Written evidence submitted by CARE (GA 48)

Focus on remote gambling

Submission made by Lauri Moyle, CARE gambling policy officer, on behalf of CARE

About CARE and our focus

CARE is a Christian social policy charity that seeks to combine caring initiatives with public policy research and public policy shaping initiatives. We work in Westminster, Brussels, Strasbourg, Edinburgh, Belfast and Cardiff. We represent around 60,000 Christians around the UK, who support our work financially and in other ways.

We first became involved in policy relating to gambling and problem gambling in particular in 2007, around the time when the final elements of the Gambling Act 2005 were being implemented and it became apparent that there were public safety problems, especially in relation to remote gambling which was then beginning to be widely advertised. Although we have on occasions engaged with public policy debates about gambling per se, our particular specialism is the protection of the vulnerable in relation to remote gambling which we have addressed in both the UK and EU policy arenas. The following consequently focuses primarily to remote or internet gambling and outlines the current weaknesses in the legislative framework in relation to the licensing objectives of the 2005 Act, namely:

In this Act a reference to the licensing objectives is a reference to the objectives of-

(a ) preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,

(b) ensuring that gambling is conducted in a fair and open way, and

(c) protecting children and other vulnerable persons from being harmed or exploited by gambling. [1]

with a specific focus on (c).

In this submission we will demonstrate that the current regulatory framework is failing vulnerable people in the UK in relation to remote gambling, highlighting Government sponsored research which shows evidence for a link between higher rates of problem gambling and remote gambling. In so doing we will also argue that there is a lack of rigorous regulation around websites that do not currently have to apply for a license from the UK Gambling Commission and thereby adhere to a UK specific code of conduct. Specifically, there is a need for the Government to implement the suggestions made in the DCMS consultation on regulating remote gambling to which it has not yet responded, despite the consultation being closed for a year. References will also be made to the current situation in the EU.

Problem gambling in the UK in relation to remote gambling: The stats

In 2007 the Gambling Commission published its second Gambling Prevalence survey, which, while not constituting a study that measures causality of problem gambling, did show the levels of problem gambling in the UK and the relevant corollaries to specific forms of gambling. While there was no increase from the 2000 survey in the overall levels of problem gambling, the 2007 survey for the first time included questions relating to remote gambling, and showed that out of the 5 forms of gambling most associated with problem gambling, 4 were forms of gambling in which one participates solely or mainly online, namely: spread betting, betting exchanges, the use of fixed odds betting terminals (excepted), online gambling in a casino type game or bingo and online betting.

At the time the survey was published we pointed out that this did not provide a compound problem prevalence figure for gambling using the internet per se. This was an important oversight and we pressed the Minister, Shadow Minister and Gambling Commission for this figure but no figure was published.

However, after we asked the question, the Gambling Commission published secondary research from the dataset of the prevalence study on gambling and the internet, produced by Mark Griffiths from Nottingham Trent University, Jim Orford of Birmingham University and a number of experts from NatCen, the organization which conducted the survey originally. The study showed that the rate of problem gambling amongst those who chose to gamble online was higher at 5% [2] than for the population at large (0.5-0.8%) [3] . A further overall secondary analysis of the Gambling Prevalence survey 2007 showed that there was a link between problem gambling and online roulette. [4] In both cases the researchers urged caution in analysing their results, but nevertheless made it clear that they believed internet gambling and problem gambling need to be looked at again. In the first study, the experts even argued that the Government should take a particularly close look at regulating remote gambling because of its specific and peculiar nature i.e. the lack of natural boundaries such as 24 hour accessibility, the ease of access etc.

Fast-forward to the 2010 prevalence study released earlier this year in February and the results are even more worrying. Overall problem gambling rates have increased to 0.9% of the population as a whole [5] , and the figure for any online gambling excluding the national lottery, (this time included in the main body of the study) increased to 5.3% [6] , a rise of 0.3% from the figure produced by the Griffiths-Orford secondary research study of the 2007 figures.

Finally, a meta-analysis of prevalence surveys produced by the Swedish based Centre for public sector based research (CEFOS), found that:

"interactive Internet gambling, casino gambling, electronic gaming machines, and high-stakes unregulated/illegal gambling are often relatively closely associated with PG [problem gambling]…" [7]

We therefore conclude that remote gambling needs special attention in relation to regulation, and, while we readily admit that traditional forms of gambling are used far more frequently by most UK citizens and also need due attention, the Government needs to act in order to protect vulnerable people.

