding into New Jurisdictions Giving
Politicians What they Want

• The unique and uniquely difficult tasks for
  gambling executives are the second and third,
  i.e. educating politicians about how gambling
  regulations which suit you can further their
  objectives and persuading politicians to give you
  but not your competitors a licence. Consequently
  it is crucial for executives to understand what
  politicians want. And what politicians irt
  gambling want is
• - Personal Enrichment (usually, but not
  exclusively, in non-democracies and not
  extensively and blatantly in democracies)
• Avoiding unpopularity and controversy (always but
  not exclusively in democracies) by failing to
  address the objections of anti-gamblers and the
  fears of ordinary non-gamblers
• Courting popularity (always but not exclusively
  in democracies) through
• - reducing negatives of illegal or other
  gambling
• - raising tax revenues
• - generating economic benefits other than
  consumer surplus (e.g. enhancing tourism product)
• - being seen to be appropriately liberal
• This requires industry executives
• - to collaborate successfully to ensure that the
  government passes legislation which ensures that
  there will be a stable, profitable and harmless
  industry which yields visible benefits to
  non-gamblers as well as gamblers
• - to compete successfully to persuade
  licence-awarding authorities that by awarding
  them the most exclusive licence possible they
  will secure the maximum public benefits with the
  minimum of social costs.

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Implications for expanding abroad

• Politicians and licensing authorities will have
  different objectives
• They will, however, always need or want to secure
  favourable public attitudes towards their
  policies
• Executives who hope to benefit from
  liberalisation will therefore need
• to help politicians understand how more liberal
  gambling laws can bring significant benefits
  while also not increasing and, in some cases,
  reducing negative social impacts
• To contribute to popular understanding of this
  themselves through their PR effort

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Some key strategic considerations

• Politicians want to please (almost) everyone and
  are therefore liable to make inconsistent claims
  and promises
• Gambling policy is usually something which,
  though complex, is of small importance to them
  and to which they therefore give little time,
  study and thought so that they can master the
  evidence and arguments
• Govt may not recognise that
• - the public controversy needs to be
  anticipated and addressed in advance of
  liberalisation
• - there will always be a principled
  anti-gambling lobby and a larger proportion of
  the population who worry about crime, addiction
  and sleaze and who are sceptical about the
  promised public economic benefits or that
• - existing vested interests (esp in the existing
  gambling industry) will also be vehemently
  opposed to new competition and will do everything
  they can (usually covertly) to support the
  anti-gamblers and the doubters (Thailand, New
  York, UK)
• Choosing the right local partners and
  professional advisers esp amongst local PR
  professionals is crucial

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Thank you

• The text of this and of other presentations can
  be found at www.gamblingstudies.salford.ac.uk