Over the past few weeks I have been wrestling with a judgement that keeps surfacing in conversations: how do you design incentives internally so that staff are motivated toward both performance and harm prevention, not pulled irreconcilably toward one or the other? In gambling operations, this tension is particularly acute because the core revenue model seems to depend on customer losses. When you layer on performance bonuses and salesperson incentives, the risk of perverse pressure is high.
I’ve seen companies try to mitigate these issues by introducing “safer gambling” metrics into bonus schemes, requiring training, and adding compliance checklists. But those are often second-order additions to a scheme whose real driver remains net gaming revenue. Managers know that the fastest path to a bonus is to optimise for player losses (within acceptable limits). I’ve heard of internal pushback from compliance functions, from safer gambling teams, and from risk officers, warning that the incentive logic creates a conflict of interest. Here’s my question: can a board ever believe that a “balanced” incentive scheme in a gambling enterprise will not distort behaviour?
That internal conflict is not just technical; it raises even more questions about what’s right. Boards must ask: do we want to be measured purely by growth of net revenue, or by a more nuanced health of customer base, retention, and reputation? And if you choose the latter, how do you persuade investors and external analysts that that metric is meaningful?
Global Connection
This question is not unique to the UK. Across jurisdictions and industries, we see similar tensions whenever the monetisation model conflicts with public interest or “safety” objectives.
In the United States, public companies have begun tying ESG (environmental, social, governance) goals into executive compensation, but with mixed results. Several studies warn that unless the ESG metrics are rigorously designed and audited, they become a veneer rather than a structural constraint. Regulators and shareholders increasingly question whether ESG-linked bonuses are window dressing rather than real commitment.
In regulated industries like pharmaceuticals or energy, incentive design is often constrained by regulation (for instance, limiting bonuses tied to sales of certain high-marginal products). Boards in those sectors often delegate incentive design to joint committees that include nonexecutive oversight and independent audit.
In gambling, we see an interesting example from Flutter and Entain in the UK. Their bonus structures link executive rewards to reduced reliance on deposits that lead to self-exclusion and markers of harm. But those reward conditions typically apply only in UK markets; their U.S. subsidiaries are not governed under the same constraints. That split raises a governance tension: executives are safe to pursue aggressive customer acquisition in markets where harm metrics do not apply.
In regulated Western European markets, operators have begun piloting “ethical growth ceilings”: a limit on marketing spend or new customer volume if harm metrics deteriorate. Some regulators (Australia, parts of Northern Europe) now mandate clawback clauses in bonuses if post-audit reveals harm thresholds were breached. The problem is that these regimes require high-quality data, forward modelling of harm, and the capacity to enforce retrospective adjustments, none of which mature gambling operators necessarily have.
The UK is itself moving. The White Paper “High Stakes: Gambling Reform for the Digital Age” cautions that online bonus offers may disproportionately drive high-risk behaviour, especially among those already at risk. The Gambling Commission is consulting on whether wagering requirements, mixing products, and promotional design should be restricted to reduce exploitative incentives.
Also in the UK, recent press has flagged high street slot operators allocating up to 80 per cent of staff bonus pay to “controllable profit”, essentially net losses from customers, while only a small portion is allocated to safer gambling or compliance targets. Critics argue this structure discourages staff from intervening when a customer shows signs of harm.
What is striking is how weak the oversight has been. The bonus schemes survive because no strong audit challenge has forced redesign. That is a governance failure.
Lessons for Governance
Here are distilled insights for boards and C-suite leaders:
- Make harm metrics leading, not trailing
Avoid subordinating safety or harm metrics to revenue thresholds. Instead, embed “intervention efficiency,” “customer health deterioration,” or “at-risk score trends” as primary gates. If customers cross a defined risk threshold, bonus eligibility drops, regardless of revenue. That redesign sends a stronger signal than “10 per cent of bonus is compliance.” - Use independent audit and retrospective clawback.
Design bonus schemes so that they can be audited ex post by a third party. If harm thresholds or non-compliance are discovered after the fact, claw back compensation. That disincentivises gaming the system. - Segregate incentive design oversight.
Place incentive scheme approval with a subcommittee or compensation committee that includes nonexecutive directors with no direct financial interest in performance. Require that compliance, risk, and safer gambling leads have veto or conditional influence. - Invest in analytics and forward simulation.
To detect perverse incentives, you need advanced modelling: scenario testing (if incentives push small changes, what is the projected change in harmful behaviour?), stress testing, and “what-if” forecasting. Only with robust data can you calibrate where the line lies. - Align with external accountability.
Use transparency to your advantage. Publicly report how incentive-linked harm metrics moved (in anonymised, aggregated form). Let stakeholders see that incentives do not just push growth but guard resilience. This reduces external scepticism and strengthens legitimacy.
Boardroom Questions
- To what extent do our current incentive schemes (for staff and executives) implicitly reward customer losses or harmful behaviour? Can we map that pathway explicitly?
- Do we have the data infrastructure and modelling capability to test alternative incentive designs under stress conditions (e.g. adverse customer behaviour, regulatory changes)?
- Should we adopt retrospective clawback, independent audit, or stricter gating such that safety metrics override revenue in bonus eligibility?