Financial Risk Checks for Gambling

Matt Hancock Excerpts

Monday 26th February 2024 Westminster Hall

[Matt Hancock (West Suffolk) (Ind)]

It is a pleasure to be able to speak in this debate, and I am grateful to the hon. Member for Neath (Christina Rees) for introducing it. I am even more grateful to the more than 100,000 people who signed the petition; it reached 100,000 people calling for the debate in only 27 days. Some 1,200 of the signatures are from Newmarket in my constituency—my constituency is called West Suffolk, but the vast majority of the signatures are from Newmarket. Being here feels like the start of a horse race as I am surrounded by so many colleagues and it is so busy in here today. I have been contacted by other Members, including two Ministers, who wanted to speak in this debate but cannot, including my right hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), the former Chancellor. This issue is huge and I do not want to leave the Minister with the impression that affordability checks are a side issue; they are absolutely central to the future of horseracing. We are making a mistake, so we must stop and start again, and I will set out why.

I bow to no one in caring about and paying regard to the problems of gambling harms. I have seen them for myself; I have spoken to those who have lost children to gambling. As the Culture Secretary, I introduced the limits on fixed-odds betting terminals, or FOBTs, which were far below the recommended rate. I overruled the official advice to bring in the £2 limit, with the support of the hon. Member for Swansea East (Carolyn Harris) and my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). We worked together on that.

I care deeply about gambling harms and as both a former Culture Secretary and a former Health Secretary, I understand them. However, these proposals, as they are being introduced, will make the gambling harms worse. The PwC report published recently showed that the amount staked by UK online gamblers on the unregulated market in 2020 had doubled to £2.8 billion in the previous one to two years. In December 2022, more than 250,000 people visited unregulated black market sites, compared with only 80,000 during the same month the previous year. That has a huge impact on horseracing, which I will come on to, but also on gambling-related harm. Online casinos—games of chance rather than games of skill—are a serious problem that need addressing. I would recommend that the limit of £5 being proposed by some is reduced to £2. We should be extremely tough on games of chance, which are programmed algorithmically to ensure that people lose money. I do not think anybody in this debate would oppose the introduction of measures to resist those types of addictions, for addictions they are.

As I say, I bow to nobody in my support for measures to tackle problem gambling, but I am afraid to say that, having examined the evidence, I am convinced that introducing these measures—not just as they are being proposed, but as they are actually being brought in—is increasing gambling harms and not decreasing them. We should not fall for the old adage of, “We have a problem, and we must do something; this is something, therefore we must do it.” I am afraid to say that the current proposals will make problems worse rather than reducing them.

Many of the offshore gambling firms explicitly target those signed up to the GAMSTOP service and there is a grim irony that the regulator and the Government are, unfortunately, making the problem worse.

A couple of Members have said that the checks have already been introduced by the industry; the hon. Member for Neath said that they had already been introduced “voluntarily”. I am afraid to say that I do not think that is true. The gambling industry, for which I have absolutely no regard, is introducing checks now in the shadow of expected future regulation, because it knows about the Gambling Commission—indeed, it is regulated by the Gambling Commission. These things are not being introduced “voluntarily”; they are being brought in because the gambling companies think that further regulation is coming down the track. We are already seeing the negative impact in the uptake of black market offshore gambling, as I have already said, and we are already seeing the impact on the horseracing industry.

I am incredibly lucky to represent Newmarket. Horseracing is the UK’s second largest sport, with 5 million racegoers annually, generating over £4 billion for the economy and untold soft power. In Newmarket, 7,000 people are employed in or around horseracing, which puts a quarter of a billion pounds into the local economy. In addition to all of that, it creates the joy that so many of us have spoken about.

We know that 26% of bettors have already experienced an affordability check, ahead of the proposals officially coming in. We have seen that the betting turnover on racing fell by £900 million in 2022-23. The financial impact on the horseracing industry is already happening. Prize money is going up in the rest of the world but is incredibly tight in the United Kingdom. The impact is biggest on the small racecourses, but there is even an impact on Newmarket, which hosts the two finest racecourses in the world.

[Sir Bill Wiggin]

One of the two!

[Matt Hancock]

I certainly will not have that challenged.

[Sir Bill Wiggin]

The industry estimates that this will cost it £50 million. Does the right hon. Member agree that if we can separate the challenges of problem gambling from the joy and importance of horseracing, which employs 80,000 people, perhaps progress is possible? However, at the moment that is not clear.

[Matt Hancock]

Absolutely. Horseracing already has its own legislative framework; it has had it since Churchill introduced the Tote. There is already in law a definition of and a separation of horseracing. I recommend that the Government separate games of chance, in which there is no skill and there are guaranteed losses, from horseracing, which is one of this country’s finest achievements and brings joy to so many.

Let me turn to “frictionless”, which we have heard a lot about. I was thrilled when the Minister said at the Dispatch Box that checks would be frictionless; he has said it here and he said it in the White Paper. Here we come to something of a constitutional point, if I may say so. The Gambling Commission has interpreted the Minister saying checks will be frictionless as meaning “frictionless for the vast majority”, which is different. These checks, if they are to happen at all, should be frictionless. The Minister has committed to that and it is Government policy, yet we have a regulator wrongly misinterpreting “frictionless” as “frictionless for the vast majority”. It is a distinct problem. Also, if checks are frictionless, they have to be based on data that people have already consented to make publicly available. If somebody looks at one’s bank account details, there has to be friction, because they will need permission to look at those details, so there is already a problem with implementing frictionless checks.

