The House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry has today (2 July 2020) produced its long-awaited report, marking the conclusion of its inquiry into the social and economic impact of the gambling industry. Information on evidence taken during the course of that inquiry can be found here.

It is the third major report on the UK’s gambling industry in the space of just 17 days. Entitled “Gambling Harm – Time for Action”, it contains similar criticisms of the industry (particularly the online sector) as the recent reports from the Gambling-Related Harm APPG and the House of Commons Public Accounts Committee.

Its overall message is summed up by the following comment from the Select Committee’s Chairman, Lord Grade of Yarmouth: “Urgent action by the Government is required. Lax regulation of the gambling industry must be replaced by a more robust and focussed regime which prioritises the welfare of gamblers ahead of industry profits”.

The Select Committee is less ferocious in its criticisms of the Gambling Commission than the House of Commons Public Accounts Committee and is less vicious in its onslaught against the online gambling sector than the APPG. Its report has its flaws, including reliance on some some contentious statistics, but it is more considered in its comments than either of the previous two reports. It even has some good words for the land-based casino sector.

You can download below both the report and a complete list of the Select Committee’s conclusions and recommendations, that are likely to be given very serious weight during the forthcoming government review of the Gambling Act 2005.

We summarise below what we believe will be the main areas of interest for UK licensed gambling operators:

1. The Select Committee does not consider that a need exists for a completely new Gambling Act, although it certainly wants to see material amendments made.
2. Whilst DCMS should continue to be the department with primary responsibility for gambling, its officials must give much greater priority to gambling and measures to minimise gambling related harm; it must also urgently progress the review of the Gambling Act
3. The triennial review of maximum stake and prize limits must be reinstated but should be extended to include both gaming machines and online gambling products and there should also be a triennial review of the performance of the Gambling Commission with findings reported to Parliament
4. In terms of regulation:
   • in exercising its functions, the Gambling Commission should specifically aim to identify and prevent potential and actual gambling-related harm – not the same as (but not too far away from) introducing a new public health licensing objective
   • fines & penalties imposed by the Commission should reflect not just the seriousness of the offence but the size of the offender and, in very serious or repeat cases, the regulator should demonstrate its willingness to revoke an operator’s licence
   • DCMS, the Commission and the Information Commissioner’s Office should “without delay” create a consistent GDPR compliant industry-wide approach on the sharing of customers’ financial data for the purpose of affordability checks.
   • banks should work with UK Finance to create an industry-wide protocol on blocking gambling payments, with at least a 48 hour cooling off period
   • a new funding structure must be developed to provide the Commission with more flexibility and allow it to react and adapt to fast changing regulatory requirements
5. In terms of changes in the law:
   • a subtle but significant change should be made to section 22 of the Gambling Act 2005 so that, instead of the Gambling Commission aiming to permit gambling insofar as it thinks is reasonably consistent with the licensing objectives, it should instead not permit gambling unless it believes that to do so will be consistent with the licensing objectives
   • a statutory duty of care should be created, enabling a customer who has suffered loss as a result of breach of that duty to pursue a claim in damages against the operator(s) responsible
   • a statutory independent Gambling Ombudsman Service should be set up
   • the minimum age at which an individual can (a) buy any National Lottery product or (b) take part in any online gambling (i.e. including other lotteries) should become 18
   • lottery duty should be replaced by a gross profits tax
   • loot boxes and any other similar games should be classified as games of chance
   • a statutory annual RET levy should be introduced, with a formula requiring companies offering potentially more harmful gambling products to pay a correspondingly higher proportion of the levy
6. Insofar as land-based gambling is concerned:
   • it is sympathetic to the suggestion that 1968 Act casinos should be entitled to an increased number of gaming machines and regulated in a consistent manner with 2005 Act casinos
   • a protocol should be created to ensure adequate supervision and staffing of betting shops
   • gambling licensing committees should take into account what is desired by/good for the community when determining gambling premises licence applications
7. Insofar as online gambling is concerned:
   • a system should be established to test and categorise all new games against a series of harm indicators, with stake limits (or approval withheld) for any that score too highly on harm indicators
   • speed of play and spin should be equalised with games in land-based gambling premises
   • a scheme must be established to block gambling payments to unregulated offshore operators
   • the Commission must define the minimum steps that operators should take when considering customer affordability
   • the current high-value customers/VIP consultation and consequential LCCPO changes must be urgently progressed (and the Commission must monitor compliance with the interim measures for VIP schemes in the meantime)
8. In terms of marketing and advertising
   • independent research should establish the links between gambling advertising and gambling-related harm
   • ads objectively seen as offering inducements to people to start or to continue gambling, or that create a sense of urgency about placing bets, should be banned
   • communications offering inducements to bet to individuals should be banned, unless they have agreed to take part in VIP schemes
   • affiliates should be licensed by the Gambling Commission
   • sports team kit sponsorship and gambling advertising within venues should be prohibited (not applicable in the case of horseracing and greyhound racing)
   • the Gambling Commission should undertake an annual inquiry into the National Lottery’s and society lotteries’ advertising and administration costs

The complete statement made by the Chairman of the Select Committee is as follows:

Most people who gamble, enjoy it safely. However, gambling related-harm has made the lives of two million people miserable. It leads to hundreds of people each year taking their own lives, leaving families and friends devastated.

The behaviour of some gambling operators, where vulnerable people were targeted with inducements to continue gambling when the operators knew they could not afford to, shocked the Committee.

Urgent action by the Government is required. Lax regulation of the gambling industry must be replaced by a more robust and focussed regime which prioritises the welfare of gamblers ahead of industry profits.

