A Responsible Component Amid the Deregulation Movement

1 March 2002

For more than a year Michael Smeaton has been aiding the British government in its attempt to move closer to a deregulated gambling environment.

Slowly but surely the Department for Culture Media and Sport's (DCMS) Gambling and National Lottery Licensing Division is leaning on Smeaton and his E-Gaming Development division with GamCare to help draft provisional regulations for the interactive gaming industry.

"Deregulation has to go hand-in-hand with an increase in social responsibility."
- Michael Smeaton

The DCMS commissioned the Budd report last year, which concluded that the British government should try to deregulate the gaming industry in order to compete with offshore jurisdictions.

A large part of that deregulation could include the eventual licensing of online casinos out of the U.K. mainland, but not until the government is assured that the proper checks and balances are in place for consumers.

Enter GamCare, a non-profit designed to be the national center for information, advice and practical help in relation to the social impact of gambling in the United Kingdom. The group strives to develop systems that promote responsible gaming and improve the understanding of the social impact of gambling. It operates a 24-hour help line for problem gamblers and offers them free assistance.

For years the group has aided both operators and players in the land-based circle, but as the online gaming world has grown, so too has GamCare's scope of practice.

A few years ago Smeaton went online to assess the advantages and risks of bringing casinos and sports books to the Internet.

He wound up created a makeshift checklist to determine what good practices were in place and what areas sites needed to work on. The list looked at issues such as loss limits, age verification systems and credit checks.

The project has blossomed into an ever-evolving list as well as offshoots of educational programs and the advisory role GamCare has taken with the DCMS. Smeaton said the relationship between GamCare and the DCMS was a natural one once the Budd report was released.

"We were the only company that was addressing these issues," he said. "It fit in perfectly with the gaming review that we had over here. When the Budd report said that future licensees with the gaming commission were going to have to show demonstrable social responsibility it put GamCare right in the center."

Smeaton said the government is willing to make concessions for the industry to help promote better business, but not without some give and take with operators.

"Deregulation has to go hand-in-hand with an increase in social responsibility," he said.

The problem with that theory though, according to Smeathon, was that the DCMS had no idea what the issues were with social responsibility in regards to online gambling. GamCare has been able to share information with the regulators and worked with them in laying the foundation for future regulations.

To work toward that end Smeaton has been busy updating his project, "Internet Gaming Report: Social Responsibility," on the Web, which was released more than a year ago. He said he continues to update the document in house and hopes to release an updated version to the public within the next couple of months.

The goal of his work in the project with the DCMS, and in creating the checklist, is to eventually create a set of standards and practices endorsed by GamCare and the industry and adopted by the DCMS.

"I get the feeling that a system like that is what everyone wants, the industry and the DCMS as well," he said. "The DCMS wants us to guide them on what can be done, but it has to be practical and fit in to what the industry can do. It has to be realistic."

"Online gaming is great because it has the potential to put in safeguards that you can't put in terrestrially."
- Smeaton

Smeaton agrees with the many online operators who feel that problem gaming can actually be monitored more easily online than in a land-based facility because of various tracking systems and other Internet-friendly practices. Operators can monitor a player's spending habits and put loss limits on credit cards with greater ease online than elsewhere, but it can also be a downside for Internet operators.

"I agree, but it is a bit more than that I think," he said. "It is a double-edged sword. Online gaming is certainly the future of gaming, especially in the U.K."

When you have gambling that is beamed into the most popular room in people's homes, Smeaton said, barriers are broken down that exist in land-based facilities, and gambling is exposed a lot more. It is imperative, he added, that safeguards are put in place to counteract that added exposure.

He said the same technology used to monitor a player's spending habits or insatiate loss limits could be manipulated to track players who are excessive and then sell them more products.

"You could abuse your players spending habit or fix your play-for-free games so they are winning at a higher rate than they will be with the real games," he said. "Online gaming is great because it has the potential to put in safeguards that you can't put in terrestrially. You also need to put in those safeguards because of the nature of the game itself."

Smeaton said it would be wrong to make assumptions on behavioral consequences, but he feels the risk is in place with the Internet for players to get addicted more easily than they would at a land-based facility. He illustrate how absorbed users can get in gaming on the Internet by pointing out how many people get caught playing minesweeper, solitaire or other games on their computer longer than they expect.

"A guy may have a pile of work but wants to take a quick break and play one quick game," he said. "An hour later they are on their tenth or 15th game and saying 'one more game.' It is easy to get hooked with the computer."

Smeaton said a big reason for this effect is the combination of the absorption of computers themselves, the ability to lose time while on the computer, and the lack of reality checks to bring consumers back to their surroundings could translate to players spending more money or time than they originally intended at a gaming site.

Through his work over the years Smeaton has gained a good understanding of an online industry he knew very a little about when he started. He pointed out that online casinos and sports books are probably the only Web sites other than banks that actually hold money for their customers. The unfortunate part, he feels, is that gaming sites don't use the same high standards for security and protection to their sites that banks do, and hackers are starting to target them because of this.

Although online gaming operators have a bevy of issues facing them--from security and financial transaction safety--Smeaton said keeping their sites free from minors should still be the top priority

"At the end of the day that is the biggest issue facing the industry," he said. "If they want to be taken seriously and if you want to get a license you are going to have to make sure you know how old they are to the biggest degree that you can."

In the meantime, Smeaton and GamCare will be working with industry experts and the DCMS in guiding both sides to a deregulated, yet safe and secure world.

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at kevin@igamingnews.com.