The Gambling Related Harm All Party Parliamentary Group (“APPG”) has today (16 June 2020) published its final Online Gambling Harm Inquiry report, calling for greater protections for online gamblers and a complete overhaul of gambling regulation in the UK. Land-based gambling operators should not be misled by the title of the report because its recommendations have repercussions for them too.
It is clear that the parliamentarians making up the APPG have worthy intentions. Furthermore, it would be a mistake for the online gambling industry and its supporters (a) to dismiss the APPG as merely part of the “prohibitionist” anti-gambling lobby, as some have done in the past, or (b) to criticise its report as wholly lacking ideas that merit serious consideration. Today’s report contains inaccuracies of fact but it most certainly raises points that will merit informed debate in due course.
However, many will justifiably fear that, if all of the APPG’s recommendations were to be implemented in their present format, a grave “backfire” danger would exist that its very aims and ambitions would be frustrated by increasingly large numbers of online gamblers (including the same problem and “at-risk” gamblers the APPG seeks to protect) removing their business from UK licensed operators to illegal unregulated black market operators, most of which would provide no consumer protections at all.
That was precisely the message conveyed, for example, by GVC Holdings CEO Kenny Alexander in his article yesterday (15 June 2020) for TheHouse entitled “As live sport returns, the betting industry is redoubling its efforts to protect problem gamblers”.
If harder evidence is required of the risk in this respect, a 28 April 2020 report commissioned by the Swedish Trade Association For Online Gambling entitled “The degree of channelisation on the Swedish online gambling market” demonstrates the rate at which Swedish licensed operators have been exposed to significant competition from unlicensed operators. It is anticipated that such competition may grow further after temporary restrictions for Sweden’s regulated online casino market – including a mandatory weekly deposit cap of SEK5,000 (£424) and a SEK100 (£8.50) cap on bonuses – are introduced on 2 July 2020.
The final APPG report (that follows its interim report published in November 2019) contains 31 recommendations (set out in full below) including the following most headline-grabbing items:
- a new Gambling Act “fit for our digital age” following some immediate changes made through secondary legislation
- a complete overhaul of UK gambling regulation because “the Gambling Commission is not fit for purpose”
- a ban on all gambling advertising
- a ban on all VIP schemes and inducements
- affordability limits set and imposed by the Gambling Commission
- a review of stakes (including a £2 maximum stake limit for online slots), deposit and prize limits online and “a complete review and classification of online product”
- a Gambling Ombudsman for consumer redress purposes and
- a mandatory RET levy payable by gambling operators on the “polluter pays” principle
The APPG’s more immediate Covid-19 related requests are as follows:
- an end to (a) all gambling advertising and sign up offers for bonuses and (b) VIP accounts
- implementation of deposit limits and a £2 stake per spin limit on slot content for the duration of the crisis and
- data being made available “to ensure independent research can be undertaken to assess the scale of harm being caused by the industry and the need for further harm prevention measures”.
The final report’s summary of recommendations reads as follows:
A new Gambling Act is urgently needed:
1. A new Gambling Act is urgently required. While some immediate changes can be made through secondary legislation and the Government should consider what changes can be made in the short-term, an overhaul of the 2005 Gambling Act is required – fit for our digital age. 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.
Greater regulation of the industry is needed:
2. The APPG has undertaken further work into the regulatory actions which are required to ensure online gambling products are less harmful. 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. In this report we recommend:
(a) An independent review of how online products are regulated, tested, and classified in terms of addictiveness and safety. Regulation of products seems to be weighted in favour of the industry and not the consumer. Products are allowed in the UK that are considered too dangerous elsewhere. The system needs to change so that we operate under a “precautionary principle” whereby products have to be proven as “safe” before they can be marketed to the public. This review should also feed into the Gambling Act Review with a series of regulatory measures for 57 current products – both online and offline – to make them safe, as well as setting out a new regulatory framework for the future.
(b) Restricting in-play sports betting to venues or via the telephone, to bring it in line with regulation in Australia.
(c) Significantly slowing down the Speed of ‘Random Number Generated’ digital slots and roulette. (e.g. online roulette much faster than land based which is supervised). There should be no Free Spins, Turbo Spins, or Reel Stop play.
(d) Providing accurate information to consumers on chances of winning and whether it is skill based or random chance.
3. Stakes, prize and deposit 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 Advisory Board for Safer Gambling 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. The APPG welcomed Neil McArthur, the Chair of the Gambling Commission’s, announcement at our meeting in February that the Gambling Commission will be forming a view on gambling advertising and online stake limits in the next six months. These are very important developments, and both are very serious issues which it is right that the Gambling Commission addresses urgently. We look forward to hearing reports on these by September 2020 as promised.
4. In this final report the APPG also recommends that a £2 stake on riskier slot content should be implemented as well as clear deposit limits which are in place in other jurisdictions.
5. Affordability limits must be set and imposed by the Gambling Commission based on a clear understanding of what is affordable to online users taking into account the gambler’s income, outgoings and circumstances: 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’. Gauging affordability cannot be left to gambling operators, given the majority of their revenue comes from people who are losing more than they can afford. 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. 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. A “single sign-on” (SSO) mechanism should be implemented: 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.
