Gambling Advertising

Lord Trevethin and Oaksey Excerpts

Thursday 25th April 2024 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Armstrong. I apologise for my slightly late appearance in the Chamber.

I was also a member of the Select Committee which considered these issues, now a few years back. I am also a member of Peers for Gambling Reform, led by the noble Lord, Lord Foster. I pay tribute to his tireless work in seeking improvements to these problems. Like the noble Lord, I very much hope that, when the Minister responds, he will not be tempted to adopt the position that is to some extent taken in the White Paper, in which it was rather naively said that there is no hard evidence that gambling, advertising and marketing increase problem gambling. It is in the nature of things that conclusive evidence on that point is not available.

The following propositions are not in doubt. First, the gambling industry spends well over £1 billion a year on advertising and marketing in this country. It was more than £1.5 billion in 2017 and I would have a very large bet at very short odds that it is more now. Secondly, problem gamblers unquestionably provide a very substantial part of the profits made by the industry—see the committee’s report and plenty of other material. Thirdly, problem gamblers are more susceptible to gambling advertising than others—see the learned and impressive article published by the Public Health journal in February 2023. In all these circumstances, it is obviously correct to infer that the industry knows what it is spending its money on and why, that gambling advertising and marketing will increase gambling activity, and that a significant part of the increase will involve problem gambling. In short, one simply has to follow the money.

I have looked at some of the material helpfully circulated by the House of Lords Library. It contains a number of studies and papers that have been prepared in the last three or four years. I was particularly struck by one paper which I will mention in the time I have available. It was published by two academics at Bristol University, Rossi and Nairn, in 2021. Having considered evidence from 650 participants who were exposed to 24 gambling advertisements—and also, by way of a control, to other forms of non-gambling advertisements —it found that gambling advertising is

“significantly more appealing to children and young persons than to adults”.

It found that, in 2021, 45% of 11 to 17 year-olds saw gambling advertising on social media at least once a week, and about 25% saw it every day. That was three years ago. Use of, and to some extent addiction to, social media has not decreased since then.

There are various other findings which I do not have time to set out. One in particular struck me, and the noble Lord, Lord Smith, spoke to this. There are many advertisements that relate to esports gambling. I doubt if many Members of this House engage in esports, let alone gamble on them. Esports are the professional, competitive playing of computer games online. To my surprise, I found that there is a huge amount of gambling on this. The authors of this report observed, correctly, that this is a development almost entirely under the radar of public discourse and policy-making. In so far as I can see, there is almost nothing in the White Paper about that.

The authors of the paper made various recommendations, in particular a ban on esports gambling advertising—because it is targeted at children and young persons—an expansion of the definition of a young person from 16 to 24, and enforced arrangements which would involve gambling advertisements being provided only when users confirmed that they recognised and wanted them. I do not have time to say more about the paper or the other available material but, as other speakers have emphasised, it all tends to suggest that there is a very real problem.

I have a question for the Minister. The Government are prepared to make unlawful the purchase of cigarettes for a significant segment of the population. Is there any good reason why they would not enforce an arrangement whereby gambling advertising would have to do what cigarette advertising used to do when it was permitted—namely, inform the potential user of the probable outcome, which is that he or she will lose money?

Loot Boxes

Lord Trevethin and Oaksey Excerpts

Thursday 13th October 2022 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, I am also a member of Peers for Gambling Reform, led tirelessly by the noble Lord, Lord Foster of Bath, although my contribution is negligible compared to his and to the work done by the noble Lord, Lord Butler. I agree with everything that they have said, and I have also found the Government’s response to the consultation on this matter naive and unsatisfactory. I will develop certain criticisms.

