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6.5 pm

Ben Chapman (Wirral, South) (Lab): I am delighted to have secured this debate on internet gambling, because I think that the subject is very important. I am not a great expert on the internet, but I know of people who are involved in internet gambling and worry about the situation. I speak without having consulted such people, but I hope that they understand that I share a concern which others have expressed.

There is an adequacy of accumulated evidence and expert opinion to suggest that the issue should be a matter of concern for a large number of people, extending to more than those who practise internet gambling. It may seem a little anachronistic to term internet gambling “a vice”, but if that is what it is, then that is what it is—although gambling is not the oldest vice, it is certainly well up there.

I do not want to be negative; I want to be positive—and we are, as they say, where we are. As I am sure that the Minister will say, internet gambling is here to stay, and, to be frank, we had better get used to it. However, I want to sound a note of caution about some things that concern me, because we are, in a sense, stepping into the unknown. I also want to put forward some thoughts about things that I think are within the Government’s power to effect and regulate.

The Government set out their position early on with regard to internet gambling and, to their credit, they have remained consistent. The House of Commons Library has said this about gambling and internet gambling:

Few would take issue with that point of view. Indeed, the Government have been supported in their approach by the Salvation Army, the Methodist Church and GamCare, among others.

The Government have also said, however, that they want the UK to become a centre for the online gambling industry. That aspiration has, of course, been thrown into sharp relief by the passing of anti-gaming laws in the US, which prohibit banks from accepting requests for payment from gambling websites. The industry’s potential is massive. Last year, $12 billion was bet on sites around the world, which offer games such as poker, blackjack and roulette and slot machines, and £1 billion of that was staked in this country. Many operators will be looking to Britain to fill the void left by the US, and it is understandable that UK plc should seek to profit economically, but many people will be uneasy with such an aspiration.

A study commissioned by the Department for Culture, Media and Sport found that on a conservative
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estimate the number of online gamblers is about 1 million people in the UK staking on average £1,000 each. A recent “Panorama” programme, however, contained claims from a further study suggesting that that figure is a massive underestimate. That study stated that 5.8 million people—one in 10 people in the UK—log on to sites every month.

For some, the situation has proved to be very profitable. Some people—I suspect that they are a minority—have turned professional and earned huge sums of money, but for others the results have been devastating. Citizens advice bureaux have reported some extremely disturbing cases, albeit in relatively few instances. One man gambled on the internet and lost £200, having seen a TV programme on online gambling. He became so obsessed about the need to recover that £200 that he now owes more than £50,000. Another bureau saw somebody who ran up £30,000-worth of online gambling debts in 12 months, using one credit card to pay off another. That person is applying for bankruptcy. Many people may find it hard to imagine that worthy organisations such as GamCare and the Responsibility in Gambling Trust, no matter how well funded, would have the tentacles to prevent punters from slipping into such a vortex of addiction.

The point is that gambling on the internet is an inherently isolated pursuit, unlike gambling in the social context of a casino. Typically, those gambling on the internet will do so alone. The dangers of acting on impulse are thus increased. Dr. E. Moran from the Royal College of Psychiatrists, who has many years of experience in this field, including involvement with the establishment of Gamblers Anonymous, lists several well established psychological effects of gambling, ranging from habit forming caused by small but regular prizes to an unrealistic assessment of the player’s chances of winning. Users may be unaware that they are racking up large losses, because they are given occasional wins as an incentive to keep them locked in. The availability of credit on many sites means that users lose sight of their debt, which contributes to the temptation to chase it. Extensive studies have shown that the psychological and physiological effects on those who participate in gambling encourage the chasing of losses.

It may be said that it is a small minority who are afflicted by these conditions of self-delusion and that it is the responsibility of the gambling industry and the Government to target those people and give them help. That is true, but my fear, and that of others, is that a few years down the line we may find that what is currently a minority has grown significantly. In 2002, an inquiry in Australia found that one third of the industry’s total revenue was derived from “problem” gamblers.

