Financial Risk Checks for Gambling

Carolyn Harris Excerpts

Monday 26th February 2024 Westminster Hall

[Carolyn Harris (Swansea East) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Neath (Christina Rees) on leading this petition debate.

It is an honour to speak about a topic that I am truly passionate about: reducing gambling harm and protecting the most vulnerable. According to the Gambling Commission, 22.5 million people in this country gamble, which equates to about 44% of the adult population. The overwhelming majority do so without any issue, but not everyone. When it comes to those for whom gambling is an addiction, the Gambling Commission and the Government have a duty to act responsibly and protect them from harm. The publication of the long overdue gambling White Paper last April was therefore widely welcomed by the all-party parliamentary group on gambling related harm, which I chair, as well as by a growing community of organisations, charities, academics and clinicians, all intent on reducing gambling harm, protecting the vulnerable and saving lives.

While concerns remain about the consultation times on the proposals in the White Paper and how long it will subsequently take us to get where we need to be, what is important today is that we lay out why the changes are so critical—specifically, the positive impact that affordability checks will have in reducing harm and saving lives.

In its patterns of play research, the Gambling Commission identified that the most profitable 1% of accounts make up 70.4% of the gross gambling yield, echoing previous research from the University of Liverpool. The gambling industry relies on a hugely disproportionate percentage of its profits coming from those affected by gambling addiction, who are subsequently harmed by unaffordable losses.

Historically, the industry has recognised the need for responsible gambling and ensuring that customers spend within their means. In 2018—that seems a life-time ago—the Senet Group, the industry standards body that was later absorbed into the Betting and Gaming Council, set out three steps that responsible gamblers should adhere to: only gamble what you can afford, set limits and do not chase losses. Suggesting that someone gripped by addiction would be able to make rational decisions on what is affordable is naive. Nobody would even contemplate that for any other addiction. The logical way forward would be to proactively introduce affordability checks on anyone gambling larger sums.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I thank my hon. Friend for giving way and congratulate her on the work that she does on this matter. Does she agree that primarily the focus should be on protecting the most vulnerable people in our communities? It is not about being anti-gambling per se. The industry has failed to act, which is why measures are needed to protect the most vulnerable in our communities. It is a small price to pay to protect those people.

[Carolyn Harris]

I totally agree. Anti-gambling is one thing that I am not. I am very fond of visiting the racetrack, as I am the bingo hall. My motive does not come from being anti-gambling. I want to protect vulnerable people.

The logical way forward would be to protect and proactively introduce affordability checks on anyone gambling larger sums. Those would not stop anyone who can afford it betting as much as they choose, but it would stop those who cannot. After carefully considering the evidence, the Government included a consultation on two forms of affordability checks in their proposals in the White Paper. The first would consist of background checks on those spending moderate levels, which would look at financial vulnerability. The proposed limits for the checks to be triggered would be a net loss of £125 within a month or £500 within a year.

The second would be a more enhanced check for those regularly spending higher levels, which might indicate a binge gambling problem. The proposed thresholds for them would be a £1,000 net loss within 24 hours and £2,000 within 90 days—halved for those aged between 18 and 24, given that that group has already been identified as being at greater risk of harm.

Although many have jumped to condemn the checks, it is important to be clear about who would be impacted by them. Recent research conducted by Dr Philip Newall from the University of Bristol and Dr David Zendle from the University of York using open banking data found that the unharmed gamblers have an average monthly spend of £16.41, compared with £208.91 for the highest risk group. That suggests that risk-free gamblers would very rarely trigger any affordability checks. If anything, the figures highlight the fact that the proposed thresholds are far too high and could be set at a lower level. To be clear, the initial background checks of financial vulnerability would be frictionless, using publicly available information such as credit reference data alongside negative indicators such as county court judgments and insolvency checks. The enhanced checks would initially use open banking, with more intrusive checks only being triggered further down the line.