The hon. Member for Swansea East made the point that it is difficult to see why people would worry about these checks or why they would go to unregulated online sites. There are two responses to that. The first is that people fear the Government looking into their financial affairs. The second is a practical point: it is happening. That is how people are responding to these proposals. I know it is happening among my constituents, because they tell me on the doorsteps. They are changing the way they place bets, because of fears about what the Government are going to look at. We need to recognise reality in this place. We cannot just wish away people’s behavioural response, which is making the tackling of problem gambling worse rather than better.

Any jockey knows when a race is going wrong. I surely do. With this one, I say to the Minister that it is time to return to the stalls and start again.

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[Paul Blomfield]

I am very happy to get on with it. The point I was seeking to make is that gambling addiction is a health issue. The NHS will very shortly be opening a gambling harms clinic in my constituency. It will join a network of 15 across the country that are tackling the serious problem of gambling addiction. Hon. Members have asked, “What requires an intervention? What is the difference between gambling and going out and spending £150 on a meal, shopping and other leisure activities?”, butI do not see the NHS treating those activities as a serious health issue, as it does with gambling addiction.

[Matt Hancock]

Will the hon. Gentleman give way? I am a former Health Secretary.

[Paul Blomfield]

I know that the right hon. Member is a former Health Secretary.

[Matt Hancock]

I was the Secretary of State who introduced those gambling clinics.

[Paul Blomfield]

I know.

[Matt Hancock]

There was one beforehand. Will the hon. Gentleman address the question of the extent to which we know that those gambling harms are related to betting on horseracing—as opposed to these games of chance, which are so aggressive and have algorithms designed to promote addiction?

[Paul Blomfield]

I am happy to have taken that intervention, because I was not seeking to make that point. I was recognising the way in which horseracing is being used as a wedge issue to tackle a different problem, as has been echoed by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) and my hon. Friend the Member for Swansea East (Carolyn Harris). There is a distinction, and we should not let horseracing be used to undermine the affordability checks that are needed in a different context.

The point I was making is that if this is a health issue, we need to have a prevention strategy, just as we do with other health problems. I commend the Government for the prevention strategy that they have developed with the gambling White Paper. Affordability checks are an important part of that strategy, but it is regrettable that the debate around them is generating more heat than light, as it has done today.

I can understand why, beyond racing, the gambling industry is keen to avoid checks. As my hon. Friend the Member for Swansea East pointed out, Gambling Commission research using the “Patterns of Play” data confirms that the most profitable 1% of accounts make 70.4% of gross gambling yield. Those are disproportionate profits derived from small numbers of players, who in many cases are gambling much more than they can afford to lose. Those people need to be protected. We know that harm can happen at relatively low levels of spend, so it is important that affordability checks be set low enough to prevent harm.

I understand the fears behind the petition. It is important that we spend time, as other colleagues have done, underlining how unobtrusive checks can be and, I am confident, will be. Affordability checks are nothing new, and contrary to suggestions from the industry, background checks on financial vulnerability could be frictionless, making use of already available data—data that we should remember is already used by the industry itself to monitor accounts and, in some cases, withhold winnings from players to regulate their losses. The data is there, and the industry is willing to use it in one context. Why not in this context, too?

We know that in the case of enhanced checks, only 0.3% of account holders would be expected to provide additional information—I think that point was made earlier. That is a tiny number in relation to the benefit that could be achieved through introducing the checks. The vast majority of checks can be done passively, using information that is in the public domain or required for registering an account. My hon. Friend the Member for Neath made the same point in her speech. It is also important that checks be done by independent, reputable third parties regulated by the FCA. We should bear that in mind, too.

I want to make a brief comment on the black market argument that has started to come up. This is the last refuge of rogues, really. When the tobacco industry had run out of every other argument to stop regulation, it said, “But what about the black market? Don’t do anything to us: it will force people to turn into black market smokers”—and they did not. We saw a successful public health strategy on tobacco. Payday lenders made the same argument when affordability checks were introduced in their sector, and we have not seen a significant movement from payday lenders to black market loan sharks.

Claims about the potential growth of the black market following more stringent regulations have been successfully challenged, including by the Gambling Commission, whose powers to address the issue of illegal sites will be further strengthened by provisions in the Criminal Justice Bill. I understand the difficulties in regulating the online world. We face rogue operators across the online world, but if we are prepared to tackle them in other spheres, why not in online gambling?

Affordability checks will play an important role. They must be set independently rather than by the industry, and set at a level that will protect those who need them most. I recognise that many people enjoy betting safely and without harm, and we can and should ensure that affordability checks are frictionless except in the most extreme circumstances. We cannot lose sight of the fact that affordability checks are about protecting people from harm and ensuring that the gambling industry is regulated in the right way.

I note the points made about things that have already been happening. Those things are happening because the industry knows that change is coming. If the industry had been left to its own devices, we would never have seen those sorts of measures.

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[Conor McGinn (St Helens North) (Ind)]

It is a pleasure to serve under your chairmanship, Sir Edward. I was worried that I was going to be declared a non-runner, but I am glad to get under starter’s orders, having listened to numerous colleagues.