7. Extending the gambling on credit ban: We welcomed the ban on gambling with credit cards and also the recent action to ensure that people are not able to gamble on credit cards through payment systems such as PayPal or via their mobile phone. Again this change came about due to a direct request from the APPG. Gambling with other forms of credit such as loans and overdrafts should also be prohibited in line with the sentiment behind the credit card ban that people should not be gambling on credit of any kind. This cannot take two years as the credit card ban did.
8. VIP accounts and incentives should be banned: Rather than relying on the industry, the Gambling Commission must act decisively and take steps to ban highly problematic VIP schemes. The Gambling Commission itself has identified the dependence of the gambling industry on VIP customers who are disproportionately likely to be addicts. We are concerned that fines to companies for offering inducements inappropriately have very little impact on this well-resourced and well-funded industry.
9. Reverse withdrawals and bonus promotions: The APPG recommends that, if the Gambling Commission accepts that reverse withdrawals and the offering of bonus promotions to those who are displaying markers of harm are harmful practices, they should be stopped permanently not just for the duration of the Covid-19 lockdown.
10. Ban on gambling advertising and marketing across all channels: From the evidence we have heard and given that the point of advertising is to encourage people to gamble and given the clear risks of exposing children to gambling advertising, there is a clear case for banning all gambling advertising, marketing and inducements across all channels. The Government has a duty to protect vulnerable people and also children and is out of step with the stringent restrictions and interventions in other jurisdictions. In addition to ending all gambling advertising is it also imperative that gambling advertising is also banned in online games such as FIFA which young children are playing often for many hours daily.
11. Operators should be prohibited from marketing to those that have self-excluded.
12. Online companies should commit to fund blocking software and offer it for free to gamblers 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.
13. The effectiveness and people’s awareness of self exclusion systems should be reviewed. We are concerned about the flaws which have been highlighted in the national self-exclusion scheme GAMSTOP and these should be immediately addressed. In addition, whilst there are a range of online gambling self exclusion tools our inquiry suggests that there is low awareness of these amongst gamblers as well as of blocking software schemes and gambling support services.
14. 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 coverup wrongdoing or curtail the work of the regulator.
15. We support stronger measures to verify the age and identity of online gamblers. A recent survey commissioned by the Gambling Commission found that 2% of 11-16 year olds had spent their own money on online gambling in the past week and 7% of young people had gambled online using a parent or guardian’s account (either with or without permission). 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.
16. All online gambling, including the National Lottery, should also be restricted to those over 18.
17. 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 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.
18. 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. All operators should be required to deposit anonymised data in an agreed format to an independent data repository. This data would be made available to researchers.
19. 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 Great Britain should be adhering to codes of practice both within Great Britain and to those set in local jurisdictions internationally.
A new regulatory structure is needed
20. The Gambling Commission is not fit for purpose: The system of gambling regulation in this country and the Gambling Commission must be overhauled. As has been shown by the highly critical report from the National Audit Office, we find that the Gambling Commission is effectively not fit for purpose. The NAO note that even if the Commission makes improvements “it is unlikely to be fully effective in regulating a challenging and fast-changing industry within the current system”. This is totally unacceptable and is a matter of deep public concern and raises issues about the safety of the 1.8million ‘at risk’ gamblers and 395,000 problem gamblers in the UK including some 55,000 children, some of whom are as young as 11. Overall, the NAO’s report is a major intervention by the Government’s own auditor and organisation which holds the Government to account. The APPG recommends an urgent review of the Gambling Commission and its capacity to effectively regulate the burgeoning online gambling industry.
21. Further regulation is also required in certain key areas:
(a) 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;
(b) There should be increased protection against accessing unregulated gambling sites by enacting internet service provider and financial transaction blocking to unlicensed operators; and
(c) Gambling Commission licensees should cease active trading in jurisdictions that have not formally legalised remote gambling.
22. We recommend legislation to equip the Gambling Commission with adequate enforcement powers, and that a “duty of care” to all their customers is placed on operators.
23. A Gambling Ombudsman is urgently needed: The NAO report also highlights that gamblers need to know much more about how to resolve disputes and that a Gambling Ombudsman is needed. The APPG continues to strongly support this.
24. Regulatory Settlements: We recommend that where regulatory settlements are achieved with gambling companies, following a gambling related suicide, that, given the exceptional circumstances, the bereaved family should have a say in where and how that regulatory settlement is allocated. It should not be immediately directed to GambleAware.
25. The APPG also heard how more work is required to understand female problem gamblers and addiction and that a large-scale piece of work is needed in this area. We strongly support this proposition. Research, Education and Treatment must be reviewed
26. 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 the re-starting of a national 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. We also recommend the establishment of a substantial longitudinal study to allow us to understand the development and life-course of gambling disorder, as well as the impact of awareness raising and treatment.