First, the response recognises, fairly enough, that there is compelling evidence of an association between the purchasing of loot boxes and problem gambling. I recall that 12 peer-reviewed studies are cited, and they all come to the same conclusion. It might be thought that that represents a good reason for taking some sort of action to mitigate the damage being done by the availability of loot boxes in video gaming. But the Government’s response declines to take any such action on the basis that there is at the moment no satisfactory evidence to support a finding that there is a causal connection of the relevant type between purchasing loot boxes and problem gambling. I agree with the noble Lord, Lord Foster, that, even if that were so, it would not in itself be a sufficient reason for complete inaction of the type commended by the Government. But I find completely unconvincing the Government’s position on the quality of the evidence for a causal connection between the two things. In the course of my brief discussion of loot boxes and all that they bring with them, I will suggest that it is obviously correct to infer that there is some relevant causal connection between what one might call excessively enthusiastic and expensive purchasing of loot boxes on the one hand and problem gambling on the other.

Secondly, in the course of my speech, I will agree with and develop the point made by other speakers that the purchasing of loot boxes is, in substance, a form of gambling. The Government’s response relies, inappropriately, on a semantic analysis of the definitions used in the Gambling Act 2005. A realistic assessment of the position would recognise the very close similarities between loot box purchasing and what one might call gambling in the strict sense.

Thirdly, the response is disappointing in that it pays almost no attention to what one might call the lived or real-life experience—I suppose it is real life—of those who play video games and are motivated or incentivised to buy loot boxes. Like the majority of Members of this House, I suspect, I am not a video gamer, although I am a gambler, as I have declared on other occasions, and I know all about gambling for all sorts of reasons. However, I have spent some time on YouTube over the last couple of days, looking at some interesting presentations of the opening of loot boxes, so I have some idea of what goes on when one pays one’s money and opens up a loot box. With respect, I say that nothing in the Government’s response suggests that the authors are familiar with or have paid sufficient attention to the visual and auditory stimuli used by the gaming industry to make loot boxes attractive.

Finally, I entirely agree with the noble Lord, Lord Butler, that the core message of the response—which is that, as things stand, it is sufficient to leave it to the industry to sort matters out—is wholly unrealistic and naive. It is also unfair to the gaming industry, which is a magnificent part of this country’s economic activity, because it ignores the acute conflict of interest that arises.

I will briefly develop what I have said about the Government’s position on an absence of evidence on the relevant type of causal relationship. Generally, the paper takes a rather odd approach to the role of evidence in the preparation of this sort of document. This does not augur very well for the White Paper we have been promised for months and months on the reform of gambling legislation in general. Of course, evidence is very important; it is taken in the course of this sort of consultation process, and it must be assembled and acted on. However, when I read the report referring favourably to the provision of evidence from respondents that children have less developed impulse control than adults, have a greater susceptibility to peer pressure than adults and may have a limited understanding of purchasing decisions, I wonder why it is thought necessary for any evidence to be given on those blindingly obvious matters at all. That is an indication that something rather strange is going on in relation to the handling of evidence.

Looking at this point about causation, what sort of evidence would be required to prove a causal connection between overenthusiastic purchasing of loot boxes on the one hand and problem gambling on the other? Would the research show that children developed a taste for gambling by unlawfully gambling online, then became problem gamblers, and then started to play video games and found that the purchase of loot boxes satisfied their craving to gamble? It is not likely that that evidence would be available; children generally get into video gaming first and then gambling later—only a bit later, unhappily, because of the accessibility of online gambling. That is the general sequence.

Might there be evidence that some human beings are predestined, for genetic reasons, to become problem gamblers, and the same innate characteristics that will make them problem gamblers cause them to be overenthusiastic purchasers of loot boxes? Maybe, but there is no such evidence of a genetic or neurological nature to that effect yet. I suggest that a more sensible analysis of the position would run as follows. First, there is a very close resemblance between the act of buying a loot box and the act of gambling on, say, an online slot machine. Secondly, the gaming industry presents loot boxes in a way that makes them virtually indistinguishable from some online slot machines. Even I am not stupid enough to play online slot machines, but I know what they look like. Thirdly, the buyer of a loot box unquestionably takes a risk, using in-game currency to buy something the value of which is unknown.

