Ian Mallon: What if Flutter is right about regulation’s ‘unintended consequences’?
Meetingofthewaters, with Danny Mullins up, jump the last on their way to winning the Paddy Power Steeplechase on day two of the Leopardstown Christmas Festival at Leopardstown Racecourse in Dublin. Pic: David Fitzgerald, Sportsfile
Flutter Entertainment, the company formerly known as Paddy Power-Betfair, will next week make a trading statement ahead of its January 29 listing on the New York Stock Exchange.
The Dublin-based firm will announce a strong 2023 – ahead of its springtime financial statement – in particular the performance of US market-leaders FanDuel and PokerStars, with global revenues expected to exceed €10bn.
In its home territory – where revenues are 5-8% (approx.) of overall income - Flutter is nervously watching the slow birth of gambling regulation, which the Department of Justice says “will be enacted in the coming months”.
It will have noted the timing of comments by Tánaiste Micheál Martin over Christmas, which coincided with Paddy Power Chase Day at Leopardstown on December 27 – an exclusive PP meeting, where all seven races on the card are sponsored by the bookmaker, through a €500,000 purse.
The Tánaiste’s key message was that betting legislation would not result in job losses.
A prohibition of betting ads from 5.30am to 9.00pm, including adverts on Racing TV and Sky Sports Racing, is a central component in a wider set of marketing laws which are causing great uncertainty with fears both channels may end coverage here.
Mr Martin also attempted to assuage industry fears, first raised by Minister of State James Browne - the legislator charged by the former Taoiseach to regulate gambling.
“I read an article in which James sets out very clearly the arguments as to why he believes some of the fears that are being articulated will not be realised,” said the former Taoiseach.
The Tánaiste was referring to a December 17 interview in the , in which Browne took aim at “a leading bookie crying out recently” and “scaremongering” about the Gambling Regulation Act.
The unnamed “leading bookie” was Flutter – parent of Paddy Power, Betfair and Sky Bet.
Flutter’s “crying” came in the form of a submission to the Minister, where it highlighted ‘areas where certain new laws may lead to unintended consequences’ - five key areas which contradict “the stated objective of enshrining flexibility and instead adopts an approach which hardwire certain provision into the Bill”.
These are: 1) Stake Limit; 2) Inducements; 3) Prohibition on advertising during certain hours; 4) Advertising on On-Demand Services; 5) Unlicensed Operators.
There are others not mentioned, including a blanket exemption on the biggest gambling segment here, lottery and scratch cards, a substantial problem area; and self-exclusion.
Evidence-based research by the Economic and Social Research Institute (ESRI) concluded recently that the issue of problem gambling (PG) is greater than first understood – indeed industry sources were surprised the issue is 10 times worse than first thought.
The ESRI report – ‘Measures of Problem Gambling, Gambling Behaviours and Perceptions of Gambling in Ireland’ - found that 130,000 people were destructive punters, while 279,000 suffered from moderate PG.
By the ESRI’s definition, PG includes behaviours where bettors stake more than they can afford to lose, “more than €1,000 per month”.
The survey reveals “the most common forms of gambling are lotteries and scratch cards, followed by betting on horses, dogs and other sports”.
Let’s just stick to Flutter’s stated concerns in its submission to James Browne.
The Bill, under S126, provides that an operator may be granted a licence subject to the maximum payment and winnings for each relevant gambling activity not exceeding the maximum value.
This means that the setting of stake limits, particularly in gaming, will be enshrined in law rather than allowing the Regulator, Anne Marie Caulfield, to set those maximum levels.
Flutter believes that such limits should be determined by the Regulator where “evidence suggests it may be effective at protecting consumers, following detailed research and consultation”.
It agrees that €10 maximum stakes on slot machine games is appropriate given the speed of such games, but that the same price limits on table games including roulette, blackjack, poker and bingo is too low due to the slow play nature of such games.
There is a view shared by Paddy Power co-founder Stuart Kenny that all casino games are the ‘crack cocaine’ of gambling and therefore such care over stake limits is indeed wise.