It must also be put into perspective that the enhanced checks would be narrowly targeted to around 3% of the online gambling accounts affected. I can say at this point that it is the online accounts that are key. Online is where the most harm is taking place. It is where people—incredibly vulnerable people—can spend money they just do not have, with no intervention, with no contact with anyone that might notice a problem, and, until last week’s announcement, without limits. Online is causing harm at rates far in excess of any land-based venue, and it is important that we keep that in mind. The APPG’s focus has always been on that, and we have continually called for the likes of horseracing tracks and bingo halls to be considered separately in legislation.

For the 3% of affected online gambling accounts, the vast majority of checks would be frictionless. The Gambling Commission has already advocated for the focus of checks to be on publicly available data. Research suggests that only 0.3% of account holders would be subject to the level of checks that would require them to hand over any additional financial information. However, it seems that the smaller number of enhanced checks that would require consent on the part of the individual are being used as a scaremongering tactic to turn the debate on affordability into a controversial topic. Given that those checks have such a minimal impact, it is difficult to see why they have been contested so vehemently.

We know that the industry has stirred up the controversy by exaggerating the levels of intrusion and suggesting that the checks would drive gamblers to the black market. That loses sight of the whole point of the checks, which is to protect gamblers from harm by ensuring that they are spending within their means. Surely that is in the interest of the industry, which currently has a reputation for allowing those unable to control their gambling to gamble far in excess of what they can afford to spend.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The hon. Lady is making some strong points, and she has done some excellent work on this issue. When one talks to people who have lived and are living with serious gambling addictions, what comes across very strongly is the way they alter their behaviours to avoid accountability and scrutiny, to the point of using multiple identities. That being the case, is the hon. Lady confident that these kinds of checks, some of which will be intrusive, as she said herself, will drive the better outcomes we all hope to see?

[Carolyn Harris]

While we do not have all the answers now, that does not mean we should not do anything to protect those who are vulnerable. It is our responsibility to make sure that the system works to protect vulnerable gamblers.

It is ironic that this is the same industry that just a few years ago set out the three steps for responsible gambling, which included only gambling what is affordable —the same industry that still spends big bucks on “Safer Gambling” logos and promoting safer gambling week. It seems to be a case of talking the talk, but being totally unwilling to walk the walk and actually implement the measures that could protect the most vulnerable customers.

As I said at the beginning, we know that the vast majority of the 22.5 million people gambling in this country enjoy doing so safely and within their own limits. Nobody, least of all me, wants to prevent them from being able to do that. We have already established that the number of people who could trigger a check as a result of their spending, even if it is money they can afford to spend, is negligible. The argument against affordability checks is therefore very difficult to grasp, when a slight inconvenience for a very small number of people will protect many more.

The argument for affordability checks is comprehensive. It will stop those gripped by addiction from gambling more than they can afford. It will reduce the levels of harm we are seeing. It will protect the industry’s most vulnerable customers. Most importantly—and I say this because there are people in this room today who have lost children because of this addiction—it will save lives.

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve with you in the Chair, Sir George.

I congratulate the hon. Member for Neath (Christina Rees) on leading this debate. She and I usually have discussions about squash, but I am here to talk about another of my hobbies: horseracing. I have a lifelong interest in and passion for racing. In the past, I have owned legs and hairs of racehorses—not very successfully. At the moment on the farm at home we have a brood mare and we have youngstock, and my ambition—as crazy as it may sound—is to get those horses on to the racecourse. At the moment, the greater problem than affordability checks is dealing with mud fever, but affordability checks are very important. Like everyone else, I know that problem gambling is a major problem, but there is concern that there will be a severe unintended impact on the funding of horseracing if the affordability checks go forward in their existing form.