Fourthly, there is an illusion of control, in that different types of box—which, visually, could be a crate, pack or some form of container—may be chosen. They have different and rather odd names, they cost different amounts of money, and a child might well wrestle for some time with what he or she thinks is a delicate decision as to which box should be purchased to obtain what is hoped to be an ultra-rare product contained within. Fifthly, suspense is generated—I have seen this on YouTube—by a delay while the box is opened, or while it explodes slowly and dramatically, issuing forth all sorts of good things. Similar effects are created by suitably dramatic background noise. Sixthly, there is the possibility of a big win: the acquisition of some so-called ultra-rare item which will enable the gamer either to compete more effectively or to dress or equip the avatar in a way that will impress other users. Seventhly, the industry uses the notorious near miss effect, which can persuade the disappointed purchaser, who finds that the box contains some humdrum piece of equipment that is already possessed, to have another go and cough up some more money. In the words of an academic study footnoted to the government paper,

“the randomness is objectified and becomes part of the entertainment”.

I therefore entirely agree with my noble friend Lord Butler that, if it looks like a duck and does everything else that a duck does, it probably is a duck. In substance, then, this is probably gambling.

The paper relies on the definition of gambling in the Gambling Act and, at paragraph 35, says,

“we view the ability to legitimately cash out rewards as an important distinction.”

That is, if you gamble in the strict sense online or elsewhere and you win, you can turn your winnings into money or they represent money—which you can spend on other things, if you are wise enough to take it out and do so. Very well, that is one point, but I suggest that the distinction is more apparent than real: video gamers are using what is called “in-game currency” to gamble on a loot box which may contain something that they value—they may win; they may lose. The fact that what they are acquiring normally has value only within the virtual universe constructed by the game— although there are circumstances in which the contents of loot boxes can be traded for real money—is nothing to the point. This can be compared and contrasted—but mostly just compared—with the position of a problem gambler in the strict sense: the problem gambler risks cash and when that problem gambler wins cash, the value of it is, as it were, contained within the gambling universe and will be used to buy further gambling time. The analogies are compelling.

I am out of time, so I simply close by respectfully inviting the Minister to assist the House by indicating precisely what the Government expect the gaming industry to do to mitigate the risks connected to loot boxes. If I were running a gaming company and I read this response, I would not know what I had to do to clean things up.

Gambling Harm (Social and Economic Impact of the Gambling Industry Committee Report)

Lord Trevethin and Oaksey Excerpts

Wednesday 27th April 2022 Grand Committee

[Lord Trevethin and Oaksey (CB)]

My Lords, it is a great pleasure to follow the noble Baroness. I declare various interests. I was honoured to be on the committee chaired by the noble Lord, Lord Grade. I make a very modest contribution as a vice-chair of Peers for Gambling Reform, which is so ably and vigorously led by the noble Lord, Lord Foster, who will be speaking shortly. I also draw attention to the interests I declared in the committee which might be thought to travel in conflicting directions. I grew up in a horseracing family; I have been surrounded by gamblers all my life; I gamble, usually with enjoyment but almost invariably unprofitably; and I still have family connections with the horseracing world. Those are my amateur interests which might be thought to be relevant. I have a professional connection with gambling problems in that I have acted as a barrister in a number of cases involving very serious allegations against gambling operators. In the course of that work, I have seen alarming evidence of deliberate and, it might be said, even cruel exploitation of gamblers with serious problems, and it is with that in mind that I shall address only one recommendation that the committee has made.

Before I do that, I echo what the noble Baroness just said about the distinction to be drawn between, as she put it, open-air gambling at the races on the one hand and online gambling on the other. Horseracing, which is dear to me and my family and about which the next speaker may well have a bit to say, is part of the fabric of British life. There is a danger, which I am sure the Government will be mindful of, that the necessary reforms in this area might have an unfortunate effect on the horseracing industry. The time to address that will be when we know what the Government’s proposals are, but I am aware from contact with the horseracing authority that there are concerns in respect of restrictions on advertising and affordability checks. Horseracing should, within reason, be protected.

