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Problem Gambling in European Union

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Problem or pathological gambling can be broadly defined as “an impulse control disorder consisting of consistent and recurrent maladaptive gambling behavior that disrupts family, personal, or vocational pursuits. (Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM-IV). Washington, D.C.: American Psychiatric Association (1994.))

In virtually all jurisdictions where commercial gambling is permitted, governments have become increasingly concerned with the issue of problem gambling in recent years. Indeed, governments have increasingly moved toward the position that protections of consumers of various kinds, including the “protection of the vulnerable” from problem gambling, has become a primary concern in gambling policy. Moreover, as commercial gaming industries increasingly become part of mainstream entertainment offerings, this sentiment is likely to grow in political importance. Furthermore, as jurisdictions experiment with policies, regulations, and constraints with the intent of mitigating problem and pathological gambling, we are likely to see greater attention paid to the efficacy of such strategies in realizing their objectives.

Most EU jurisdictions to date have sought to discourage—or at least not to encourage— excessive gambling by substantially restricting the quality and availability of gambling services that can be provided. This has been true of casinos and machine gambling permitted in arcades and bars, as well as with betting and lottery services. European jurisdictions and policy makers have also been aware of the potential for other negative social impacts associated with commercial gambling industries, such as participation by organized crime, money-laundering, loan-sharking, fraud and tax evasion. This has led to policies that constrain commercial gambling industries so that those which are permitted and licensed can be easily and effectively regulated. As a by-product, this has reinforced the tendency to authorize only a limited number of commercial gambling licenses or outlets. In the same spirit, governments have typically regulated quite strictly such matters as who may work in gambling enterprises, where gambling may be conducted, and what kind of gambling services can be offered. Concerns with problem gambling issues are likely to be increasingly cited in the future as reasons for maintaining tight regulation in these areas.

This suggests that—for such restrictive policies to be effective—they must have an evidencebased and scientific foundation on which to base regulations and other market constraining rules. Unfortunately, this is an area that, until quite recently, did not receive much serious attention from scholars and from the research community. There is still relatively little peerreviewed research available on problem gambling in the EU as a whole, though there is a growing body of literature primarily aimed at the this issue in English speaking countries (i.e. United States, Canada, Australia, New Zealand, and the United Kingdom).

For the most part, most EU Member States have neither carried out prevalence studies nor put into place explicit strategies for developing a greater understanding of the causal or contributing factors to problem and pathological gambling within their borders. In light of changing legal principles and political sentiments, along with jurisprudence pressures from within the EU, one can expect that this situation will change rapidly in the near future.

A general discussion of some of the main themes in the peer-reviewed scientific literature on problem gambling is presented below. It will be helpful, however, first to sketch briefly the historical background which has led to the situation in which EU jurisdictions now find themselves or are likely soon to find themselves, where problem gambling is a major issue in general debates about gambling legislation and policy.

The Historical Background on Problem Gambling and Public Opinion

Historically, governments have prohibited or restricted the legal availability of various forms of gambling because they were enforcing a code of morality—usually religious but sometimes secular— which regarded gambling as a vice. Furthermore, until relatively modern times, it was often assumed that it was the duty of government to control or eliminate vice.

As a more pragmatic view emerged, there was concern that gambling—especially in excess—would be disruptive to the general social fabric. Almost always, governments and the general public have had concerns about the capacity of gambling to render families of limited means destitute, and therefore have sought to make it especially difficult for those of lower income to gamble. In a similar vein, it has long been believed that the dangers of gambling would have disproportionate risks for the young. As a result, policy toward gambling, from an historic perspective, has often had different attitudes for enforcing prohibitions against gambling by lower income individuals and youth, than gambling by people of more substantial means and greater maturity. (David Miers (2004), Regulating Commercial Gambling: Past, Present and Future. New York: Oxford University Press)

In the Member States of the EU, as in jurisdictions of North America and elsewhere, opportunities to participate in commercial gambling have been quite limited until fairly recently. There have been national lotteries, betting on horse racing, places with casinos such as Monaco and Baden-Baden, and limited amounts of charitable gambling for good causes, but—in general—legal gambling was rare. Governments regulated quite strictly such matters as who may work in the gambling business, where gambling may be conducted, what kind of gambling can be offered, who would benefit economically from the spending, and how much commercial gambling of different sorts may be made available.

In the past half century, attitudes with respect to the morality of gambling changed substantially. On the whole, there has been steady growth in the prevalence of the view that individuals should be free to decide for themselves how to spend their own time and money in pursuit of entertainment, and that it is not the business of government to impose moral codes to which they do not adhere. Rather, at least for gambling, there has been a growing consensus that the proper role of government is to protect citizens from harm at the hands of others (i.e. consumer protections) and, in some cases, to protect consumers from harming themselves (i.e. protecting the vulnerable.)

In this respect, it is important to note that governments increasingly make a distinction between gambling to excess in a manner that might be harmful, and gambling responsibly for the pleasure and the entertainment to be derived. The general approach which governments presently take is that moderate consumption of gambling activities for recreational purposes is relatively harmless, and it is only of when problems of excessive consumption emerge that governments need to take note. The specific consequence of these changes in attitude—and arguably the main reason for liberalizing gambling laws—has been the fact that public opinion no longer supports the use of extensive and expensive law enforcement resources to stop people from gambling, and broadly supports the view that government should not concern itself with the vast majority of gamblers who do no obvious harm either to others or to themselves.