Given that people are faced with a barrage of bright lights and flashing images offering the possibility of big winnings, it may be unhelpful to talk in terms of “problem” or “vulnerable” gamblers, because that implies that anyone else is somehow invulnerable. Reading through Government papers on the subject, one gets the impression that if only the punter had enough information they could be transported to a state of calm objectivity when deciding whether to risk each stake—but gambling can be glamorous, exciting and sometimes very fast. There is likely to be regular
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success, which tends to blinker the user to his or her long-term losses and encourage participation. The fact is that internet gambling is conducive to addictive behaviour. We can say at the very least that not all who take part make an informed choice all the time.

Education and transparency are important, but are they enough? We surely need more and better restrictions on under-age children gaining access. The recent licence regulations issued by the Gambling Commission are welcome in their requirements for age verification, but there may be gaps. What can be done, for example, to stop children gambling via internet services on mobile phones? For obvious reasons, we need to take steps to ensure that phone credit cannot be used to stake money. Across the board, we need more warnings that players have spent too much money, and we need to look at restricting the amount that can be staked in any one period of time. The provision for punters to “self-exclude”—to inform the website that they wish to be prevented from taking part—is dependent on individuals recognising that they have a problem and furthermore taking steps to tackle it. “Pathological” gambling, as it is termed, is not so easy to tackle.

What assurance can my right hon. Friend give me that the banks and credit card companies will be fully involved in identifying problem gamblers and that credit will not be granted so easily by the websites themselves, and in the form of credit cards? We need to support, financially and through close involvement with the regulators, all the organisations, such as GamCare, that work with those who need help. I am pleased that that appears to be forthcoming, because it is needed. The establishment of the Responsibility in Gambling Trust is also welcome, and it is good that a target of £3 million a year to fund its activities has been set. However, am I alone in thinking that having members of the industry, even in a minority, on the board, is at least questionable? Expertise is one thing, but perception of vested interest is another. It should be remembered that the organisation was originally set up by the industry and known as the Gambling Industry Charitable Trust.

I see no reason why the partnership formed with the Economic and Social Research Council to conduct research, for example, could not have been with the Gambling Commission. By all means let us have a body charged with research and educating the public, but should not that be funded by a levy on the industry, but be separate from the industry? Surely that is the only way to ensure rigorous independence—perceived and actual—and to give the public full confidence in its activities and strategy.

Even if we accept the Government’s strategy of damage limitation by means of a tightly regulated UK market, it is less easy to understand why restrictions on advertising internet gambling are to be relaxed from next year. No matter how closely the regulations are drawn up to protect children and those at risk, advertising and, to a lesser extent, sponsorship is designed to entice those who would not otherwise opt to participate, and to encourage those already involved to play more.

I have discussed this matter with Ofcom, because I consider the distinction between sponsorship, which is currently allowed, and advertising, which is not, to be
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doubtful. It seems to me that, irrespective of whether a form of advertising acts as a direct incitement to purchase a product, advertising and sponsorship want the same outcome—increased sales.

A proliferation of companies has sponsored, for example, InterCasino with “Football Tonight” on Sky. Others have sponsored football teams. There is a particular worry about football. For example, I understand that one company has sponsored Aston Villa. Companies are out to maximise profits, and a big part of that is attracting new customers—from competitors, but also from those who have never gambled. A leading academic on marketing strategies confirmed that, and said:

It is one thing to push for a set of regulations designed to lure players away from potentially unscrupulous operators, but we should not encourage greater participation. Surely banning advertising in itself would not have repercussions such as driving people underground. It remains within the powers of the UK Government to ban advertising, and they should do that.

Certainly the Government should take immediate action against companies that have breached existing rules. Despite assurances in November last year that online gambling companies would face prosecution for flouting the law, no one has so far been prosecuted. The law continues to be widely ignored. For example, 888.com recently offered the chance of a seat at the Aussie Millions poker tournament in Melbourne for anyone who downloaded the poker software and completed stages of a free tournament.

