Gambling-related Harms

Lord Sikka Excerpts

Thursday 14th October 2021 Lords Chamber

[Lord Sikka (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Foster, and I am grateful to the right reverend Prelate the Bishop of St Albans for facilitating this debate.

The harms caused by gambling have been raised on a number of occasions, but this review is very helpful because it brings together lots of studies and information. For example, 13 studies looked at gambling harm resulting in underperformance or poor performance in employment and education. It notes that, from the age of 17 and perhaps even lower, those engaged in gambling underperformed in their academic studies, which has a knock-on effect on their subsequent employment and related capacities. Gambling was also found to be linked to loss of concentration at work, lateness and poor work performance, resulting perhaps in loss of employment or lack of opportunities for promotion and so on.

Child gamblers had considerable difficulties in learning at school. It is illegal for children to gamble, but many websites permit it. I tried one of them and it said: “Are you above 18?” I said no. Click, and I was still in—whether I said yes or no made absolutely no difference. Although such sites say they will monitor it, the software does not care. Children of gamblers also have difficulties at school, because of the chaotic home life associated with gambling parents. Again, it would be helpful to know whether the Government have any proposals for dealing with this.

Some 31 studies mentioned in the review deal with financial harms to gamblers and their families. One study found that an increased number of electronic gambling venues in a local area increases the number of personal bankruptcies in that area, which is a catastrophe not only for the families concerned but for the local economy, because a lot of spending power vanishes. Again, it would be helpful to know how the Government want to control that. I have noted that some of these venues are quite near schools and colleges, and one can see young adults going into them. Gambling causes direct financial harms to gamblers and their close associates. A number of studies identified that gambling-related debts were a huge problem too, because they exert pressure on household budgets. I know that the Government have banned the use of credit cards for gambling. Perhaps they should consider some restraint or ban on the use of debit cards as well. Some individuals had their salary or a loan paid into a bank account and basically used a debit card to squander away their and their family’s income. Such financial harm also affects the children of gamblers.

An issue on which the Government should commission further research is tax avoidance by gambling companies. The data is quite hard to collect. When I look at the accounts of gambling companies, I often find very little information about profit shifting, about trials for pricing policies or about tax avoidance strategies. Most of the online gambling companies licensed by the UK Gambling Commission operate from offshore tax havens. The main attraction is lower tax bills, secrecy and rules avoidance—which some people like to call regulatory arbitrage; I prefer “rules avoidance”. It is known that Unibet’s servers are based in Malta, Alderney and Gibraltar. It is registered and licensed in Gibraltar but makes profit in the UK. Whereas the Chancellor tells us that it is government policy to persuade companies to pay tax where they are based and where their customers are, in these cases the customers are in the UK, the companies operate in the UK, but their revenue is booked in Gibraltar.

It would be helpful to know whether the Government have an estimate of how much tax is dodged. Paddy Power’s owner, Flutter, bet365 and William Hill have subsidiaries in offshore locations such as Guernsey, Gibraltar and the Isle of Man. At least 55% of online gambling in the UK takes place on Gibraltar servers. Are the Government content with this leakage of tax revenues? Companies such as bet365 have been paying an effective tax rate of about 12.7%. William Hill has been paying around 12%. Others such as GVC, which is the parent company of Coral, have been paying around 3%. The Gibraltar-based 32Red is estimated to have paid just £812,000 in corporation tax over 10 years. I urge the Minister to encourage HMRC and others to publish a report on the taxes being avoided by gambling companies.