Having made that modest plea for horseracing, of which I am fond, I will now briefly speak from a forensic perspective, if I am able to achieve that, about one recommendation that I think is critical. The starting point is to recognise that gambling operators are subject to a considerable conflict of interest when they are asked by the law or the regulator to take steps to protect problem gamblers. The conflict is obvious: the bigger the problem, the more profit the gambling operator makes. I have seen cases in which that problem is vividly brought out. The existence of that problem means that the Government’s reforms must recognise that it is completely unrealistic to expect the gambling operators to cleanse their own stables and act properly in future. The necessary standards have to be imposed on the gambling operators, and I suspect that they would accept that. It is almost unfair to expect them to behave entirely properly, given the commercial interests at work.

The recommendation that the committee has made and that I wish to speak to is that the office of a gambling ombudsman be created. I am quite familiar with the work of ombudsmen in my world, the legal world, so I know how they operate. They have very important powers. When a complaint is made to an ombudsman, the ombudsman normally has the power to drill down into the underlying evidence and, in particular, to get the relevant emails—which is where the devil is to be found—if the ombudsman thinks it appropriate to do so.

I am doubtful that effective redress will be available in every case in which a gambler has been unfairly treated by a gambling operator; sometimes it will and sometimes it will not. It will not be obtained in the courts, because the courts are too expensive. It might sometimes be provided by the ombudsman, but the real value of creating an ombudsman is that in cases of abuse and unfair exploitation, where a complaint is made to the ombudsman, the ombudsman can then make a comprehensive and searching inquiry into the underlying facts. That is critical, because it will expose misconduct by the gambling operators. The misconduct can be referred to the Gambling Commission, which I think is beginning to wake up to the scale of the problem that confronts us. The Gambling Commission has the power to impose extremely substantial fines, as it is beginning to do.

That seems to me to be one very effective potential route to a reform of the industry and a mitigation of the harms of which so many of your Lordships have spoken. I am not entirely confident at the moment, but I very much hope the Government’s proposals will include that which the committee has suggested in relation to the creation of an ombudsman. We shall see.

Online Gambling

Lord Trevethin and Oaksey Excerpts

Thursday 23rd November 2017 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, I also pay tribute to the noble Lord, Lord Browne, for raising this important matter and for his powerful and moving speech. I want to declare an interest of a sort: I have been instructed in a number of cases involving addicted gamblers who have sought to self-exclude. While for obvious reasons I will not go into the detail of those cases, the pattern that recurs is as follows. The gambler, in what the Gambling Commission refers to as a moment of lucidity, decides to stop and presses the button on the screen marked “self-exclude”. That button has alongside it a period of time. It is normally not less than six months, for reasons that I do not understand, and at present it is normally not more than five years—I shall come back to that a little later.

The moment of lucidity passes and the gambler decides that he or she—it is almost always he—wants to go back to gambling. It is often possible to circumvent the self-exclusion simply by using some other operator. Sometimes, in cases where gamblers want to wager very substantial sums of money, there are a limited number of sites that will provide the necessary service. Then, the gambler has to use some sort of subterfuge to get back online; a different name is used, for example. Money inevitably is lost and, in the cases I am talking about, astonishing amounts of money are lost in a very short period. Then the gambler may try to recover that money from the bookmaker provider. Issues then arise as to the steps the bookmaker has taken to satisfy itself that the gambler has not self-excluded. Issues tend to arise as to whether the bookmaker actually knew that a self-excluded gambler was coming back to the tables, or at least turned a blind eye to that fact for commercial reasons that are not difficult to understand.