Let me say at the outset that those of us with an interest in this topic, from whatever perspective—and, indeed, those of us with a wider interest in sport—are very fortunate that we have, in the Minister and the shadow Minister, two people who are engaged, open to discussion and involved in every aspect of their brief. In fact, I saw the Minister yesterday, and I thought to myself, “He is the great white hope for the Conservative party.” He appeared on our television screens and received rapturous applause, foot-stomping and acclamation on Merseyside. I am sure that it was coincidental that it was when he was at Wembley as a member of the presentation party presenting Jürgen Klopp and Virgil van Dijk with the league cup.

[Sir George Howarth in the Chair]

I draw attention to my declaration in the Register of Members’ Financial Interests. I always say at this point that, having owned horses and gambled on horses, I have given a lot more to racing and betting than it will ever give me, but I am happy to draw—

[Matt Hancock]

The hon. Gentleman reminds me to draw the House’s attention to my entry in the register. I am lucky to have been strongly supported by those in Newmarket.

[Conor McGinn]

I am delighted to have given the right hon. Gentleman that opportunity.

I want to be emphatic about this so that we are very clear: I am here to speak on behalf of Haydock Park racecourse in my constituency in St Helens; I am here to speak up for the 100,000 people who signed this petition—decent, honourable, good taxpayers in this country who have a concern about this issue and a love for horseracing; and I am here to say emphatically that the whole of the horseracing industry, which, if I might cheekily say so, is not widely known for its unanimity on issues, speaks with one voice about its concerns on this issue. I am co-chair of the all-party parliamentary group with the hon. Member for Tewkesbury (Mr Robertson), and this is an interest and an issue that unites people in all parties and across the House.

I want to step back a little and look at the bigger issues. Many of the points that I wish to make have been made already. I furiously agree with the hon. Member for Shipley (Philip Davies) on this—as I do, I fear, on too many issues—and he made a lot of the points that I wish to make.

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[George Freeman]

I am grateful to the hon. Lady, who makes a good point. They are beautiful and what a joy it is to watch them exercising, whether in Malton in Yorkshire or wherever else around the country. The sight of horses exercising in preparation for racing is part of the rural economy.

Secondly, I want to make the point that horseracing, as an activity and an industry, is a jewel in the crown of our global soft power. The truth is that, having grown up in Newmarket as a child, I have watched as that town and its horseracing have become very reliant—over-reliant, I would suggest—on a few very wealthy families. Those families have done an amazing service to our sport, but we have to make sure that we are not reliant on a very small number of individuals to maintain the viability of an entire industry. That point puts this debate in a wider context.

Crucially, I also want to highlight that there is a very serious problem in our society of addiction to gambling, particularly online gambling, and there is a growing body of evidence—I say this as the former Minister for Life Sciences and as somebody who has had a career in medical research—that the causes of such addictive behaviour and cycles of addiction are not simply based on repeat activity. They are a symptom of much deeper underlying causes, which are often genetic and nearly always neurological. There are a whole series of conditions that drive that underlying cycle of addictive behaviour. It is not that someone has a bet on a horse, then a second bet and it is entirely addictive. Indeed, in my own experience, betting on horses is quite the opposite; I have very seldom made much money doing it and I very seldom carry on doing it with that in mind. No, that is not what drives the addictive behaviour; it is underpinning neuroscience and wider conditions. As a society we really need to take those factors very seriously.

[Matt Hancock]

Is there not the more specific distinction, which the hon. Gentleman almost drew out, that the placing of a bet and then waiting many minutes as a minimum for a result is neurologically distinct from a bet that gives an immediate hit? Where the repeat bet would be based on the physiological immediacy of the previous result, horseracing breaks that and therefore has a different neurological impact in relation to addiction. Would it therefore not be right in law and in policy to completely separate the proposals for online games of chance from the wonderful sport of horseracing? It would be easy to do in law—let’s just split the two.

[George Freeman]

The right hon. Gentleman anticipates the logic of the argument I was building towards—he is exactly right. That is why if we are seriously thinking of tackling this curse of addictive online gambling, surely we should be looking at a whole range of other behaviours and products. The proposal seems to be a disproportionate way of tackling a real problem, if indeed that is what it is. Others have mentioned the logical consistency of extending these checks on alcohol, tobacco, car hire purchases and—dare I say it—mortgages, and all sorts of things that we might say people cannot afford. I worry that this could be the thin end of a very big wedge in which the state decides that it is its job not to regulate properly, but to start asking whether people can afford to do something. That is an Orwellian dystopia that I do not want to live in.

The truth is we have to think properly about the sustainable resilience of racing. I absolutely echo the comments of my hon. Friend the Member for Tewkesbury (Mr Robertson): prize money is falling fast, costs have risen fast and are stubbornly high, and competition is eating our lunch. If we look to Irish and French racing, we see that we are haemorrhaging from a serious industry. This proposal would not make a small reform to a healthy industry—the industry is struggling and it needs our help, but I am worried that the law of unintended consequences will make the situation worse.

I want to make a point about technology. It has often been asserted that we do not have the technology to do these checks properly. That is right at the moment, but would it not be an amazing thing if we decided to use technology properly—we are already an AI powerhouse—to start to analyse addictive behaviour and look at the trades on digital betting that indicate such behaviour? Over 70 markers of harmful gambling have been identified in studies, 16 of which really drive this activity. I suggest there might be an opportunity for us to use technology better to tackle those behaviours online that drive the problem we are trying to solve.