Addiction is a health problem which should be treated by the NHS and paid for by gambling industry profits. The Government must impose a mandatory levy on the industry. The more harmful a gambling product is, the higher the levy the operator should pay.

Only time will tell if the harm caused by gambling has been exacerbated by the coronavirus lockdown.

Our report makes some 66 recommendations which we believe will begin to the address this huge problem.

As reported by SBC News, commenting on the Select Committee’s report, Neil McArthur (Chief Executive of the Gambling Commission) has said:

We welcome this report and are already working on a number of the recommendations highlighted. As we made clear in our evidence to this and other committees, we need greater resources to be able to meet the challenges ahead.  Our current funding arrangements do not give us the resources we need and we are working closely with DCMS to address that.

We have made considerable progress in many areas to make gambling safer. We have tightened the regulation of the online sector and taken much tougher enforcement action against operators, including suspending and revoking licences.  In the weeks ahead we will be publishing plans to remove potentially addictive features in games, further improve customer interaction and strengthen affordability checks.

We recognise that criticism is something that all regulators face.  Where the criticisms are justified we will learn from them, but as we have been completely transparent and candid in all the evidence we have given to the various committees, in many areas this and other recent reports are playing back issues we have raised, know we need to work on and are already working to improve.

You can follow the below links to access the following:

• Report: Gambling Harm – Time for Action (HTML)
• Report: Gambling Harm – Time for Action (PDF)
• Gambling Written evidence volume (PDF)
• Gambling Oral evidence volume (PDF)
• Select Committee on the Social and Economic Impact of the Gambling Industry

UPDATES:

1. Responding to the Select Committee’s report, the Chief Executive of the Betting and Gaming Council Michael Dugher has said:

The Betting and Gaming Council welcomes the House of Lords report as a substantial and important report on the future of gambling regulation. There is much in it that we support and whilst we don’t agree with every recommendation, we feel this is an important contribution to the debate and the approach the Lords took was constructive.

We would now urge the Government to bring forward their planned Review of the Gambling Act without delay and to work with the industry on an evidence-led approach to future regulation.

The BGC completely agree with the Lords that the challenge for the Government and the industry is to make gambling safer for all, but no less enjoyable for those who do participate safely. Striking the right balance between regulation and not unfairly restricting the majority will be key to a successful Gambling Act Review and we are prepared to engage openly and constructively with Ministers and Parliament on that process.

The BGC, as the new standards body, are determined that there should be a race to the top on gambling standards and our members are fully behind achieving that goal. The Lords report rightly acknowledges that around 300,000 people are problem gamblers, and we recognise the impact this can have on those around them, but it’s important to remember that the vast majority of the nearly 30 million UK adults who enjoy a flutter every year by either buying a Lottery ticket or having a bet do so safely and enjoyably.

As both the Government and the Gambling Commission acknowledge, problem gambling levels in the UK have remained stable at around 0.7 per cent of the adult population for nearly two decades and we must now look at what more can be done to identify those individuals and ensure that they use the self-exclusion tools available that block them from all forms of gambling with our members.

The BGC are already working with the Gambling Commission on new affordability checks and a new code of conduct for game design, including slowing spin speeds on games and removing some in game features.

We welcome the Committee’s understanding of the role of advertising and the lack of real evidence of any link between gambling advertising and problem gambling. Betting not only provides sport with the vital funding it needs, it also supports the TV channels’ ability to broadcast more sport than would otherwise be possible. Over 50 per cent of all our members’ bets are taken on sport and in turn revenue from these bets return to sport through media rights, advertising and sponsorship.

Our members have taken great strides in addressing the level of advertising, introducing a whistle to whistle ban on advertising during all sport, which has resulted in an 84 per cent reduction in sports advertising, banning all gaming product advertising during lockdown and have now committed that at least 20 per cent of advertising will be safer gambling messages going forward.

The report rightly raises concerns about children and gambling. It is vital to understand that the vast majority of that gambling is legal betting between friends, in arcades or on the National Lottery. It is illegal for anyone under the age of 18 to bet with any of our members and we have strict measures in place to prevent any child from accessing our members’ products, whether that is preventing them entering betting shops, ID and age checks at the entrance to casinos or new ID and age verification checks online, which have resulted in hundreds of thousands of accounts being closed. Gambling by under-18s with National Lottery products is clearly a matter for the Government, but we note the Committee’s recommendation that all gambling should be restricted to adults only.

It is also vital that action is taken against black market operators who do not adhere to our safeguards and checks, and it important that any changes to regulations do not simply drive gamblers into the arms of unscrupulous individuals.

The BGC are also happy to explore the creation of an independent Ombudsman to judge customer complaints if clear procedures and responsibilities can be agreed that do not conflict with other regulation.

The report rightly acknowledges the huge economic contribution made by our industry, which pays £3bn a year to the Treasury in tax while also employing more than 100,000 hardworking men and women.

We are driving significant changes in our industry and will continue to do so. Our members have already introduced a range of measures, including cooling off periods on gaming machines, encouraging deposit limits, monitoring play and spend, closing off VIP schemes to under-25s and massively increasing funding by £100 million for research, education and treatment.  Many of these actions mirror recommendations made in the report.

We support reform and look forward to engaging with the Government on how we ensure a strong future for the regulated industry whilst being 100 per cent focused on driving more changes and higher standards on safer gambling.

2. Additionally, writing for PoliticsHome on 3 July 2020, in an article entitled “The Lords report into gambling was food for thought – it’s time now for the Government to get on with their Review”, Michael Dugher has said: