Financial Risk Checks for Gambling

Ronnie Cowan Excerpts

Monday 26th February 2024 Westminster Hall

[Philip Davies]

Thanks.

Thankfully, readers of the Racing Post and punters still believe in the timeless Conservative principle of individual responsibility. In a recent poll of punters carried out by the Racing Post, when asked who they thought was best placed to assess whether their betting is affordable, 96.6% said that they were, 1.8% said the Gambling Commission, 1% said bookmakers and 0.6% said the Government. If that is not a giant raspberry to the proposed affordability checks, I do not know what is.

Everyone knows that the problem gambling rates in the UK are extremely low, and certainly do not justify anything remotely close to what is being proposed. However, it is also pretty obvious to most people with common sense that the affordability checks are likely to make things worse for people with a gambling addiction, rather than better. Does anyone seriously think that anyone who has a serious gambling addiction, if and when they are told by online bookmakers that they are no longer allowed to bet with them, will just stop betting completely? It is pretty obvious that those people will do all they can to carry on with their addiction, and that will mean going to the black market where there are no controls on people’s behaviour.

[Ronnie Cowan (Inverclyde) (SNP)]

Will the hon. Gentleman give way?

[Philip Davies]

The hon. Gentleman will have the opportunity to have his say later, and I am anxious about Sir Edward’s strictures.

The Gambling Commission has always said that the threat from the black market is overstated, while at the same time, like most quangos, telling the Government that it needs more money to tackle it. I hope the Minister will make it clear that he does not underestimate the threat from the black market. Only today, the front page of the Racing Post shows the results of a special investigation into The Post Bookmakers—an unregulated firm with 1,300 customers—which said it was expecting a ridiculously busy Cheltenham and recommended that a customer deposited as much as they could. How on earth can making it more likely for people to go to firms like that possibly help to tackle problem gambling?

The wonderful sport of horseracing derives much of its income from the gambling industry, so the more people go to the black market, the less money there is for the sport of horseracing. British racing is the best and most prestigious in the world. It is the second biggest spectator sport in the UK after football, brings a huge amount of foreign investment into the country and is a huge part of the rural economy. It also provides a huge amount of pleasure to millions of people across the country. The Government cannot possibly allow themselves to introduce measures—however well meaning —that will have a devastating effect on this great sport.

Some 24,000 racehorse owners in the UK invest more than £500 million into the rural economy. They pay £32 million a month in training fees, employing over 350 racehorse trainers who employ some 80,000 people. The least they should be allowed is to have a bet on their own horses as well. We cannot allow decisions to be made that put that investment at risk.

However much I would like the Government and the Gambling Commission to abandon the affordability check policy, I have not been here so long without accepting that some battles are impossible to win. I therefore accept that the Government may feel that they have invested too much in the affordability check debate to be able to abandon it completely. I have suggestions for the Minister that might help make the policy less bad, and I hope he will consider them.

The Government have said that they want financial checks to be frictionless, but as envisaged the checks would be anything but. First of all, will the Minister pledge to ensure that any checks will be based on net deposits, not gross deposits? That would make a material difference. Secondly, it is envisaged that enhanced affordability checks will be based on current account turnover, or CATO, data. That is used primarily by loan industries to determine whether a customer can afford a loan. It focuses on money flowing in and money flowing out of an individual’s account. That is precisely the wrong kind of test, as it second-guesses in a subjective manner what someone can afford.

CATO does not consider financial vulnerability and is extremely unhelpful when it comes to people with irregular money flows such as the self-employed, entrepreneurs and individuals with high wealth but low income. Will the Minister pledge not to use CATO data for those reasons? If he insists on going ahead with affordability checks, will he use SCOR data instead, from the Steering Committee on Reciprocity? SCOR data is much more appropriate as it shows if someone is showing signs of financial vulnerability and distress. It flags people who are falling behind on the rent or those with missed mortgage payments, defaults on loans and so on. Crucially, the checks are entirely frictionless and do not discriminate against any group, such as the self-employed.

When the Government envisaged affordability checks, surely that is what they had in mind—checking that people were not resorting to gambling to try to win the mortgage payment that they had fallen behind on, rather than trying to second-guess what each individual could afford to spend on gambling. I look forward to the Minister’s response to that suggestion. Will he also make clear where anti-money laundering checks will fit in with the affordability check regime?