I echo the comments of the right hon. Member for West Suffolk on track racing, which I would go so far as to say is one of the best ways to introduce people to responsible gambling. I remember taking my two children to the 2000 Guineas and giving them £5 each, and they decided to put it together on an each-way bet. It was a smart move; they are clever children. Even more clever, my son decided to take my daughter’s advice, because she knows about horses, and he looked at the odds, because he knows about numbers, and they put £5 each way on Galileo Gold, who stormed to victory. They learned a lot that day about gambling. They saw people who had drunk too much and who were losing too much. They didn’t. I took the money and gave it to them. They discovered a lot, and on-track gambling is a fabulous way of getting people to realise that most of the decisions we take in life are a gamble one way or another, and it is how we deal with them that really matters.

I am not here in any way for the health of the gambling industry. I am interested in the health of UK racing and the real identification of the at-risk addiction that we see cursing so much of our society, in particular those games of chance that have driven such addiction. I simply say to the Minister that I know he has a difficult job on his hands. I have sat at that Dispatch Box with a packed Westminster Hall calling for reform. The Prime Minister, in North Yorkshire, understands the importance of the industry. The Secretary of State’s constituency is next to Newmarket—in fact, she has the breeder of Galileo Gold in her constituency—and understands it. It is not too late to change tact and come back with a serious package of measures designed for the twin problems of the sustainability of racing’s finances and the genuine opportunity for this country to lead in harnessing technology and smart regulation for the tackling of gambling addiction. If not, I urge the Minister to look seriously at the net loss provisions, which are too low. When an industry warns that something will cost it £50 million, we have a duty to listen.

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[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.

[Matt Hancock]

I have been listening with increasing disappointment to the tone that the hon. Member has taken. Given the importance of tackling problem gambling, does he recognise, like the 7,000 people who live in my constituency, the importance of horseracing? Does he recognise that horseracing betting has an equally low rate of associated problem gambling as betting on the national lottery? The national lottery is carved out of this proposal. Should not horseracing betting also be carved out, so we can all concentrate on tackling gambling harms, exactly as the hon. Member would like us to?

[Ronnie Cowan]

I was bringing attention to the message that has clearly been given out by the UK Government. The Government are keen to ensure that the measures such as the proposed changes do not adversely affect racing or interrupt the customer journey. They also cannot push away high net worth individuals such as the owners and trainers who invest in the sport. I would suggest that it is not for me to say this; the Government are all over it. The Government understand the difference between online gambling, casino gambling and horseracing.

The key to the problem is that people are spending more than they can afford. As a result, some are dying. That is the human cost, and that cost is completely unacceptable.

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[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)]

I thank the hon. Member for Neath (Christina Rees) for tabling this important debate, as well as everyone who signed the petition. My hon. Friend the Member for Tewkesbury (Mr Robertson) said that I always turn up to these events; I must confess I did not know that I had a choice. I may have made a different decision if I knew that, but there we are.

My right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) quite rightly mentioned the book that he showed me. It looked like a very extensive book. I have not had chance to read it all yet, but I am sure that “Strongholds of Satan” by William Morgan will be valuable as I further my education in this whole exciting field of policy. In her opening comments, the hon. Member for Barnsley East (Stephanie Peacock) outlined the varying points that came up in the debate and the various views from stakeholders, whichever side of the debate they might be on. I am grateful for all the comments. The debate has been interesting and thought-provoking, and it is good to hear those different perspectives. That is why I always try to take the time to meet and engage with people and, crucially, listen to the points put forward to me.

As some have mentioned, we are walking a fine line and need to get it right to help those who may be entering the risk of gambling harm while ensuring that those who want to continue to gamble safely can do so. I want to recognise the concerns that many have had with the proposed system of checks for the highest-spending online customers to help identify that harm. Those concerns have been raised by colleagues, in the media and certainly with me over the past few months. I believe that the proposals for financial risk checks will represent a significant improvement for both businesses and customers, compared with the current situation.

A recent GambleAware study showed that almost three in five adults support the introduction of the checks. None the less, we and the Gambling Commission have listened and we want to get it right. We are clear that the risk checks should not overregulate the gambling sector, should not unduly disrupt the millions of people who gamble without suffering harm, and should not cause unnecessary damage to sectors that rely on betting, particularly horseracing. We and the Gambling Commission both recognise that it is not our job to tell people how to spend their money. As outlined in the gambling White Paper, we want to balance that freedom with the necessary action to tackle the devastating consequences that harmful gambling can have on individuals and communities.

We know that operators are operating onerous, ad hoc and inconsistent so-called affordability checks on a number of customers, often without being clear on why the checks are happening and normally requiring customers to provide data manually. The proposed system will be a significant improvement by having clear and proportionate rules to which all operators are held, allowing for financial data to be shared seamlessly with operators instead of burdening customers with information requests. The Gambling Commission’s consultation on these checks closed in October. I know from our discussions that it has given careful consideration to the nearly 2,000 responses that it has received, and it has been working very closely with relevant stakeholders, including my Department, industry representatives, the Information Commissioner’s Office, the financial services sector and others, to refine the proposals.

Understanding consumer perspective is vital for the commission. That is why it has a programme of research on the consumer voice, which is an ongoing piece of research using qualitative and quantitative methods to gather consumer perspectives, including on the consultation proposals relating to financial risk. That research has helped inform its thinking and will be published by the commission alongside the consultation response. I am glad that the points raised today reflect that some of the issues facing punters are not down to just these checks—other issues have quite rightly been raised.