However, Flutter says limitations will result in the migration of Irish consumers to overseas, unlicensed operators, an oft-repeated concern.
S148 of the bill supports a total prohibition on inducements, or free bets, something which Flutter agrees with when such offers are made to problem gamblers.
However, it says there is “there is no statistical evidence that promotion offers to open an account have any impact on customers' risk levels – in other words, "customers who join on a promotional offer are no more likely to become a higher risk customer than those who don’t".
Flutter in its submission says that 500,000 Irish people used a free bet in 2022, “a core part of a competitive market”.
If free bets are not a gateway to PG, then there is valid concern that inducements – which drive publicity and sales for newspapers and ticket sales at racecourses – could negatively impact revenues.
These two concerns are where things get spicy for legislators, particularly over the consistency of what constitutes advertising.
For example, under strictest terms, Irish audiences should not have access to the PDC World Darts Championship next Christmas, with its Paddy Power emblazoned branding within and across the playing area for almost three weeks of televised activity.
Minister Browne said that race meetings, such as Paddy Power-sponsored events, will benefit from “exemptions for (advertising) hoarding on a track. You can still call it the Paddy Power Cup”.
"So there is no impact here on broadcasting — it is specifically the ads.”
It needs to be clarified as to what constitutes advertising and what is primary branding, something Flutter’s UK&I CEO Ian Brown says is a cause for “deeper concern that the Bill in its current form will fail to deliver the very outcomes it sets out to achieve”.
Under legislation, the Authority must apply for a court order before requiring Internet Service Providers from blocking access to unlicensed sites, a move Flutter says “will add further to this challenge”.
A simple Google search for unlicensed betting sites today reveals 1.4m results, where a cross-section examination shows that the majority of results guide users to black market operators.
How the Regulator plans to police and block access to these sites through the court system appears completely unworkable given the sheer quantity.
There are other contradictions in the legislation, particularly in the area of self-exclusion where a problem gambler self-excludes from a betting site to which they are registered.
Operators say for this area to offer consistency, once a person chooses to isolate from one site, they should then be excluded from all operators.
Certainly Flutter’s, albeit self-interested, opinions raise interesting points. What remains to be seen is what amendments or adjustments will be made to the Bill, ahead of legislation, where tweaks are still being made by DOJ legislators.
What the intended consequences of these adjustments are will determine the success of the Gambling Regulation Bill.
The Gleneagle INEC Arena in Killarney and the National Basketball Arena in Tallaght are being looked at by the Professional Darts Corporation as possible host venues for its BoyleSports World Grand Prix event.
The tournament was previously held at CityWest in Dublin, but that ended when the venue was turned into a Covid centre during the pandemic, and is now being used as an immigration facility.
While Premier League Darts will take place here in March at the Three Arena, that already sold-out event is only a one-day showpiece as opposed to a seven-day extravaganza.
Matthew Porter, CEO of the PDC , wouldn’t speculate on possible venues, but The Pitch understands that Killarney is a possibility. However not being a major urban hub may cause logistical and ticketing problems.
The Tallaght option may also work this year, despite the €35m renovation of the National Basketball Arena, due to start in 2025 and which will take 18 months to complete.
In the meantime, Porter is still coming to terms with the impact of Luke Littler on World Darts, following the 16-year-old’s incredible impact on the World Championships.
“Fallon Sherrock was the closest thing we’ve ever seen, where interest transcended the sport, just like Luke has managed,” he told The Pitch.
Even still, Sherrock’s numbers are nothing like the Warrington teenager’s, with a total of 4.7m viewers watching the World Darts Final between Littler and winner Luke Humphries, on January 3.
A larger television audience on Sky Sports than the US Masters, the Ashes, or Formula One has ever managed – only beaten by football – was more than three times the previous best of 1.5m for last year’s final.
With such extraordinary growth across the game, Ireland’s Department of Sport will do well to appreciate the value of a growing sport with optimal interest and value.