If the Government insist on affordability checks, I have another suggestion: to differentiate between games of skill and games of chance—that is, to separate sports betting from online slots and roulette. Horseracing is not a game of chance and in my view should not be treated as such. Incredibly, as my hon. Friend the Member for Windsor (Adam Afriyie) made clear, the Government envisage that some games of chance will be treated more favourably than games of skill. I do not think that the national lottery will be subject to affordability checks—it cannot possibly be right that people who bet on horseracing will but people who bet on the lottery will not. Will the Minister confirm that that will not be the case or give an explanation of why it will?

Not including the national lottery in such measures would indicate a disregard for the people losing money and an interest only in the people winning money. If the concern is about problem gamblers, why is it okay if they have lost all their money to the lottery, just because that money goes to good causes rather than bookmakers? The national lottery must be included in all the measures in the White Paper.

I end, Sir Edward, where I began: by urging the Minister to look after the interests of all punters to ensure that nothing is done to threaten the horseracing industry, which will never forgive the Government otherwise, and to stand up for the key Conservative principle of individual freedom and individual responsibility. It is not too late to snatch victory from the jaws of defeat.

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[Mr Laurence Robertson (Tewkesbury) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. I refer hon. Members to my entry in the Register of Members’ Financial Interests; I am also proud to be the Member of Parliament for Cheltenham racecourse and—with the hon. Member for St Helens North (Conor McGinn)—the co-chair of the all-party parliamentary group on racing and bloodstock.

I am afraid that I will have to disappoint the hon. Member for Sheffield Central (Paul Blomfield), because I am going to speak mainly about horseracing. I think the most recent estimate is that Cheltenham racecourse brings in £278 million to the local economy in just four days. Those four days are coming up very soon, so I would be neglecting my duties if I did not speak from a horseracing point of view.

May I thank the Minister for being always available for a meeting to discuss the issue, and always willing to come to these debates? I do not think he particularly enjoys them any more, but he always turns up and listens. I thank him for everything he is doing. I recognise that this issue was dropped on him by previous Ministers; for that, he has my deepest sympathy.

I want to point out the relationship between betting and horseracing, which is not always obvious. The figure varies, but something like 40% of racing’s income comes from betting companies through the levy, media rights and sponsorship. I also want to explode the myth that horseracing is a rich sport; it is referred to as the sport of kings, and several monarchs have indeed taken a deep interest, but it is very poorly funded. If we look at the top 1%, there may be a lot of money there, but if we look at the whole pyramid, we find that it is not well funded at all. Racehorse owners—I am not one of them—are the unsung heroes of racing. They lose so much money that I am surprised that they continue at all, but they do.

Let me cite some figures from yesterday’s racing. At Hereford, the average prize money was £4,342. Not many miles away, at Naas in Ireland, the average was £12,479. Two races in France yesterday averaged £27,000. Hong Kong was almost off the scale: the average was £154,620. We can see from that how very poorly horseracing is funded in this country. That has a knock-on effect on stable staff, jockeys and trainers, who are all far from rich—quite the reverse, believe me. Although British racing is the best in the world, it is probably almost the most poorly funded.

Racing cannot take any more financial setbacks. Racing and betting have come together on this issue like never before, because they know that they face the greatest ever threat to their existence. I am not exaggerating when I say that. Imagine the UK without the Grand National, the Derby, Royal Ascot or the Cheltenham Gold Cup: they are magnificent, iconic races and the UK would not be the same without them. I have to say that the changes to the levy that are being discussed would not compensate for the losses that racing could face as a result of the affordability checks. Quite the reverse: to use an old political phrase, it would be a double whammy.

[Ronnie Cowan]

The hon. Gentleman is talking about industry funding, but what about the boat race, Wimbledon or—I have to mention it—the Calcutta Cup? None of them is funded by the gambling industry, yet they survive.

[Mr Robertson]

They are very different. Someone with more experience may correct me, but I think I am right in saying that across the world, horseracing is funded by gambling companies. I am not fully aware of how other sports are funded, so I will have to ask the hon. Gentleman to excuse me in that respect. I have always been in favour of racing expanding its income stream and getting more sponsorship. It does a lot of work on that, and I would be happy to see it going down that path, but it is nowhere near it yet—not by any means.