Following the publication of a blog by the commission on 22 February, I am pleased to be able to provide colleagues with an update on these checks. Firstly, the Gambling Commission has confirmed that it will be proceeding with the proposal for financial risk checks. That includes the frictionless, light-touch financial vulnerability checks and the enhanced ones. However, following feedback through the consultation, the commission has confirmed that it will not require gambling businesses to consider an individual’s personal details, such as their postcode or job title, as part of the checks. I know that was a key concern for those who signed the petition, and I hope that demonstrates that the commission is carefully listening to the concerns as it finalises how the checks will work.

To ease the introduction of those checks, as we have heard they will initially come into force at a higher threshold for a short period, before reverting to a lower threshold later in the year. We expect the lower threshold to be closely aligned with that proposed in the White Paper, which will enable a smoother implementation for the small number of affected consumers. The checks will not be intrusive, and will use publicly available data—as has already been said.

The commission will require the industry to introduce these frictionless, light-touch checks in two stages; that is intended to happen over the course of this summer. Enhanced financial risk assessments will also be implemented for the important protections they can offer consumers who may be at financial risk, and to ensure that assessing financial risk can be done in a more frictionless manner than is currently possible. The Gambling Commission will therefore conduct a pilot and data collection period. That will involve the commission working with the credit reference agencies and a selection of gambling businesses to ensure that the process of assessment is as effective and streamlined as possible. The pilot will run for a minimum of four months, during which time the commission will consider all issues that arise. The commission is clear that this process will help to refine the final requirements and models for data sharing, and help to ensure that the intentions and commitments in the White Paper are fulfilled.

I am sure everybody agrees it is important that we do not skip ahead to full implementation before getting the details right. Indeed, I know that many right hon. and hon. Members, including my hon. Friend the Member for Shipley (Philip Davies), have made suggestions to me and to the commission. All of us want to find a solution that actively protects those most at risk of harm. The commission is actively considering all the proposals—including my hon. Friend’s—and I can confirm that many of the ideas that have been raised will be explored during the pilot stage, including looking at whether CATO or SCOR data is being used. By doing so, the commission can ensure that all the decisions that will be made are based on the evidence of what is working.

[Matt Hancock]

Will that include carving out horseracing in the same way that the national lottery has been carved out? Both of those have the lowest impact in terms of gambling harm and it would be inappropriate to treat the two differently.

[Stuart Andrew]

I have heard the national lottery mentioned a few times. Yes, it is unique—it is under its own separate legislative framework—but under the fourth licence conditions, player protection requirements will be increased and there will be conditions on payments for support, research, education and treatment.

I have also heard arguments for a carve-out for horseracing. I acknowledge that greater gambling harm occurs in online casinos, but we know that those who experience gambling harm use multiple products, and some have been using horseracing products. I have heard harrowing stories of people who have made losses on horseracing products alone.

Future of Horseracing

Matt Hancock Excerpts

Wednesday 25th October 2023 Westminster Hall

[Matt Hancock (West Suffolk) (Ind)]

I beg to move,

That this House has considered the future of horseracing.

It is a great pleasure to serve under your chairmanship, Mr Hosie, and to open this debate on the future of horseracing. As we can see by the sheer number of colleagues who have made the time to come today, it is an issue that affects the whole country, and there is a great deal that we need to do to secure the future of horseracing. That is why I was motivated to call this debate.

We all know that British horseracing is essential to this country’s culture, to our language and many of the idioms that we use, to our heritage, and of course to our economy. It means a huge amount to many, many people. Horseracing is the UK’s second-largest sport, in terms of those who watch it and those who go. It provides great joy and excitement. There are 5 million race-goers annually, with almost 100,000 jobs and more than £4 billion-worth of economic activity in the industry. That ultimately means jobs and pay for those who are employed in horseracing. For those on the Treasury Bench, there is more than £300 million in taxation, which I am sure would not go amiss.

There is also a global significance. British horseracing is the pre-eminent horseracing industry in the world, but it is also under significant challenge. Modern technology has improved British horseracing enormously, but ultimately it is the most ancient of sports. As with many other successful things, many places claim to be the first in the world to have horseracing: some in the Gulf, some in the downs of southern England, and also near Chester, where I grew up—there is a case for saying that the first known horserace, or at least the first on which there was betting, was held near Eaton. Of course, betting is integral to the sport of horseracing—I will come to that in a moment.

[Sir Edward Leigh (Gainsborough) (Con)]

My right hon. Friend mentions history, but we believe we have had racing since 1800 in Market Rasen, in my constituency. It depends crucially on betting. Lincolnshire people are sound, sensible and prudent people. The whole future of smaller racecourses such as Rasen is now being put in jeopardy by these affordability tests on betting. I hope my right hon. Friend will give a really powerful speech defending the industry.

[Matt Hancock]

I certainly intend to. My right hon. Friend will be the judge of whether I manage to give a powerful speech, but there is certainly a very powerful case for saying that there is a really serious policy error going on that we need to fix. It is having a really serious impact, especially on the mid-size and smaller racecourses.