Earlier in the year, the same company offered free flights to anyone who opened an account. I am told that The Independent newspaper hosts a gaming section on its website offering inducements of up to £500 to make deposits when signing up. Those are only a few examples, and even if those concerned could make a case that they were operating within the letter of the law, they are surely not operating within its spirit.

Will my right hon. Friend give me an undertaking that the law will be rigorously enforced now, and that those who infringe it will be punished severely? Furthermore, if he will not consider a ban on advertising, does he think it appropriate—even with the enhanced protection of the new regulations—that when the Act comes into force next year, such inducements will be legal?

We need to be cautious about the next few years. As I said, I am fully aware that in terms of direct regulation, we will be in a much better position in September next year than we are now. It is right and proper that the Government have taken the lead in efforts to establish international standards for the regulation of online gambling, and I congratulate them on doing it. I do not think that the road that the United States has followed is the right one.

I call on the Government to commit to doing four things in the run-up to September. They should ensure that the industry gives more warnings to players and
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restricts access to under-age people. They should also ensure that regular authoritative research is carried out to monitor the situation, as well as assessing the burden placed on health services, charities such as Citizens Advice, and others. They should consider whether the Gambling Trust is, and is seen to be, as independent as it should be, and they should take immediate steps against unlawful advertising, and seriously consider a ban.

We in Britain are entering new territory—a territory in which demand for gambling is being actively stimulated. Gambling online is but one form of this, but because of the internet’s ease of access and increasing pervasiveness, it has the potential to be the most pernicious. I am not suggesting that there is any harm in the occasional flutter. Nor am I seeking to be a killjoy. Prohibition would be illiberal and, more to the point, impossible to enforce. But the spirit of the Gaming Act 1968 is worthy of preservation. Gambling, unlike many other regulated activities, is deserving of special consideration because of its inherent addictive properties. We should not be in the business of allowing it to be promoted unhindered.

6.21 pm

The Minister for Sport (Mr. Richard Caborn): I congratulate my hon. Friend the Member for Wirral, South (Ben Chapman) on securing this timely debate. The matters that he raises are important, and I know that they are close to his heart and to the interests that he pursues.

Let me start by saying that I am very pleased with what we, collectively—the Government, the Gambling Commission, the industry and others, such as the faith groups—have achieved so far, and will, I hope, continue to achieve. We are creating a modern, flexible licensing regime for a modern, innovative industry. Ours will be a new system of regulation, which will be watched widely around the world as it develops. It will be able to adapt more quickly to new developments in the industry and will involve local people and their elected representatives more closely in the regulation of gambling in their communities.

We have given the Gambling Commission the statutory powers that it needs to tackle illegal gambling and operators who breach the rules. We have ensured that continuing to keep crime out of the British gambling industry remains central to our system of regulation, and is backed by the toughest vetting and by sanctions at the end of the process.

I agree entirely with what my hon. Friend said about the Gaming Act 1968, which was put on to the statute book to drive crime out of gambling. It was probably one of the most draconian pieces of legislation on the statute book, and it has worked very effectively. Indeed, it has given the industry the integrity for which it is known around the world and the basic principles that we have tried to bring into the Gambling Act 2005 and the new regime. Most importantly, we have placed the protection of children and vulnerable people at the heart of gambling regulation for the first time. Provisions such as those were not in the 1968 Act. New commercial freedoms for industry are balanced by new
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obligations to ensure that children and other vulnerable people are protected. This balancing of new rights and new social responsibility obligations is absolutely central to the success of the new Act.

It is worth reminding ourselves precisely why we need the new Gambling Act. Controls on commercial gambling are being undermined by new technology. This means that we are finding it difficult to protect children and vulnerable people from risky new products and from new methods of delivering those products, such as the internet. The Gambling Act restores control by means of a strong, flexible, adaptable licensing regime, which has social responsibility as the key underlying principle. Other countries, such as the USA, have taken a different approach from ours, especially on remote gambling. But our view—with which Professor Budd, Parliament, problem gambling experts and most academics agree—is that strong regulation, not prohibition, is the best means we have of protecting children and vulnerable people from the harmful effects of gambling.

