The Institute’s Educational Trust is focused on providing education about finance, both in terms of what the finance industry is and does, and also about personal finance (known as financial literacy).
Last year the Trust commissioned a survey on teachers’ ability to teach finance, which concluded that, in essence, they found it very difficult, didn’t understand the subject and didn’t like teaching it.
This year, we asked YouGov to conduct a survey focusing on young people and gambling.
The results were surprising. Of all young people, 42% bet (and we deliberately excluded playing the lottery in our definition of betting), but there is a huge gender divide, with over half of all males betting compared with less than a third of females.
When we opened an account with a false date of birth, it took three days before the gambling company caught up with us and asked for proof of age
Gambling companies have been quick to take advantage of liberalisation of the gambling laws and the explosive growth in technology, especially smartphone apps, so much so that you can’t watch a sport on television, especially if it is football, without an avalanche of in-your-face adverts exhorting you to place a bet on a particular outcome.
But is this chicken and egg and, if so, which came first, the adverts or the young gamblers?
Our survey suggests it’s the adverts, as 44% of those who have placed a bet admitted that they had done so illegally, mostly online, because less than one-third of bets are actually placed through a traditional bricks and mortar office.
The gambling industry protests that it has stringent measures in place to prevent underage gambling, but our analysis suggested that they weren’t that stringent. When we opened an account with a false date of birth, it took three days before the gambling company caught up with us and asked for proof of age. However, when we declined to provide further proof of our age, it merrily kept our money in complete violation of the Gambling Code which requires it to return the stake to those whom it believes are under 18.
Gambling is the new smokingHowever, their arrogance isn’t surprising as, just like tobacco companies in the 1970s, they believe that their product is ‘fun’. Gambling is the new smoking; it presents itself as a ‘normal’ activity but, like smoking, is addictive and seeks to appear ‘cool’. In the 1970s, almost 50% of young men were smokers. Today almost half of all young men bet, especially on a Saturday. Like smoking forty years ago, gambling is now omnipresent. Smoking is unquestionably bad for your health, gambling is bad for your wealth.
Many of the big gambling companies minimise their tax obligations by basing their businesses offshore with Gibraltar and the Isle of Man their two favourite locations. This may be a dangerous tactic given that the electorate regards paying one’s fair share of tax as highly important, so going offshore to reduce taxes won’t reflect well.
However, perhaps the gambling companies are relying on the general ignorance of the public because only 25% of all young gamblers actually understand the odds. An alarming 50% of those surveyed thought that 3-1 against meant that if they won with a £10 stake they would win £20 (rather than £30). This asymmetry of information between the supplier and the buyer is precisely why the, then, FSA started a number of initiatives, beginning with 'Treating Customers Fairly' and culminating in the Retail Distribution Review.
Perhaps it is time for the rather lethargic Gambling Commission to cease giving the impression that it is the gambling industry’s trade body and behave more like a regulator. It was distinctly unimpressive that it felt unable to comment on our professionally-run survey because of “concerns over its validity”.
However, the Institute is not against gambling per se, what it is against is the exploitation of young people, and is certainly conscious that there may not, at first sight, be a lot of difference between gambling and making an investment.
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