That sort of problem is arising in the courts. Until now, disappointed self-excluded gamblers who have brought such claims have found it difficult to make them good because they have run into a defence which is of some relevance to the policies under consideration in this debate. The defence that the bookmakers tend to run—not a particularly attractive one—is a causation defence. They say, “Yes, we probably should not have let you gamble all that money, but if we had not let you come on to our virtual tables and lose hundreds of thousands of pounds, you would have found another online provider who would have taken your money. Therefore, you have suffered no loss. Therefore, you have no claim”. There is a case involving a gambler called Calvert, who was suing William Hill, in which the claim failed for that reason.

That is the legal context. In working on those cases, I have had occasion to look at the change in the law that occurred in 2005. I went back to the White Paper, which the Government produced before the Gambling Act 2005 was enacted. I noted that the White Paper was entitled, rather troublingly, A Safe Bet for Success. Yes, perhaps, but the success in question would be that of the bookmakers. The paper characterises the existing legal framework as it then stood as being one of grudging toleration. Some of the powerful speeches that the House has heard this afternoon may indicate that that is precisely the attitude that the legislature should have to gambling.

The position taken by the Government before they enacted the Gambling Act 2005 was very different. It was expressed as follows. In the Government’s view,

“the law should no longer incorporate or reflect any assumption that gambling is an activity which is objectionable and which people should have no encouragement to pursue … It is an important industry in its own right, meeting the legitimate desires of many millions of people and providing many thousands of jobs”.

That passage appeared in a very short section headed “Dealing with the downside”. This debate is concerned with the downside and, in the time I have available, I shall make one or two practical observations about the reforms being discussed.

Before I do that, I want to say something about the profits that are being and will be generated by online gambling. Some of the figures have been mentioned. I was struck by this useful briefing paper to be found in the Library. The gross gambling yield, which is the return to the bookmaker, taking into account any winnings that have to be paid out to the punter, has risen year on year from £12.6 billion to £13.8 billion—the latter figure is for 2015-16. That is a rise of £1.2 billion in a year and, give or take, about a 10% increase. Those are good figures for the bookmakers. During the same period, the gross gambling yield from remote gambling—online gambling of the type we are discussing—rose from £3.6 billion to £4.5 billion, a rise of £0.9 billion. So one can see that a large part of the increase in the profitability of the industry that has occurred in that period is attributable to such online gambling.

A further consideration indicates the power of the commercial motivations that will affect bookmakers’ operations. The provision of online gambling is, relatively, very cheap. That is obvious, because you do not have to build and pay for a casino building or pay for the employees in a betting shop, and so on. This striking statistic caught my eye: just over 6,000 employees are employed in the remote sector—the online sector—whereas some 106,000 employees are employed in the entire gambling sector. That rather brings home just how profitable online gambling is for those who provide it.

Members of the House have spoken eloquently and movingly of all the moral problems and personal tragedies caused by online gambling. There are moral questions here. If one goes into a betting shop, as I do occasionally—for research purposes, obviously—and one looks around, one sees dead-eyed men, and they are almost always men, hunched over the FOBTs, occasionally exploding into impotent rage. First of all, you are reminded of similar scenes that must be taking place in the bedrooms of our children all around the country, which is disturbing. I am also reminded of a line in a piece by Rebecca West, which I adapt. She said that a visit to the casino is a foretaste of death, where the dominion of the will gives way to the dominion of the worm. That is a rather dramatic way of expressing what, in my view—and I think that of many noble Lords who have spoken in this debate—is a moral question.

In the time available, I make three or four short practical observations and points. First, will the new multi-operator self-exclusion scheme leave open the possibility for UK gamblers to access non-licensed foreign sites that do not subscribe to the scheme? If so, the new scheme will not do its job. I would be very interested to know what protection might be provided in that respect. Secondly, I echo the compelling arguments against a two-tier system and in favour of a one-tier system. Thirdly, I am most anxious to know whether it will be possible for addicted gamblers to exclude themselves for life—they should be able to do that. Fourthly, I would be very interested to know what sanctions are to be imposed for non-compliance by bookmakers with the new system. Their commercial interests lie elsewhere. For them, the bigger the problem, the bigger the profit.