We will be able to employ a range of measures designed to permit the socially responsible to promote and offer their gambling activities in a socially responsible way. In fact, social responsibility will be an explicit licence condition, with breaches triggering serious penalties including unlimited fines or even loss of licences. As I have said, protecting the public—especially children and the vulnerable—remains our top priority. I am confident that the measures in the Act will protect children and vulnerable adults, but the Gambling Commission will be able to impose additional measures on operators to provide further protection if it is needed.

We do not know whether more people will choose to gamble, but I believe that if they do, they will be far better protected than they would have been under the old Act. The industry has established the Responsibility in Gambling trust, which my hon. Friend mentioned, to fund prevention and treatment of problem gamblers. We have set a target of some £3 million a year to apply once the Act is fully implemented, from September next year. The trust is working very hard to achieve that target, but if more is needed and is not delivered by the industry, the Act allows the imposition of a statutory levy. We will use those powers if necessary. We want to see the industry make its due contribution to this critical arm of the arrangements. We can apply the powers to the Gambling Commission as well.

We are allowing the expansion of gambling opportunities only because we are also introducing effective measures to deal with the risk. We will keep a close eye on levels of problem gambling. If evidence tells us that we need to get tougher to protect the public, we will do so. The Government recognise that remote gambling poses new potential risks, which my hon. Friend described. The problem that we have faced and choose to address is that existing legislation does not deal adequately with the internet and remote gambling. We believe that strong regulation is the best means of protection for consumers. Operators in Britain will have to comply with a specific remote gambling licence. Licences will contain tough conditions to protect vulnerable users, and will prevent children from gaining access to sites.

As I said earlier, the British gambling industry enjoys a well-respected international reputation for integrity
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and high social-responsibility standards. Strong regulation in the new growth areas will further enhance our reputation, and allow British operators to lead the global online market. Regardless of whether remote operators choose to base their businesses here, we retain a keen interest in how those businesses’ gambling activities are promoted and advertised to British citizens.

Legitimate gambling businesses based in jurisdictions with robust consumer protection regimes should be allowed to advertise in great Britain. It will be an offence to advertise illegal gambling, but the Advertising Standards Authority has been working with the Gambling Commission to draw up a new code for non-broadcast gambling advertising in the light of the Gambling Act 2005, and has been consulting widely. The Secretary of State also has reserve powers under the Act to make regulations on the form, content, timing and location of gambling advertising. We will not hesitate to use those powers if it becomes clear that self-regulation is not sufficient to protect children and vulnerable people from exploitation.

My hon. Friend referred to an event that took place a few weeks ago. While it is not strictly accurate to say that we have no control over remote gambling operators based overseas, we recognise that regulating remote gambling is a global challenge. That is why we held the first-ever international Government summit on remote gambling in the United Kingdom on 31 October this year. We brought together more than 30 jurisdictions from around the world with an interest in regulating for remote gambling with a view to exploring the scope for developing minimum international standards for such regulation, particularly in relation to social responsibility and age verification. I believe that we made excellent progress, and that we now have a road map that will lead to better regulation of remote gambling throughout the world.

Those present at the summit agreed to co-operate further in a number of key areas to ensure that gambling remains fair and crime-free and that vulnerable people are protected. We discussed the text of the draft communiqué in detail. Delegates have taken it back to their respective Governments, and written confirmation will be sought in the coming weeks.

We also agreed at the summit to follow up with proposals for an expert working group representative of those countries present. We will want to involve wider international institutions, including UNESCO and the global financial sector, in advising on the development of worldwide standards for regulation. I hope that that group will report back in the middle of next year. The co-operation that we received from credit card companies was also pleasing, as that is essential if we are to regulate internet gambling effectively.


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