There is also the philosophical aspect to this, as we have heard. A Conservative Government should not be telling people how much money they should spend. I am keen to recognise that we need to help problem gamblers, but we should be targeting people who may be liable to become addicted to gambling, rather than people who spend too much on gambling. If we try to stop people who spend too much on gambling, we enter the philosophy of it. What about people who spend too much on alcohol? What about people who get addicted to shopping? It was said earlier that we do not see the health service dealing with those people, but perhaps it should, rather than just focusing on one aspect of society —in other words, gambling. Perhaps that is a criticism of the health service, because that is not something to be proud of. We should be looking at people who have other addictions. People with addictions often have other problems as well, and I speak with some knowledge on the matter. Saying, “You can spend £100 a month, but not £200 a month” does not help people with addictions. We should be creating systems that help those who are in real danger.

I am not going to speak for very long, and I will respect your 10-minute guidance, Sir Edward. I suggest that we should halt this process. My hon. Friend the Member for Shipley (Philip Davies) suggested that the Government have invested too much capital in it. Well, they have not invested as much capital as they did in High Speed 2, and they managed to pull that—eventually, but quite rightly. I suggest that we should take a step back, because we risk destroying not only the betting industry, but, far more importantly from my point of view, the second most popular sport in the United Kingdom.

--- Later in debate ---

[Mr Robertson]

My hon. Friend tempts me to go down a road that I am not quite sure I want to go down. The SNP is capable of speaking for itself.

[Ronnie Cowan]

I was not saying that it should be stopped; I was saying that there has to be equitable funding for all other sports. It cannot focus just on horseracing as the only one to benefit. There are other sports enjoyed throughout the United Kingdom.

[Mr Robertson]

Okay. I think I answered that earlier.

Look, we all want to protect vulnerable people. The analogy I always use is that a pub makes its money from selling alcoholic drinks to people, but it does not want alcoholics or people who are drunk in there. It wants people who enjoy a drink without causing any problems to themselves or anybody else. The proposals are deeply unpopular in the racing and betting industries, and many colleagues in my party and other parties are concerned about them. We are not saying, “Let’s not take measures to help vulnerable people.” Of course we should, but this is not the way to do it.

I ask the Minister to have a word with the Gambling Commission and put a halt to the pressure it appears to be putting on companies, which are already taking steps, and we are already seeing the loss of income to horseracing. The Minister should say, “Hold it for a minute”—or perhaps, “Hold your horses”—“and let’s have a rethink.” Let us get interested parties around the table—I think that suggestion was made earlier. Let us not rush this; let us think about how we do it properly. As I say, the Minister is not to blame; he has had this dumped on him, but I ask him to please go back to the people who are pressing this policy, wherever in the Conservative party they are, and say, “This is a dangerous policy. It will not work. There is a lot of opposition within our own party to it.” Let us get people who know what they are talking about around a table, talk about it and see what progress we can make working together.

--- Later in debate ---

[Ronnie Cowan (Inverclyde) (SNP)]

I thank the hon. Member for Neath (Christina Rees) for leading this debate. Let me say briefly to the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) that if horseracing were even partially responsible for fomenting an uprising against the UK Government, I would be leading the charge—but it is not. It is a terrific sport, which people gamble on and enjoy. This petition is a tiny bit about horseracing and a lot about the black market and affordability checks, but we have spent nearly two and a half hours talking about the horseracing industry.

Before anyone puts me down, I am delighted that so many MPs here today have recognised the fact that online gambling and online casinos are a dangerous thing and that we have to be on top of that to help people away from the course of addiction. I have not seen many of those Members sitting in front of grieving parents whose child has been driven to complete suicide. I have, however, seen them on the racecourses. I have seen them back up their racecourses. It is understandable: if I had a racecourse in my constituency, I would think that it was a hugely important part of my constituency that generated money and had an important supply chain around it.

[Conor McGinn]

Will the hon. Gentleman give way?

[Ronnie Cowan]

Not right now.

It is hugely important. If we look at the sort of money that the gambling industry feeds into the industry—

[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.

[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.