No easy reading for the industry or regulator from the APPG Online Gambling Harm Inquiry Interim Report

The Gambling Related Harm All-Party Parliamentary Group has today published its Interim Report relating to its Online Gambling Harm Inquiry that was launched in February this year, with publication of its terms of reference later that same month.

You can download the entire report below, but the mood of the APPG is most certainly prefaced in its introduction to the Interim Report when its says:

We were also grateful to online gambling companies who appeared before the group and for their cooperation with our work. We were however, appalled at the cowardly behaviour of Kenny Alexander, the Chief Executive of GVC holdings, who pulled out of appearing before the group, and failed to send a representative, shortly after receiving an email from a problem gambler which challenged the actions of GVC, copying in the GRH APPG. An industry which causes harm must be answerable for its actions.

Given its harsh criticisms of the Gambling Commission (to which we refer below), it is surprising that the APPG has thought fit to publish its report before meeting with either the new Gambling Minister or any representative from the Gambling Commission, but it explains that is “due to the political context”. Nevertheless its principal findings (and we quote the words from the Interim Report) are:

  1. It is now a matter of urgency that stake and deposit limits are introduced in online gambling to reduce the harm that the industry is causing.
  2. It does not see the justification for having slot machine style games online with staking levels above £2. If they are not acceptable in land-based venues they should not be allowed online.
  3. Other than the operator objections, it is not at all clear why the Government and regulator are not looking at stake and deposit limits online.
  4. It is deeply concerned that it is still possible to gamble online with a credit card and to use debt to fund addiction. This should be ended immediately as should the use of overdrafts to fund gambling.
  5. GambleAware collects funds from the industry to research and treat gambling addiction, but the APPG is  deeply concerned about the way they operate and an urgent review of their role and effectiveness is required.
  6. It has not found that the operators have sufficient harm prevention measures in place or a full enough understanding of the markers of harm. There are also of course clear conflicts of interest. A high proportion of revenue for the online operators comes from those who experience harm. Whilst the APPG would like the industry to regulate itself, this conflict of interest underlines the need for stronger regulation by the Gambling Commission.
  7. Given the clear scale of harm caused by online gambling, and the cross-party consensus that action is needed in this area, it is not clear to the APPG why the Government and the Gambling Commission are not looking at this area in greater depth and that more radical action is not being taken.

The APPG’s recommendations (a number of which are misinformed, including in relation to staking levels permitted in land-based gambling venues and each of the matters identified by the Gambling Commission in the iGaming Business article to which we refer at the foot of this website posting) are set out in its Interim Report as follows:

  1. New legislation is urgently required: The most recent primary legislation in the area, the Gambling Act 2005, is analogue legislation in a digital age and in need of urgent revision. A few years ago the online gamblingindustry was described as being akin to the ‘wild west’ – without sufficient regulation and legislation. Whilst things have moved on, the current regime does not take account of the exponential growth of the online sector and the weak parameters around it. This legislation should focus on prevention of harm and retrospective concerns but also assess the kind of industry we would like to have in the future.
  2. It is essential that game and product design rules should apply and be consistent in the land-based sector and online. Currently, content is available online which is prohibited in land-based venues. This is unacceptable.
  3. Stakes and prize limits are urgently needed online. The Government has accepted the principle that stake limits can prevent harm in introducing the dramatically reduced stake for FOBTs to £2. If the amount which can be spent in one transaction is limited, this will also limit the harm these products cause. It is not a panacea but a critical step in reducing harm. We recommend that, in line with the Responsible Gambling Strategy Board advice, an urgent review of stakes, deposit and prize limits online is undertaken. It is not at all clear to us why the Gambling Commission has failed to prioritise this other than it being objected to by the online gambling industry.
  4. Improved affordability checks are urgently needed: When there are high levels of gambling related harm in the online sector and there are no stake and spend limits, it is simply not good enough for the online operators to say they are ‘developing affordability checks’. Operators should have a clear understanding of what is affordable to online users based on the proportion of a gambler’s income, and this should be underpinned by the Gambling Commission. The average level of disposable income in Britain is £450 a month, yet screening for affordability often only comes into play after thousands of pounds have been lost – in many cases tens of thousands of pounds.
  5. An increased role for banks is needed in relation to affordability checks: A number of challenger banks and traditional banks have introduced a gambling transaction block. We welcome these and the positive response we have had from a range of financial institutions. Given the breadth of data at their disposal, banks could also better assist operators in carrying out affordability checks through open banking.
  6. Gambling companies need to significantly improve the measures they take to protect vulnerable or at-risk gamblers. We would like to see online gambling operators act far more sympathetically and return money in cases where money was clearly gambled when it should not have been, for example when a person has been shown to have been vulnerable through an acquired brain injury. Gambling operators should also simplify their terms and conditions so that vulnerable adults are better able to understand them.
  7. We recommend a review is undertaken of the use of bonuses and incentives by gambling operators to determine whether they contribute to harmful gambling.
  8. The use of Affiliates for marketing purposes should be reviewed as should whether senior staff employed by Affiliate marketing companies should also hold a PML.
  9. VIP accounts should be restricted: We recommend that far greater assessments are taken by operators to assess a person’s suitability to have a VIP account and that the Gambling Commission adopts more vigilance towards these accounts. We are concerned that fines to companies for offering inducements inappropriately have very little impact on this well-resourced and well-funded industry.
  10. Banning the use of credit cards: The group is deeply concerned that it is still possible to gamble online with a credit card and to use debt to fund addiction. This should be stopped immediately. It is inconceivable that gamblers are able to build up credit to feed a gambling addiction. William Hill disclosed to the Financial Times that credit card payments accounted for 6% of total deposits, but this is likely to account for a much higher proportion of gross yield, given gambling with money you cannot afford to lose is a sign of problem gambling. More rigorous affordability checks should prevent operators allowing gamblers depositing funds from overdrafts or loans.
  11. Online companies should commit to fund blocking software and offer it for free to customers who self-exclude from their site: They should also fund a “self-exclusion group” that would constitute all operators, but also other sectors that can assist with restricting access to gambling sites – such as GamStop, Gamban, the financial services sector, internet service providers and mobile networks. Software platforms such as iOS and Android should allow blocking software to be shared across all of an individuals’ devices.
  12. A “single sign-on” (SSO) mechanism should be considered: A third-party software platform that creates a profile for a user which is used to sign on to every gambling site. The SSO platform would verify the user’s identity and enable the user to set mandatory deposit limits that would apply across all operators. These limits could be informed by affordability checks using services such as Experian.
  13. We recommend that operators ensure they do not market to those that have self-excluded and the Gambling Commission take steps to ensure it is more vigilant in this area.
  14. We support stronger measures to verify the age and identity of online gambling customers. A recent survey commissioned by the Gambling Commission found that, there is a small but significant increase in online gambling since 2018 (from 1% of 11-16 year olds, to 3% in 2019). These figures suggest the current system of checks are not working and that more needs to be done by gambling operators to safeguard children and young people.
  15. We support the proposals for a Gambling Ombudsman to deal with customer complaints and to provide an effective arbitration mechanism for claims against online gambling companies.
  16. More responsible advertising: The sector urgently needs to adopt a more responsible approach on advertising, particularly during sports programmes in order to protect children and the vulnerable. While Paddy Power (Flutter) made a joke out of football shirt sponsorship in recent months, that such a joke could be made is an indictment of the current state of gambling sponsorship proliferation. We welcomed the “whistle-to- whistle” television restriction to reduce live broadcast advertising. Yet, for the advertising ban to be truly effective, these companies need to go even further to include shirt and league sponsorship and digital advertising around a pitch. Otherwise, children and vulnerable adults will continue to be bombarded with gambling adverts. The FIFA gaming product also shows teams showing shirt sponsors even though the majority of FIFA players are young people. Online gambling companies should work together to make better use of Ad Tech to minimise the risk of exposure of gambling advertising content to children, young people and vulnerable adults.
  17. Increased responsibility from the broadcasters: It is also worth bearing in mind that it is the broadcasters that have been most resistant to the clampdown on advertising. The TV companies have an important role to play in this too.
  18. The Gambling Commission as the regulator also needs to urgently improve its standards in the area of online gambling. We are yet to hear from the Commission but are keen for them to ensure that they take action in all the areas set out in our report. In addition:
    • Spread betting should fall under the auspices of the Gambling Commission instead of the Financial Conduct Authority, and subject to the same social responsibility protections as gambling operators;
    • There should be increased protection against accessing unregulated gambling sites by enacting internet service provider and financial transaction blocking to unlicensed operators; and
    • Gambling Commission licensees should cease active trading in jurisdictions that have not formally legalised remote gambling.
  19. We recommend legislation to equip the Gambling Commission with adequate enforcement powers, and a ‘duty of care’ on operators to not exploit those with addictions.
  20. There should be a rapid and thorough assessment of the prevention, research and treatment needs that exist in all parts of the UK. The APPG strongly supports reinstating a large scale gambling prevalence study to provide a foundation for an assessment of the appropriate legislation, regulation and treatment of harm caused by the online gambling sector.
  21. A statutory levy of 1% should introduced to fund harm prevention projects, support for those who have been harmed by gambling and to fund gambling research, including on the link with suicide. We advocate the imposition of a graduated or ‘smart levy’ where those in the gambling sector who cause the most harm pay the most.
  22. The treatment of gambling addiction and support for gambling related harm should be part of the NHS remit and be attributed to those with experience of commissioning and assessment of treatment services.
  23. The commissioning of research should be transferred from GambleAware and the Gambling Commission to independent UK research councils, an approach that is taken for other major public health issues in the UK.
  24. Access to data should be made a condition of licensing to ensure high quality, independent research can be undertaken to assess the scale of harm being caused by the industry.
  25. Greater action to deal with the inappropriate use of NDAs must be taken by the Gambling Commission. A change in the law regarding the use of NDAs is also urgently required. It should not be possible for them to cover-up wrongdoing or curtail the work of the regulator.
  26. It should be a condition of licence that gambling companies that wish to operate in the UK should be required to ensure they are protecting children and the vulnerable in all countries in which they operate. In approving licenses, the Gambling Commission should also consider activity in other jurisdictions. A licensee operating in the UK should be adhering to codes of practice within the UK and internationally.
  27. A new charter for responsibility: GRH APPG is calling for operators within the remote gambling sector to sign our ‘Charter for Regulatory Reform’ to signal their intention and support for the policy proposals we have outlined.
  28. Skins and Loot boxes require greater regulation: Whilst our inquiry has focussed on the harm caused by online gambling, it is clear that a closer analysis is required of the emerging world of gaming and loot boxes. The Gambling Commission must take a closer look at the regulation of this area. At present the lack of a cash out feature will preclude social and casino style gaming falling within the Gambling Commission’s remit. However, this could be addressed by a change in the law that would classify gambling as “wagering for an item of value” rather than “money’s worth”, bringing these new forms of gambling under the legal definition, and empowering the regulator with additional powers and sanctions.