I am lucky enough to represent Newmarket, in my West Suffolk constituency, which is home to two of the finest—in fact, the two finest—racecourses in the country. It is the global headquarters of flat racing, and it has grown over the 12 years that I have represented it. It is an incredibly important sport for the whole town, with more than 7,000 people in and around Newmarket employed directly and indirectly in horseracing. It generates over £250 million in my constituency, and obviously attracts thousands of others, positively impacting and supporting local businesses, the hospitality trade and the like. It is also integral to the town. The horses walk through town every morning on the way from the stables to the gallops. As my right hon. Friend suggests, I will speak about the problems that affordability checks have brought.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Of course, Stratford-on-Avon racecourse is one such racecourse that has been adversely impacted. I would really welcome the Minister being cognisant of the fact that there is a problem here, when his Department and the Gambling Commission seem to be peddling what I would only describe as drivel about affordability checks being frictionless or racing not being damaged. Clearly, there is damage being done. On the point about how we support racing globally, there is a straightforward lever that we can pull now on the overseas element of the levy—on bets placed here on overseas racing. It is a no-brainer that we should get that done. I think the right hon. Member promised it back in 2018, and it should happen now.

[Matt Hancock]

I feel very strongly about this subject, not only because I represent Newmarket but because I had the joy of riding in races at Newmarket. I was the first MP in modern times to win a horserace at Newmarket in 2012. Since then, my hon. Friend the Member for Hexham (Guy Opperman), who has been an incredible advocate for horseracing and does jumps, which are much harder, has also ridden winners. He always sends me a photograph of him at the winning post. The Minister should note that the fact that another Minister has turned up to support this debate, even though he cannot speak—[Interruption]—although he can cough—shows the strength of feeling on this issue.

I feel incredibly strongly about this; it is personal to me. It is personal to me for two reasons. First, I represent Newmarket and love the sport; and secondly, I have personally participated. I underwent a weight-loss programme almost as exaggerated as that of the former Chancellor, who has just spoken, my right hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), in order to do that.

Three things need to happen. The first is the levy reform that I promised as Culture Secretary in 2018.

[John Spellar (Warley) (Lab)]

Before the right hon. Gentleman moves on to the detailed point, there is a slight danger that the debate is becoming very internalised to racing, racing towns and the immediate racing industry. We also ought to acknowledge that this is one of the big attractors to the UK in a broader sense, in the same way as our cultural offer, other sporting events and architecture are. It is part of the whole scene that makes us attractive for inward investment and inward workers. Is it not important for our country, to attract investment and people, to have that broad range?

[Matt Hancock]

I totally agree and could not have put it better myself. That shows the cross-party nature of the work needed to ensure that racing has a bright future, for the reasons the right hon. Gentleman set out and those that I have set out. I completely agree with every word he has said.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for securing this debate. He said he would outline three reasons why this is important. Can I add a fourth one? With the costs of stabling and even learning to ride escalating, does he agree that there is a danger that the sport will soon be enjoyed only by the elite? Does he agree that steps should be taken to ensure that people of all classes should have access to the sport and the opportunity to take part? In my constituency, we have that. I hope we can agree that as well in this debate.

[Matt Hancock]

I could not agree more. The hon. Gentleman’s intervention shows that this is an issue for the whole United Kingdom, and for people of all backgrounds across the country. In my constituency, I have Heads of State rubbing alongside those from every background who love horseracing. It brings people together, and we should celebrate that. The hon. Gentleman is right to raise that point.

These are the three issues I want to raise with the Minister. The first is levy reform, which was promised. Critically, although we legislated a decade ago that anyone betting on a horserace through an offshore platform counts for the levy, we should also say that anyone betting on an offshore race counts for the levy. Otherwise, people will be increasingly driven to betting on races that happen overseas, and the international problem is significant. Prize money, which entices people to put horses into GB races, at an average of £16,000 per race, is lower than in Ireland, at £22,000, and France, at £24,000. That is not sustainable.

Levy reform is critical, and it is vital that the horseracing and gambling industries come together, shepherded by the Department for Culture, Media and Sport, and bring forward a strong, credible proposal. I say to those who are in and support the gambling industry that they need people to bet on races—that is, real betting, on unknown outcomes, as opposed to computerised betting on a smartphone, where everybody knows they will lose money if they keep going. Horserace betting is a joy and a pleasure for millions. It is the best way to defend gambling, and supporting the horseracing industry is massively in the interests of the gambling industry.

The second issue, which deeply affects my constituents, is the importance of ensuring that some of the necessary occupations for horseracing are on the Migration Advisory Committee’s shortage occupations list. I have written to the Home Office about this issue and they said, “Speak to the Department for Digital, Culture, Media and Sport.” The DCMS Minister is here today, so this seems an opportune time to raise the issue.

[Sarah Dyke (Somerton and Frome) (LD)]

I thank the right hon. Member for securing this important debate. My constituency, Somerton and Frome, contains Wincanton racecourse, alongside many successful training yards and stud farms—including Paul Nicholls Racing and Joe Tizzard Racing. The industry plays an important role, but it is facing a shortage of workers due to our rural location. As the right hon. Member has said, the Migration Advisory Committee has recommended six horseracing roles to be added to the shortage occupation list, but we are waiting for approval from the Home Secretary. I am sad to see that horseracing has become yet another industry paralysed by these inflexible immigration rules. Does the right hon. Member agree that the Home Secretary should urgently approve these recommendations and help British sport?

--- Later in debate ---

[Stewart Hosie (in the Chair)]

Order. That was a very long intervention.