On the other hand, over the same period, public opinion has also increasingly demanded that the state protect people from various kinds of harm, including especially those which would once have been thought of as character defects but are now more likely to be judged to flow from psychological disorders. Consequently in Europe, as in North America and Australasia, the recent liberalization of permitted gambling has been accompanied by an increasing concern to do so only within a regulatory context which ensures that the incidence of—and harm caused by—excessive gambling is properly mitigated.

Moreover, the concern with regulating to “protect the vulnerable” in relation to problem gambling has been intensified as a consequence of technological developments. Concerns about the incidence of problem gambling have been raised with respect to the increasing popularity of electronic gambling machines in conveniently located venues and, more recently, of opportunities to gamble using the internet, mobile phones and interactive television. (See, for example, Griffiths, M. (1999), “Gambling technologies: Prospects for problem gambling,” Journal of Gambling Studies, 15, 265–284., and Griffiths, M., & Wood, R. (2000), “Risk factors in adolescence: The case of gambling, videogame playing, and the Internet,” Journal of Gambling Studies, 16, 199–225.) Because these new forms of gambling are both continuous and highly convenient, they have the potential to tempt people to gamble excessively on impulse, especially when high stakes and prizes are available.

Consequences of Public Concerns about Problem Gambling.

Although EU jurisdictions have been concerned in principle to minimize the negative social impacts of commercial gambling, different EU Member States differ with respect to the nature and structure of the gambling industries they have authorized, as well as with respect to their taxation policies dealing with gambling industries. There has, consequently, been no uniformity in the way the governments of EU Member States have addressed the issue of negative social impacts, including problem gambling.

Most EU countries have a single national lottery at least in part because of a belief that this provides a degree of control so that problem gambling and player protection issues can be effectively addressed. For the same reason, some countries—such as Holland, Finland, Sweden and Austria—have kept casino gambling under government ownership and control.

Increasingly, those countries which have allowed a proliferation of gambling machines in convenience locations outside of casinos are seeking ways to address the perception—and perhaps the reality—that such machines are especially likely to elicit problem gambling behaviors. EU Member States are also agreed in principle that it would be desirable to be able to regulate gambling on the internet, but they have not yet agreed on how this can and should be done.

In general—as is the case in other parts of the world—EU Member States have only recognized problem and pathological gambling as a significant public health issue relatively recently. So far, they have put comparatively light regulations in place to deal specifically with this issue, and have yet only allocated limited resources to the research, treatment, public education about, and prevention of problem and pathological gambling within their societies, cultures, and social environments.

As is discussed elsewhere in this report, one important consequence of restricting the availability or quality of gambling services offerings as part of policy to protect the vulnerable, is to create market conditions where gamblers pay more for gambling services than would be the case in less restrictive competitive environments. As a by-product of such conditions, excess profits can be made. Typically, both gambling service providers and governments financially benefit by such restrictions, in comparison to the more competitive alternatives, by capturing the economic rents created by the restrictions through statutory privileges and contractual relations.

Under the broad economic principles of the EU, commerce is to be governed by the concepts of “free and fair trade.” This suggests that there cannot be discrimination in the provision of services against organizations from other Member States with respect to access to particular markets, unless explicit exceptions are granted and can be justified. Because of its perceived and real “moral” challenges, gambling services have been delegated such exceptional status. As a result, many of the gambling services sectors in Member States are characterized by commercial arrangements that would be unacceptable in law in other commercial sectors in the EU.

The essence of recent European Court of Justice findings in cases such as Gambelli is that the exceptional status accorded to gambling services sectors can only be justified if the policy of the Member State is indeed to protect their citizens from the dangers associated with the commodity so protected. (It is not enough to justify discrimination, or monopoly privileges, on the basis that the revenues thus generated are allocated for “good causes.”)

Furthermore, the restrictions on fair and free trade must be in proportion to the loss of economic welfare that accrues to the EU at large because of such uncompetitive policy.

Proportionality implies that the existing economic and legal arrangements that create the uncompetitive conditions are indeed the most efficient way to mitigate the adverse and unintended social impacts associated with permitted gambling services. This in turn implies that those factors to be mitigated are measurable, and that the particular strategies to be implemented can be empirically tested for their efficacy. At present, the state of knowledge and research within the EU on the prevalence levels of problem gambling and the effectiveness of policies intended to deal with it are not at an adequate level to justify such a clear causal path.

One of the challenges around this issue is that, even with peer-reviewed academic research on problem gambling and its social costs, it may still be difficult to segregate scientific findings from the hidden (or no so hidden) agendas of researchers or institutions. (See, for example, Kindt, J.W. (2001), “The costs of addicted gamblers: should the states initiate mega-lawsuits similar to the tobacco cases?” Managerial And Decision Economics, vol. 22, pp. 17-63, and Eadington, W.R., “Comment on ‘The costs of addicted gamblers: Should the states initiate mega-lawsuits similar to the tobacco cases?,” in Managerial and Decision Economics, vol. 25, pp. 191-196 (2004)) This can be a major obstacle to the generation of evidence-based policy because serious attempts at trying to provide relevant evidence may come under attack by those who have an economic or political interest in discrediting the findings.

In summary, concerns over problem gambling issues ensure that proposals to change gambling law—or to allow new technologies linked to gambling services—will be controversial. Without a substantial base of knowledge that could emerge from a growing body of peer-reviewed research on problem gambling and related issues, such controversies will too often be characterized by claims and counter-claims which are not warranted by hard evidence, because the hard evidence would not yet be available.

© European Union

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