In an article today entitled “Gambling Commission hits back at MPs’ Report”, iGaming Business has reported that a Gambling Commission spokesperson has reacted to the Interim Report by saying:

We are disappointed that this report has been released before we have been given the chance to give evidence to the APPG.

The report does not reflect our considerable action and progress on most of the areas of concern set out in the report and we look forward to being given the chance to outline that work to the APPG.

Protecting children and vulnerable people is at the heart of our work.  We constantly look for ways to make our regulatory approach more effective, ensuring that it keeps up with changes in technology and consumer behaviour, that we remain fit for purpose and continue to effectively respond to emerging issues and risks.

We take tough enforcement action against anyone who doesn’t comply with the rules and will continue to tightly regulate the gambling industry. We recently carried out a comprehensive compliance review, involving 123 online casino operators, which resulted in 45 online operators being forced to submit an action plan to raise standards.

A further 14 online operators were the subject of enforcement investigations which resulted in tough sanctions. This work continues.

We have also begun to gather data and look at what that means for stakes limits online and we are consulting on use of credit cards for online gambling.

Earlier this year, we published the National Strategy for Reducing Gambling Harms which sets the framework for improving prevention, education and treatment support including working with the NHS. In addition, we are also looking at how to make gambling product design safer, tighten industry practice around VIP inducements and look at how advertising technology can be used to protect children and vulnerable people.

We look forward to ensuring the APPG fully understand this comprehensive programme of regulation that is already working to make gambling safer for all.

It will be interesting to find out what is said on a future date “to be confirmed” (according to the APPG website) when oral evidence will be given to the APPG by:

  • Rebecca Pow MP, Parliamentary under Secretary of State for Arts, Heritage and Tourism, Department for Digital, Culture, Media and Sport (Invited),
  • Neil McArthur, CEO, Gambling Commission and
  • Shahriar Coupal, Director of Advertising Policy and Practice, Advertising Standards Authority