Horseracing is largely funded through the levy. In recent years additional funding has come in through media rights and sponsorship, but largely it comes from the horserace betting levy, which came in in the early 1960s. I personally think that the Government went down the wrong road with horseracing. It would have been better if we had what is known as a parimutuel form of gambling. As we heard from my hon. Friend the Member for Tewkesbury (Mr Robertson), that is why the prize money is so much higher in places like Hong Kong and Japan, which have incredibly well-regulated industries too.

Horseracing depends to a dramatic extent on the levy. It is quite clear from what I see and the feedback I get that the affordability checks in their current form will have a serious impact on the takings from the levy. Looking at the prize money, horseracing and its funding is facing a real crisis in the UK. My hon. Friend the Member for Shipley (Philip Davies) said that we have the best horseracing in the world, and we do, but that is increasing in risk and becoming an anachronism. There is a real worry that if we let this go on horseracing, will wither on the vine in this country.

Look at the horses in training sales from Tattersalls at Newmarket last autumn. A lot of those horses would have traditionally come out of flat racing, gone into national hunt racing and remained in the UK for racing. They are now going all around the world, to the US or Australia, and there are emerging new industries—in Dubai with the Meydan, and in places such as Bahrain and Saudi Arabia, which are making a real impact. A lot of horses are going to those places and a lot of British owners are racing out there. Members may have watched the racing on Saturday afternoon. The very well-known racing figure Sir Alex Ferguson—where was he? He was at Meydan, not watching his horses run at Kempton. I am worried that that is where we may be heading.

We have heard great stories today; everyone has plugged the racecourses we have all around the UK, and we have heard how important they are for their local economies. That is very true, but there is one point I would highlight, which I picked up in the Racing Post over the weekend. An article said that the Grand National meeting every year puts more money into the Liverpool economy than the Eurovision song contest did last year. We see that repeated at Cheltenham, York and Goodwood and at the festivals that take place all around the country. That is at risk.

The racing supply chain extends far beyond that. It extends into the training centres and into the countryside and on to the studs. There are places where horses are pre-trained, and, importantly, there are places where horses are retrained. When horses have finished their racing lives, they are retrained for alternative uses and activities. The tentacles of racing extend a long way, not just into the countryside but into the towns and the licensed betting offices on the high street. I know that the hon. Member for Swansea East (Carolyn Harris) has a concern about those, but certainly in the town that I represent, there has not been a dramatic increase in LBOs. They are a very important part—

[Carolyn Harris]

No, I do not.

[Peter Aldous]

If I have misinterpreted the hon. Lady, I apologise profusely. LBOs are very important on the high streets. They also tend to have a family feel about them in that the staff, many of whom now are women, have a good family relationship with the punters. If people start getting out of control, they very quickly say, “Hang on, do you know where you are going on that?” There is a long supply chain.

We have also heard about unintrusive and frictionless checks. The feedback that I get is that they are very difficult to put into practice. We will either see the rise of the black market—the large article on the front of the Racing Post indicates that that is a reality—or a lot of small punters will say, “Well, I give up. I’m not going to do it.” That then impacts on the levy and it spirals down to the impact on racing.

Finally, there is an element of hypocrisy about this in that the lottery is not included. The lottery is great and it is probably one of the best legacies of the Major Government. Its impact has been profound and positive. When I was growing up, very rarely did we win Olympic gold medals. I remember listening to David Hemery when he won in 1968 in Mexico. We now win in so many different sports, and that is the direct result of the lottery. The lottery is a great thing, but it is a game of chance rather than a game of skill. It is random betting and it can take over people’s lives. I remember one statistic put to me that if I gambled on the national lottery every year since Moses was pulled out of the bulrushes, I still would not have won. We need to look at all forms of gambling and betting together.

In conclusion, I was reading the Racing Post a few months ago. One of its leading journalists, Chris Cook, son of the former Labour Foreign Secretary Robin Cook, made a comment that left me thinking. He said that you would not have expected a Conservative Government to do this to horseracing. I agree with him. On that point, I urge the Minister, who is listening very intently to the great speeches that we have had—