[Matt Hancock]

I agree that the Home Secretary should sign off on the Migration Advisory Committee’s recommendations; they are based on analysis and fact. If she signs off on them, it shows the system actually working rather than not working. The Migration Advisory Committee has agreed that there is a problem and it is proposing to fix it—and fix it we must.

[John Spellar]

What assurance has the right hon. Gentleman received from the racing industry as to what training programmes they have got going into the future, when they will not need this to be a permanent feature?

[Matt Hancock]

There are significant training programmes already in place in the horseracing industry—for instance, at the British Racing School in my constituency, another British Racing School in Doncaster, and apprenticeship programmes right across the industry. In fact, horseracing is brilliant at taking youngsters, who might not have succeeded in mainstream education, and giving them a wonderful, different career—I know this as a great supporter of those with dyslexia. Horseracing is really good at that and good at the training, but that is not enough; we need to make sure we can hire people from overseas as well.

My third and most important point for the Minister is that the recent gambling review set out to the Gambling Commission the need to ensure that gambling is affordable. Nobody speaks more strongly about the need to control problem gambling than me. As the Secretary of State for DCMS, I brought in the reforms to fixed odds betting terminals, which effectively got their scourge off our high streets. As the Secretary of State for Health and Social Care, I expanded the gambling clinics to ensure that there is direct NHS provision for gambling addiction, which is a very serious problem. However, the way that the Gambling Commission is bringing in these so-called affordability checks makes people move from gambling on reputable platforms into unregulated gambling. That is therefore having the directly opposite effect to the intention.

I understand the intention to tackle problem gambling; I have long supported that goal. The problem here is that, in order to tackle the problem of online games designed to hook people in with an adrenalin rush—and give them a certain loss—instead, those who love to have a flutter at the bookies, online, or at the racecourse are being caught in this net. Many people have already closed their betting accounts because they refuse to give highly personal data to the Gambling Commission—and frankly, I can understand why they have done that. This is already happening. It is happening before the Minister has set out his view. It is happening in response to the White Paper, not to Government policy. It is ultra vires from the Gambling Commission—it is getting this wrong and damaging the very objectives it set out to achieve. The Minister can already act on this by simply setting out that the current way that the affordability checks programme is being put in place is counterproductive. If Members want proof of that, I will give them it.

Research by PwC found that the number of customers using unlicensed betting websites more than doubled in one year, from 210,000 in 2019 to 460,000 in 2020. Billions of pounds are now staked on unlicensed betting websites, which do not have support programmes or any identification of people who might have suddenly lost a large amount of money or who display erratic behaviour. They do not contribute to horseracing in the way that they need to, nor do they offer support for problem gambling. This policy has been a mistake, and the Minister needs to change it.

[Paul Howell (Sedgefield) (Con)]

The right hon. Member talks about illegal betting, and a lot of that comes through the use of illegal drones to film races in the first place, which means that the racecourses do not get any revenue. We need to make sure that there is integrity in the filming of sporting events, so that the revenue goes to the right places. The technology is moving on, and there is illegal use of data through the tools he talked about earlier. We must stop illegal drones and betting sites, and make sure that the revenue is going to the right places.

[Matt Hancock]

I totally agree. That point is another problem that needs to be addressed, and my hon. Friend is right to raise it. All these problems drive down the amount of money going into horseracing, which has two consequences. One is that there is less prize money, which means that there are fewer horses coming forward and that the UK will lose its pre-eminent position, as well as the tax revenues, jobs and prestige that comes with it. For instance, in 2022, the average number of horses competing in a race was at its lowest since records began in 1995. There is a problem that needs to be fixed.

The second consequence is that there is less money for problem gambling programmes, which we know are needed to help the minority of people who have a problem and need support. This is not only ultra vires from the Gambling Commission, but counterproductive to the goals of those who, like me, care about supporting people who have a gambling addiction. The websites to which people are being driven do nothing to promote safer gambling, do not support sports and do not make any contributions to tax, and the intrusive affordability checks happening right now—let alone what might be threatened in the future—are reducing betting turnover. They are impacting on horseracing and on people’s ability to have a flutter on the horses, which is a leisure activity for the vast majority of people who do it.

In a recent survey of over 14,000 punters, 28% said they will stop betting on horseracing altogether if the current plans for affordability checks are implemented in full. That would be a catastrophe for horseracing, and it would be detrimental to the Chancellor’s wish to sort out the nation’s coffers. Most importantly, it means that those who enjoy gambling responsibly—and who do so in what is now a pretty well-regulated overall framework for ensuring that people get the support they need before the affordability checks are put in place—do not have the opportunity to exercise their right to that pleasure.

I will stop there, as I know many people want to speak. I hope to hear cheerful and positive encouragement from the Minister and the shadow Minister, the hon. Member for Barnsley East (Stephanie Peacock), because our great sport of horseracing needs their support. Critically, we need to make sure that the Gambling Commission supports gambling that people enjoy while also effectively tackling problem gambling, rather than driving people into the darker regions of the internet, where they can get away from any regulation whatsoever. As the Member who represents Newmarket, I am proud to make this case.

[Philip Davies (Shipley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hosie. I congratulate the right hon. Member for West Suffolk (Matt Hancock) on tabling this important debate. I start by declaring an interest: I am a board member of the Racehorse Owners Association. I have been to the races at the kind invitation of a number of people whose names are in the Register of Members’ Financial Interests, and I am a modest owner of racehorses; it would probably be better to say that I am the owner of modest racehorses.

