Financial Risk Checks for Gambling

George Howarth Excerpts

Monday 26th February 2024 Westminster Hall

[Conor McGinn]

On a point of order, Sir George. The hon. Gentleman has asserted that Members who spoke in favour of racing or who have racecourses in their constituency have never sat in front of grieving parents, do not know anything about addiction and have never comforted those affected by addiction. The hon. Gentleman knows nothing about me, and he knows nothing about many other colleagues who have spoken. I ask him to be very careful about how he approaches what he says, and to have sensitivity before making assertions about any Member here or their motivations, their families or their experience of addiction.

[Sir George Howarth (in the Chair)]

That is not a point of order, but the hon. Gentleman has managed to get it off his chest.

[Ronnie Cowan]

I absolutely take on board what the hon. Gentleman says. I apologise if I worded that wrongly; I was talking about the sessions that we had at the APPG for gambling-related harm. I appreciate that, as was pointed out earlier, many people have been touched by the curse of gambling addiction.

The point is that it is understandable that so many people have raced to sign e-petition 649894, which calls on the UK Government not to implement the proposed financial risk checks for online gambling. The gambling industry has led and paid for this lobbying and has been hellbent on spreading disinformation that is designed to create uncertainty and raise concerns among people who enjoy the occasional gamble. I understand the punters’ point of view. They feel the fear behind this, because it is a message that they have been fed.

The truth about affordability checks is more complicated, however. I am not a prohibitionist. How many times have I had to say that? I am not trying to ban gambling, but I do want to create a safe environment for it. It may come as a surprise that affordability checks were not the invention of the APPG for gambling-related harm. This is not some mendacious ploy that the group is using; the idea was mooted in 2019 by Tom Watson, when I believe he was still the MP for West Bromwich East. Industry leader Richard Flint, who was at Sky Bet, supported Mr Watson by saying that too many people were losing money that they could not afford online. We need to work together with the industry and the Government to limit that harm.

I think that limits on spend, rather than on stakes, are the right way to go, and those limits should be based on affordability. Richard Flint acknowledged that such limits could lead to a drop in operator revenue. He clarified:

“There will be some online firms in the short term that…make less money as a consequence”.

Getting straight to the point, he added:

“but then…that spend shouldn’t happen anyway.”

That is a point that the Jockey Club should have considered when its chief executive officer launched this petition. It has cited a potential loss of £5 million on the horseracing betting levy, which according to its own board’s annual report was worth £100 million. But what price a life? What price the number of people who have been driven to complete suicide?

I return to the need for affordability checks. A year later, at the 2020 Lords Committee, the UK’s biggest operators—the chief executive officers of the big five—spoke enthusiastically about the need for affordability checks as a key mechanism to reduce harm. An industry CEO said that

“the way to go is affordability and to ensure that, when people come to our sites, they can only afford to lose or bet an amount that, quite frankly, they can afford and were comfortable with.”

So what is new? What is new is that, since the White Paper, the Government and the Gambling Commission have proposed threshold figures for the checks. Affordability is no longer an abstract concept; it is tied to precise thresholds.

The industry does not like the fact that the White Paper has called its bluff, so it is kicking up a storm. It is clear that those who might be categorised as the pro-gambling lobby and those such as myself, who could be described as the safer gambling lobby, agree that if we are to create a safe environment, affordability is an area that needs tightening up. I wonder whether that was explained to everyone who signed the petition.

The petition states:

“The proposed checks could see bettors having to prove they can afford their hobby if they sustain losses as low as £1.37 per day.”

That figure has been scoffed at a few times in this debate, but it is £500 a year. It may mean nothing to us as MPs on 86 grand a year, but that £500 a year could be the difference for some poor people who are trying to put money in the meter or food on the table. What we are trying to do is to stop them getting to the point at which they lose that money in the first place. Please do not belittle that. If the checks say people can afford it, they can afford it. We are trying to help those at risk. Surely all gamblers can see that, because they understand risk.

The UK Government have already said that

“the proposed checks are only on the very highest spending online customers”.

The Gambling Commission estimates that

“approximately 20% of customer accounts will meet the threshold required for a financial vulnerability check”.

The next line of the petition is about the black market. The Gambling Commission has already reported to us that the size of the online black market has been overstated by the industry and must be kept in proportion. It follows that if we want to prevent the growth of the black market, the solution is regulation to prevent harm that leads to addiction. It will eliminate demand for a black market, not cause it. Harm prevention will mean fewer addicts, fewer self-exclusions and fewer attempts to circumvent the regulated market in the first place.

