The 2005 Gambling Act was designed to regulate gambling, in all its forms. But 15 years later, the world has changed, and gambling has changed too: bookies’ shops on the high street are fading, as gambling goes online. And a gambling law written before the first iPhone went on sale is clearly no longer fit for purpose.
Even the Government has called the 2005 Act an “analogue law in a digital age”, not properly equipped to deal with the increasing complexities of online gambling. The current industry regulator, the Gambling Commission, is unable to ensure the necessary amount of oversight and consumer protection needed within today’s digital market.
We already know about the need for gambling reform. There are numerous news headlines, research reports, and policy papers telling us so. The horror stories of problem gambling and the social harm associated with it now well-known. But there are far fewer examples of radical, evidenced-based proposals for change.
Numerous reports on online gambling have been published in recent years, each providing important reiterations of a reformist policy agenda. Contributions include those made by a House of Lords Select Committee, the All-Party Parliamentary Group for Gambling Related Harm, the Labour Party, the Public Accounts Committee, and the National Audit Office.
In a new Social Market Foundation report, we aim to push that debate even further.
We have produced a comprehensive framework of what a contemporary gambling act should look like – and how it can take effect. In our independent pre-review report, released ahead of the Government’s own review of the Gambling Act, we produce recommendations across four areas in urgent need of intervention: licenses, content, affordability, and tax.
Gambling licensing is currently overseen by the Gambling Commission, whose responsibility is to ensure that the aims of the 2005 Gambling Act are upheld. But too many dubious operators are able to engage in our economy without due diligence, meaning that harmful gambling practices all too easily escape regulatory practice.
We believe that a licence to operate in the British gambling market should be considered a privilege, not a right. By setting out alternative licensing arrangements, such as the barring of opaque ‘white label’ companies, the creation of personal management licenses, and the introduction of a more transparent sanctioning system, the integrity of a UK gambling license can be preserved – and the protection of gamblers more tightly secured.
Gambling content in the digital age means we now have a situation where vulnerable players are playing highly addictive casino or slot games. Online, there are no mandatory stake limits, jackpot limits, or restrictions on the speed of play. Mobile phones are now the most popular method of accessing online gambling.
Current legislation has been unable to accommodate the rapid technological change that has occurred over the past decade and a half. The stakes and speed of online gambling need to be tightened so that the most accessible – and potentially most harmful – type of content is controlled. We suggest this might best be implemented by introducing a review of specific limits to online content, as well as looking to define online gambling as an index of harm.
In terms of gambling affordability, it is an integral part of business – and a source of profit – for gamblers to spend beyond their means. It is also accepted that irrational decision-making and impulsivity is an inherent characteristic of gambling. Given that the success of the industry hinges upon the excessive spending of vulnerable players, affordability has been referred to as being a key element in protecting people from harm.
More has to be done to stop people spending in a way that might be destructive. Our gambling affordability model shows, by establishing a threshold at which households will struggle to properly participate in society, how much individuals are able to spend on gambling without it amounting to serious financial harm. We identify this threshold as £100 per month, and propose that a corresponding ‘soft cap’ is applied to all customer deposits: if you want to stake more than that, you should have to prove that you can afford to lose it.
Then there is the issue of gambling taxation and tax avoidance which is, just like with any other industry, a point of great controversy. It is well known that gambling operators seek to reduce their tax payments by basing their operations in tax havens such as Gibraltar, depriving the British government and British people of money that would otherwise go to towards public services. This is unfair.
So we argue that a principle of ‘footprinting’ should be established. This means that gambling operators that are based offshore are billed, in full, for corporation tax, whereas those that have a large onshore presence – whether that be in terms of their headquarters, employees, or legal structures – receive tax rewards. We believe this would eliminate the financial appeal of tax avoidance altogether.
For all of this to happen, there has to a radical overhaul of the way in which Government approaches the question of gambling reform. We call for an end to the existing regulatory framework and recommend its replacement, which would work across public agencies and government departments. The current system is not up to the complex challenge of gambling regulation, and so cross-department oversight is essential.
Gambling is a hugely lucrative industry, and it brings in useful revenue for the Treasury. It is also a legitimate leisure activity that all British people should be able to take part in, if they so wish. But outdated laws are letting down gamblers and taxpayers. Only real reform can protect them.