Politics Home Article | Hook, Hold, Harvest, Hide: how social media learned from gambling

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The opening salvo of the case by US states against Meta’s social media platforms for allegedly harming children included a fascinating description of their business model. The modus operandi of the Facebook and Instagram giant, prosecutors argued, could essentially be reduced to four stages: hook users, hold their attention, harvest their data, and hide the harms.

A Meta witness had reinforced the state’s “hide” case by being unwilling to disclose how many users had taken advantage of the so-called “protection” measures. The alleged unintended consequence was of course harm, and Meta agreed to pay up to $18bn (£13.3bn) to settle the claims.

This model seems eerily similar to the online gambling business. The adverts, free bonuses and spins are the hook. The repeated direct marketing and further offers are the hold. The use of algorithms and behavioural data is the harvest. The unwillingness to disclose how operators define and act on gambling risk, the “safer gambling” rhetoric, and the pretence that all is well, are the hide. The known consequence is the increasingly well-documented harm.

This similarity is no coincidence. Documents uncovered in earlier California litigation against Meta show a senior Meta data scientist warning that the drive to keep users returning could make its products more addictive, saying “think slot machines”.

Recent research shows how the harvest is allowed to continue despite the oversight of the Information Commissioner’s Office (ICO), with nearly nine out of 10 British-licensed online gambling operators reportedly failing to comply with basic data law.

As with so many of the problems of the modern gambling market, we can trace the origins back to the Gambling Act 2005. The 2001 Budd report was the basis for the Act, which came into force in 2007 just as the first iPhones were being released. Budd recommended online gambling operators should maintain an onshore presence, including servers and registration in Britain, but these essential provisions failed to make it into the Act. It is doubtful those omissions would have been made without any sector lobbying.

This provided a valuable loophole gift to the gambling sector. It allowed companies to stay offshore and avoid UK taxes in “white-listed” locations such as Gibraltar and the Isle of Man while offering “white-label” sub-licences to questionable operators. These jurisdictions granted licences that allowed companies to enter markets with minimal scrutiny.

A recent report by the Financial Action Task Force (FATF) says that illegal gambling has grown to rival the legal market in some countries, creating significant money laundering and terrorist financing risks. Another investigative report highlights the jurisdictions that support such transnational licensing.

Even licensed companies can find their products reaching British consumers through unlicensed operators. In July, a British licence holder, Evolution, agreed to pay almost £5m after its games were found to be used on unlicensed websites accessible here.

It also still infects our top tier football, with half of the Premier League clubs having sponsorship or advertising deals with unlicensed gambling companies. The unlicenced site Stake sponsors Everton FC, and Sunderland FC has signed a multi-year deal with the unlicensed crypto casino Shuffle. Stake and Shuffle are not legally available here.

Other illicit sites operate with near-impunity, ripping off the branding of companies such as Tesco and Barclays, as well as the faces of celebrities such as Lewis Hamilton and Tyson Fury without their consent.

Recent reporting suggests the GB licensed operator Bally’s, whose proposed acquisition of William Hill owner Evoke would make it a major high-street player, continues to benefit from millions of dollars from a previously sold Japanese facing business, serving a market where online casinos are illegal.

Earlier this year, the managing director of the Bally’s-owned operator Gamesys, Kane Purdy, was appointed as Chair of the trade body the Betting and Gaming Council which works with the government’s Illegal Gambling Task Force.

When we seek to crack down on British-facing illicit gambling, the history of acceptance of this behaviour by our licensees weakens our credibility and authority.

There are so many actual unintended consequences of the 2005 Act. Yet opponents of gambling reform invoke theoretical unintended consequences to argue against change. One of the objectives of the Act is that gambling should be “fair and open” – not that it should hook, hold, harvest, hide and harm.

There is an urgent need to get politics right on social media, crypto and AI. On gambling we let liberalisation and vested interests have priority over common sense and the public good twenty years ago. Under Andy Burnham, Labour has an opportunity to correct the mistakes. The Prime Minister’s planned reform of the “Aim to Permit” rule will be very welcome.