The key is in the last line of the petition:

“We are concerned there will also be a negative impact on British horseracing’s finances due to a reduction in betting turnover and resulting fall in Levy yield.”

That is a Trojan horse if ever I have seen one.

--- Later in debate ---

[Stuart Andrew]

I am going to crack on because I do not have much time left and I want to get through as much as I can. If I have time at the end I will happily take the hon. Gentleman’s intervention.

I hope it is clear that both the Government and the commission want this to be a genuine pilot of how data sharing would work. Throughout the pilot, gambling businesses will not be expected to act on the data they receive, although they will of course be expected to continue to protect consumers by implementing their own existing consumer safety controls and to remain compliant with our existing regulatory requirements.

The Government and I are supportive of the evidence-led and consumer-centred approach that has been proposed for the pilot period, and the Gambling Commission will publish its full consultation response very soon. I remind colleagues that this is about online betting; people who go to racecourses or betting shops will not be a part of this, and the “day out” experience will not be affected.

In the meantime, we have also challenged the industry to be more transparent with customers. Currently, requirements are in place for gambling operators to identify customers at risk of harm and to take action, but there are no specific safer gambling requirements on how or when gambling operators must consider the financial circumstances of their customers. Where there have been failures to identify and act on clear signs of harm, the Gambling Commission has not hesitated to take action, including with fines, but there has been inconsistency across the sector. That is why we and the commission are working closely with the industry with it, so that we have a much better system in this interim period.

In the light of that, and in my meetings with colleagues and with the Horseracing Bettors Forum, I have urged the members of the industry to work together to mitigate the impact of customers having to provide information and documentation while we develop the new, frictionless system of checks. We understand that they are working towards delivering an industry-led code that would apply in the interim period. I know that progress is being made and I hope that we will be able to report that an agreement has been reached soon, so that customers have more clarity about what is expected.

Let me address the concerns raised here today about the black market. I assure colleagues that I take the threats posed by illegal online marketing and markets very seriously indeed. We know that they can pose a variety of risks to consumers, including by allowing access to those who have self-excluded through GAMSTOP. That is unfair to those businesses that abide by the rules. As set out in the White Paper, we committed to giving the Gambling Commission more powers to block and disrupt illegal gambling websites. We are delivering on that commitment through the Criminal Justice Bill, which will allow the commission to suspend IP addresses and domain names if they are being used for the purposes of serious crime connected with unlicensed gambling. The commission has also been able to invest in work to combat illegal gambling and it has succeeded in disrupting and reducing illegal traffic into British gambling markets. That work should be enhanced by the new disruption powers that the commission will receive once the Criminal Justice Bill has passed through Parliament.

I will now address horseracing specifically, as it has been raised here today. The British Horseracing Authority and other stakeholders in the industry have voiced concerns about the impact of the checks on the sport. I assure everybody that we have heard the concerns and take them extremely seriously. I have already met with many colleagues here today, including members of the APPG on racing and bloodstock. I have also met the Horseracing Bettors Forum to hear a customer perspective. I will continue to engage with the sector and those affected by the reforms, because the Government are strong supporters of horseracing. I acknowledge the many points that have been made about the significant contribution that horseracing makes to our economy and the central role that it plays in the livelihoods of rural communities. The employment that it supports across racecourses, training yards, breeding operations and related sectors reflects a powerful industry that is respected at home and abroad. Many colleagues have spoken here today or written to me on this subject, and I saw at first hand the care that is given to racehorses on a recent visit to a training yard in Middleham. I am therefore clear that we must ensure that the checks do not adversely affect racing or those who work in the sector, or interrupt the customer journey. They also must not push away high-net-worth individuals such as owners and trainers that invest in the sport.

The Gambling Commission has worked very closely with operators to explore the practical aspects of implementing the checks, and colleagues have said that they have seen an improved relationship between the commission and the industry. The commission has also been carefully considering responses to the consultation, which have helped to shape the implementation plans. We want to protect those at risk—I make no apology for our doing that—with minimal disruption to the majority, who I recognise bet on horseracing with no ill effect.

We recognise the importance of horseracing, but we know also that the levy is an important piece of work. I am about to run out of time, but I will happily write to colleagues to update them. Discussions are ongoing—I know that the Betting and Gaming Council had discussions this morning about an offer that is on the table for the levy—and I hope to be able to update colleagues shortly. With that, given that my time has run out, I apologise for not covering all the points, but this was an extensive debate.

[Sir George Howarth (in the Chair)]

Very briefly—Christina Rees.