27. A ‘smart’ mandatory levy of at least 1% of Gross Gambling Yield should be introduced. Steps should be taken to put a mandatory ‘smart’ levy in place with immediate effect. This should be set on the basis of the ‘polluter pays’ principle, so those companies and sectors of the market causing the greatest harm should pay the most. The level of financial contribution should be under constant review and increased if greater demand for services arises. Funds from the levy should go to an independent Research, Education, Treatment and Prevention Council (RETPC). For treatment, the NHS should play the significant role, given the prevalence of gambling addiction and the complexity of the population.
28. The commissioning of treatment of gambling addiction and support for gambling related harm should be part of the NHS remit . It is essential that we have a national treatment service which is fully integrated with primary care with the most severe cases being treated in specialist gambling clinics. Awareness of gambling disorder must be increased throughout the NHS and amongst other frontline workers so that the onset of gambling disorder can be identified and diagnosed as early as possible
29. 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 public health issues in the UK.
30. There should be an independent review of the effectiveness of the current education and awareness raising initiatives. It is important to establish “what works” in terms of having an impact on young people’s long term engagement with gambling. The impact of brief education initiatives need to be viewed alongside wider and long term actions which are required to inform and protect young people.
31. Skins and Loot boxes require greater regulation: Whilst our inquiry has focussed on the harm that can be caused by online gambling, it is clear that a closer analysis is required of the emergent world of gaming and loot boxes. We agree with the view of the Digital, Culture, Media and Sport Select Committee that loot boxes that contain the element of chance should not be sold to children playing games and welcome the Department for Digital, Culture, Media and Sport call for evidence on loot boxes and urge the Government to take firm action. Again, this is an area where regulation in this country lags behind that in other jurisdictions. 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 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 enabling the regulator additional powers and sanctions
The Gambling Commission is reported to have hit back at the APPG’s criticism that it is “not fit for purpose”, stating:
We are committed to drastically reducing gambling harm and it is untrue to say that we are not fit for purpose. We are making gambling safer through programme of tough enforcement and compliance activity and in the last two years we have strengthened protections including online age and ID verification, customer interaction, and in April we banned gambling on credit cards.
Our recent work with the industry has seen strengthened online advertising rules to better protect vulnerable groups and later this week we will open a consultation on VIP practices. We will shortly be opening consultations on safer game design, along with further customer interaction measures including reverse withdrawals, which follows our strengthened guidance to operators as a result of novel coronavirus (Covid-19).
Earlier this year we welcomed the National Audit Office’s assessment of Gambling Regulation and are pleased it recognised our work in making gambling safer. That report also recognised that we face the significant challenge of regulating a dynamic and developing industry. It also underlined the constraints that our current funding arrangements presents and we are currently working with DCMS to address our fees structure.
Responding to the APPG’s final report, a spokesperson for the Betting and Gaming Council has said:
Over 20 million adults enjoy gambling occasionally, whether that’s on the National Lottery, bingo, sports or gaming, including online, and the overwhelming majority of them do so safely.
Both the Regulator and the Government have both made it clear that there is in fact no evidence that problem gambling has increased, but as an industry we have to keep doing more to help those people for whom gambling does become a problem.
Since the BGC was formed as the standards body last year, we have driven a number of significant changes across the industry – from advertising restrictions, encouraging deposit limits, monitoring play and spend so we can intervene to prevent customers getting into difficulties, closing online accounts, introducing strict new ID and age verifications, implementing the ban on credit cards and massively increasing funding for research, education and treatment. We are committed to making even more changes and to driving up safer gambling standards further, and we look forward to working with the Government on their forthcoming Review.
Of course there will always be people who are anti-gambling and prohibitionists who are not interested in the fact the regulated industry supports over 100,000 jobs and pays over £3 billion in tax. But we have to avoid measures that could drive people away from gambling safely with online companies who operate in what is rightly already a heavily regulated market, to instead gambling online with unregulated, offshore, black market, illegal operators that don’t conform to any standards or safeguards to protect problem gamblers and the most vulnerable.
Adding comment on behalf of the Advertising Association, its Chief Executive Stephen Woodford has said:
Now more than ever, it is essential that all parts of the advertising industry fulfil their responsibilities to the highest standards to the UK, both economically and socially. We ask all gambling operators and their agencies to continue to adhere to the strict standards set by the ASA and the Gambling Commission. These rules clearly require gambling operators to be socially responsible and to protect the vulnerable, as well as under 18s. The codes are under regular and rigorous review in line with the evidence. As new evidence emerges, the ASA and Gambling Commission consider this and amend the rules if they believe the evidence supports change. At this time, we believe a total ban is not necessary – such an action has wide implications, particularly for the support of sports across media channels, something enjoyed by millions of people right across the UK.
UPDATE: In the event that implementation of the APPG’s recommendations was to occur and a significant migration of UK consumers to illegal unregulated black market operators was to follow, not only would safer gambling concerns arise but the potential higher risk of adverse money laundering and terrorist financing consequences would need to be very much borne in mind. David Clifton will touch on this when he presents an Institute of Money Laundering Prevention Officers webinar on 30 July 2020, focusing on AML challenges and trends currently facing the gambling industry.