[Matt Hancock]

I completely forgot to also draw the Chamber’s attention to my registered interests. I have been kindly supported by many people from across horseracing over many years. They support me because I make these arguments; I do not make these arguments because they support me.

[Philip Davies]

I am sure that we are all grateful to the right hon. Gentleman for his declaration. Unlike him and my hon. Friend the Member for Hexham (Guy Opperman), I do not seek to ride any winning horses; I just try to back a few, with mixed results. At least when I lose, I know that I am contributing to the levy, as the right hon. Gentleman has encouraged us all to do.

As the right hon. Gentleman said, horseracing is a very successful sport in this country, but it is under increasing threat from foreign competition, particularly from the middle east. Many of our best horses are now sold to race there, where racing is much more profitable than in the United Kingdom.

Whether people like it or not, the vast majority of income for the racing industry comes through betting, one way or another. Owners put an awful lot of money into it without much expectation of return, and I can certainly vouch for that. Betting brings around £350 million a year into the industry. That is much more than the total prize money in the UK. If racing loses that betting income, the problem of horses moving overseas will only get worse. British racing would cease to be the best in the world. That would be terrible for the country as a whole, as well as for individual constituencies.

The right hon. Gentleman was absolutely right to focus much of his remarks on the issue of affordability checks, and I want to concentrate on it in the short time available to me. There is an issue of principle here. Who decides how much people can afford to bet on anything? Who decides what people can afford to spend on anything? We are in an interesting situation where the Government are deciding that people should have an affordability check on their betting, but on nothing else. People who spend a modest amount on betting—for example, those who lose £2,000 over 90 days—will undergo enhanced affordability checks.

I will illustrate how absurd the situation is. A racehorse owner might buy 10 horses, and spend £1 million each year at the sales buying those horses. None of that is subject to an affordability check. They then put those 10 horses in training, and pay fees of around £250,000 a year. None of that is subject to an affordability check. But if they were to spend £2,000 betting on those horses over a 90-day period, they would, at the Government’s behest, be subject to an enhanced affordability check. It is complete nonsense. Surely nobody here thinks that those people should be subject to an affordability check on that basis.

The racing industry worries that people who spend an awful lot of money owning and buying horses, and who enjoy having a bet on their horses when they run, will leave the sport, because that betting part will be at risk if the Government go ahead with their plans. That would be tragic for the racing industry and for those people, and it cannot have been the Government’s intention when they introduced affordability checks.

This blanket number is wrong, and why would it apply only to betting? Why is betting frowned upon to such an extent that the Government want to stick their nose in and find out whether I can afford to spend my money—it is my money, after all—on betting? They do not check whether I can afford to buy a pair of shoes, a coat, a suit or anything else. They want to interfere only if I am betting on anything, including horses. There is an important matter of principle here.

The intention behind some of the rules is ridiculous. For example, if someone loses £2,000 over 90 days, they get an enhanced affordability check, but they can offset only seven days of winnings against that. People’s losses are mounted up over 90 days, but they can offset any winnings made over only seven days. That is absolute nonsense. People could literally win £10,000 on the placepots at Cheltenham in March, go to the grand national at Aintree and lose £2,000, and then have to have an affordability check, even though they are £8,000 up. No account is being taken of how much is won in the previous month or two months—only of what was won in the previous seven days. Those arbitrary figures are ridiculous.

People want proportionate checks. We are basically treating everybody who bets on anything in this country as a potential problem gambler, even though the rate of problem gambling in this country is very low, at about 0.3%.

--- Later in debate ---

[Matt Hancock]

Will the hon. Gentleman give way?

[Gavin Newlands]

I have only a minute or two left, but I am happy to do so.

[Matt Hancock]

I bow to no one in my support for tackling problem gambling. I went toe to toe with the gambling industry by introducing FOBTs as Secretary of State, to its great unhappiness, but is the industry not right on this? The hon. Gentleman just said that the public want action on online gambling, but it comes down to this point: gambling on horseracing is materially different from gambling on games of pure chance, whereby people know they are going to lose over time because the technology is designed in such a way that there is no fluke, no luck and no skill. The two are materially different. If we do not understand that, we will simply end up destroying a sport to try to protect people from something completely different.

[Gavin Newlands]

I accept the premise of the right hon. Gentleman’s point, but that is why the SNP is calling for a smart gambling levy that is scaled to the damage that gambling does. There has obviously been cross-party agreement on FOBTs over the past couple of years, but the levy would be higher. We can agree to disagree on many things, but we can certainly agree on others.

I have another couple of points that I would like to make, but time has defeated me. I should perhaps not be so generous in taking interventions next time around.

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[Matt Hancock]

Very briefly, I welcome the Minister’s confirmation that the levy review will happen by April 2024. However, overwhelming concern has been expressed from Fakenham to Bangor, from Newbury to Newmarket, from The Guardian to the Racing Post, and across the House, by Labour, the Lib Dems and the DUP, as well as the Conservative party—and, within the Conservative party, from the hon. Member for Shipley (Philip Davies) to the hon. Member for Newbury (Laura Farris). When they agree, they must be right. I cannot see how we can ever have frictionless checks—how we should ever have frictionless checks—if the checks involve looking at someone’s income or bank account. I urge the Minister to take away this key point: there is a difference in different types of betting, and there is a serious risk of unintended consequences in the current approach, which is going to make things worse.

Motion lapsed (Standing Order No. 10(6)).