27 April 2023

Will new gambling regulation fall apart under scrutiny? You bet…


If you’ve noticed an unusually large number of hard luck stories from former gamblers appearing in the media in recent weeks, it is because the government’s ‘long awaited’ white paper on gambling regulation has been inching closer to publication. The BBC, in particular, has been scouring the country for problem gamblers to share their stories, no matter how implausible they may be.

It has been a long road. The Government launched a call for evidence in December 2020 to see whether gambling regulation was ‘fit for the digital age’. The idea that British gambling laws had become obsolete thanks to modern technology was always a bit questionable. When Tony Blair created the new Gambling Act in 2005, most households had access to the internet and one of the purposes of the Act was to regulate online gambling. Online gambling was also the primary target of the 2014 Gambling (Licensing and Advertising) Act which effectively regulated (and taxed) offshore websites operating in the UK.

The only real development between 2005 and 2020 was the arrival of smartphones, but this did not lead to a rise in the number of people gambling nor to a rise in the number of problem gamblers (the problem gambling rate today is just 0.3%, low by international standards).

The call for evidence was open-ended. The Government did not propose any specific policies. Unsurprisingly, anti-gambling campaigners filled the void by calling for a range of extreme measures, including limits on how much people could spend on gambling, intrusive affordability checks, a total ban on gambling sponsorship and a total ban on gambling advertising. None of these policies had anything to do with smartphones. It was almost as if these people simply disapprove of gambling.

It took 29 months and four DCMS Ministers for the Government to respond, but today it did. Lucy Frazer, the latest incumbent at DCMS, has put out a white paper with a list of policy proposals, some good, some bad and some indifferent. The good policy is raising the limit on how many gambling machines casinos can have. There was never a good reason for a limit in the first place. It was a mistake resulting from the 2005 Act being drafted in haste and should have been corrected long ago. The Government should also amend the law to make it easier for new casinos to open, as I said back in 2012.

I am indifferent about whether the gambling industry pays for NHS treatment of problem gamblers directly or indirectly. The gambling industry used to give millions of pounds to the NHS for problem gambling services via the charity GamebleAware. This came to an end last year after self-righteous NHS mandarins decided that they had a moral aversion to taking money from industry and placed the burden on taxpayers instead. This outrageous act of virtue signalling at a time when the NHS was supposedly strapped for cash should have been a sackable offence, but it shows how deeply anti-gambling zealotry runs among public sector elites. 

The idea of a statutory levy is that gambling money is somehow cleansed when the state takes it by force. Whatever. The important thing is that there is money to treat problem gamblers. Treatment is highly effective, and a 1% levy on industry profits would provide world class services, but it is essential that the money goes to treatment and does not become a slush fund for anti-gambling activists and academics.

More worrying are the proposals on affordability and stake limits. There is nothing wrong with having maximum stake limits but they must be reasonable and internationally competitive, otherwise players will turn to unregulated websites (of which there are plenty). Under existing laws, British gamblers have little reason to use unregulated websites but research shows that 5% of UK online gamblers have used an unlicensed operator in the past twelve months and nearly half of them are aware of at least one unlicensed gambling website.

The Government has proposed setting an even lower stake limit for people under the age of 25. This is part of weird new trend of treating people aged between 18 and 24 as apprentice adults who are not to be trusted. Earlier this week, there was a suggestion that the Government will ban motorists under the age of 25 from carrying passengers. It would be understandable if the Conservatives have given up trying get young people to vote for them, but this really is going too far.

Finally, there are the affordability checks. The proposal is that if you lose more than £125 in a day, you will face a ‘financial vulnerability check’. If you lose more than £2,000 in 90 days, you will face an ‘affordability check’. What does this mean in practice? How is affordability defined? How intrusive will the checks be? The devil will be in the detail, but the Government hasn’t supplied the detail. 

Frankly, I have never understood why gambling companies are expected to shoulder the unique burden of proving that their customers can afford to spend money with them. Companies selling jewellery and sports cars are under no such obligation. I buy thousands of pounds of shares on my smart phone without anyone checking that I can afford it. The evidence that I can afford it comes from the fact that I have the money to do it. Some people might only have the money because they have taken out credit, but it is up to credit card companies to make sure their customers are credit-worthy, not random businesses.

Online gambling companies already have sophisticated algorithms to spot problematic patterns of play and they frequently intervene with text messages, emails, phone calls and by suspending accounts. The reason anti-gambling campaigners like the idea of affordability checks is that they allow assumptions to be made about what counts as a reasonable sum of money to spend on gambling. According to the Social Market Foundation, £100 a month is quite sufficient, but plenty of non-problematic gamblers have a budget for gambling that runs into thousands of pounds a year and they expect to see large wins and large losses on a fairly regular basis. They can afford to spend £2,000 in 90 days and they don’t want to hand over personal information to an online gambling company. 

Creating a workable system to check ‘affordability’ that doesn’t violate people’s privacy or push punters towards the unregulated sector is not going to be easy. As with many ideas from the anti-gambling lobby, it is a simple idea that is complex in practice and is pregnant with unintended consequences. To help it find a way through the woods, the Government has announced a public consultation, but the anti-gambling lobby is opposed to this, with Iain Duncan Smith saying, ‘Consultations are a cop-out. I just don’t know what we’ve got to consult on any longer.’ 

Similarly, Lord Foster of Bath, who chairs the Peers for Gambling Reform group, said, ‘I am shocked to see so many of these proposals being subject to further consultation… With at least one person taking their own life as a result of gambling harm every single day, this Government now just needs to stop dithering and start implementing.’

But the claim about suicides is completely made up and there has never been a consultation on the policies that have been proposed. Public consultations and impact assessments are the minimum requirement for any government that purports to believe in evidence-based policy. The only reason the anti-gambling lobby wants to legislate in haste is that many of their proposals will fall apart under more careful scrutiny.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Christopher Snowdon is the Head of Lifestyle Economics at the Institute of Economic Affairs.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.