Gambling (Categorisation and Use of B2 Gaming Machines) Bill [HL]

Baroness Sherlock Excerpts

Friday 11th March 2016 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I should say at the outset that I am firmly outside my official territory and my field of expertise, but today has been an important part of my education, for which I have many noble Lords to thank. In this Second Reading debate I add my voice to those expressing concern about the harm being done by this form of gambling to individuals, their families and the communities around them.

This issue first came to my attention when I served on the Riots Communities and Victims Panel set up by the Prime Minister in the wake of the 2011 riots. Between us, the four panel members visited all the areas in the country that had riots. I was struck during the visits by the astonishing concentration of betting shops in those areas. I assure my noble friend Lord Lipsey that I am not positing a causal relationship between the two. I do not like FOBTs but even I do not think that they caused the riots. I do think, however, that there was a clear correlation between the two and the correlation, of course, was deprivation: both were happening in areas of high deprivation.

As well as the harm to individuals and their families, I am getting increasingly concerned about what is happening in those neighbourhoods. Many such areas now barely have high streets worthy of the name, being simply a collection of betting shops, pawn shops—which are also payday lending outlets—fast food outlets, and the odd charity shop. I was surprised at the sheer number of individual betting shops, but I did not know then, of course, about the rule limiting the number of FOBTs in any one shop, which has caused the proliferation of shops. I also did not realise then that FOBTs contribute half of industry revenue. One colleague with a nice turn of phrase put it to me that betting shops are at risk of turning into tiny casinos with a few nice horse races being shown on televisions around them.

The key issues have already been flagged up today and it is for the Minister to persuade the House that the Government have convincing answers to the challenges that have been laid down if they are to allow the present situation to carry on. I have tried to look at the evidence without having the experience of my noble friend. It is complicated, but it seems to be beyond contradiction that FOBTs are particularly problematic for gamblers. The nature of the game is particularly addictive and NatCen research of loyalty card holders found that 37% of these regular gamblers have a problem with machine gambling. Does the Minister accept that FOBTs are particularly problematic?

The second issue is that of location. On reading some of the research, it seems that my riots experience was typical. Research by Geofutures on the Responsible Gambling Trust website analysed the location of betting shops with machines and looked at who used them. It found that areas close to betting shops tend towards higher levels of crime events, resident deprivation, unemployment and ethnic diversity. In a way, it does not matter whether my noble friend Lord Lipsey or the right reverend Prelate the Bishop of St Albans is right about the intentions behind location; the point is that the betting shops are in those neighbourhoods and, therefore, location determines who uses them. There may be some variation in the average distance that players travel to betting shops, but the research found that 400 metres is the modal, or most common distance that those regular players travel to the shops they use for machine play. In other words, location really matters.

These shops are located in poor areas and used by poorer people, those who can least afford to lose the money. We know from NatCen research that rates of problem gambling are higher among lower-income groups, those living in deprived areas and those who are economically inactive. The same research shows that problem gamblers bet at higher stakes than non-problem gamblers, deposit more cash into the machine when gambling and gamble more often.

The third issue is that it is clear that existing regulation is not adequate. If it were, we would not be reading the horror stories we have. To me, the worst horror story of all was the Paddy Power case that was mentioned in passing by my noble friend Lord Lipsey. When I read it I actually could not believe it. Just in case any noble Lords have not read it, I am going to read it into the record. The Guardian reports:

“In May 2014, Paddy Power staff became aware that Customer A was working five separate jobs to fund his gambling and ‘had no money’, the Gambling Commission said. Although he claimed to be comfortable with his level of gambling, shop staff passed their concerns up the chain to senior staff, who advised monitoring him. Later that month, the shop manager informed a more senior member of staff that Customer A would be visiting the shop less frequently. The senior employee responded by advising that ‘steps should be taken to try to increase Customer A’s visits and time spent in the gambling premises’. The Gambling Commission said, ‘This was grossly at odds with the licensing objective of preventing vulnerable people from being exploited by gambling’.”

Do you think so? The article went on:

“The shop manager ‘recorded some discomfort’ about the senior employee’s advice, according to the commission, and staff later noticed that the customer was ‘spending heavily and [...] looked unwell and as if he had not slept for a while’. He was only advised to seek help for gambling addiction in August 2014, when a staff member met him on the street and learned that he had lost all of his jobs, was homeless and had lost access to his children”.

The problem is that the sheer profitability of these machines is going to tempt staff within the industry not to act properly and ensure that regulation takes place. Does the Minister think that the situation is properly regulated? Paddy Power agreed to pay, not a fine, but a voluntary payment of £280,000 to “a socially responsible cause”, a sum it could make back in three hours of trading. I will not comment on the money-laundering dimension, but I am grateful for the education I have received from the noble and learned Lord, Lord Mackay of Clashfern, and the noble Lord, Lord James of Blackheath.

What we have here is a gambling product which is particularly addictive, often located in high streets, disproportionately used by people who are poor and run by an industry which has failed to act to reduce harm and which, at worst, has produced cases like that Paddy Power case. These are machines which allow someone to bet £100 a spin, £50 without human intervention. Can we really allow that to continue? It may be that the Government will accept this Bill and reduce the maximum stake. If not, will the Minister please deal with the issue of location? My personal view is that these high-stakes FOBTs do not belong on the high street. They are highly addictive machines which, if they are to be offered to the public at all, should be located in large, well-staffed, properly regulated casino environments, not in betting shops in poor neighbourhoods with one member of staff behind a counter who cannot possibly monitor customer betting and could not come out to address it if she did. We need some action.