Consultation on the regulatory framework of remote gambling websites

In the years following the release of the 2007 prevalence survey, we met with both DCMS officials and the then Minister, Gerry Sutcliffe MP, who agreed with us that the regulatory framework around remote gambling was not working and needed to be revisited. No doubt the move by major UK based gambling companies to relocate their remote gambling operations out of the UK into other EU and white-listed jurisdictions, and the ensuing loss of tax revenue, was a big part of the decision to revisit the legislative framework. Nevertheless it was a very welcome decision from CARE’s perspective as we believe that the current settlement, whereby any remote gambling proprietor in any part of the world, whether or not they are appropriately licensed, can offer their service within the UK without any UK standard of protection for the vulnerable (and if they are based outside of the EU, any legal recourse to individual gamblers in cases of a dispute), is unreasonable. This settlement does not fulfil the spirit of the 2005 Act in relation to its licensing principles outlined above.

While it is true that the current regulatory framework has built-in market mechanisms which underpin the regulatory logic, we believe that allowing remote gambling companies to advertise their services terrestrially, on television and online: (a) does not provide enough of an incentive for companies to come under UK or EU regulation, (b) does not ensure an equal standard of regulation within a specifically UK licensed regulatory code of conduct and (c) in some instances undermines the very licensing objectives of the 2005 Act – specifically advertising normalises gambling and in so doing increases the likelihood that problem gambling will grow simply because more people will gamble.

The consultation document published in March 2010 and closed on the 18th of June 2010, after the General Election.

The consultation document suggested that the current regulatory framework is not working. The document, giving an indication of which way the Government might want to go, seems to express the view that it would be best to require all remote gambling companies accessing UK markets to apply for a Gambling Commission licence and to criminalise those who operate in the UK without such a license. As to measures of enforcement for these proposals, it leaves open the possibility for secondary legislative power to be given to the Minister in order to implement either the blocking of websites which operate illegally in the UK, or of blocking financial transaction to and from such websites. CARE welcomed both of these suggestions. We recommended the threat of financial blocking as the simplest measure.

CARE very much welcomed the fact that the new Minister, John Penrose MP, decided to run with the consultation because the proposed plans seem sensible, proportionate and legal under current EU case law. To date however, no formal statement has been made by the Minister as to what he will do, although some rumours have appeared in the press which indicate that the Minister still wants to revisit the regulatory framework and recognizes its current weakness.

European Parliament non-binding motion and Commission Green Paper

While we don’t feel it is necessary to go into the detail of developments in other European member states, or indeed the developments at the European Courts with regard to member states rights to regulate remote gambling, we do want to draw the committee’s attention to the European Parliament non-binding motion, which was overwhelmingly accepted by a vote of (544 MEPs for the motion with 66 against and 75 abstaining). It is entitled Integrity in online gambling and stresses that:

"gambling services are to be considered as an economic activity of a very special nature due to the social and public order and health care aspects linked to it, where competition will not lead to a better allocation of resources, which is the reason why gambling requires a multi-pillar approach; emphasises that a pure Internal Market approach is not appropriate in this highly sensitive area, and requests the Commission to pay particular attention to the views of the European Court of Justice regarding this matter;" [8]

And also says: "Considers that self-regulation regarding the advertising, promotion and provision of online games is not sufficiently effective and therefore emphasises the need for both regulation and cooperation between the industry and the authorities;" [9]

Despite the fact that we have only cited two parts of the motion we would commend it in its entirety for the committee’s consideration. It can be accessed at:

Not long after the motion was passed, the EU parliamentary elections took place and new commissioners where appointed to the EU Commission. Whereas the previous commissioner for Internal Markets was against looking into remote gambling, the new commissioner made it one of his priorities. Earlier this year, the Commission published the Green Paper on remote gambling, which is the first step to regulate remote gambling in the EU. This is an encouraging development but it will take years to introduce new legislation at an EU level and we have no guarantee about what it will say.

In light of this we would urge the committee to make recommendations to the Minister that would speed up the process of protecting the vulnerable in the UK, particularly to provide a requirement for all companies servicing UK citizens to comply with the UK licensing code of conduct, regulated by the UK Gambling Commission and enforced in such a way as to make it un-lucrative to operate without a license and accountable to a UK body.

Conclusion and Recommendations

We have shown that remote gambling has a particularly problematic relationship with problem gambling in the UK. We have shown that the current regulatory framework has not worked, as evidenced by the increase of problem gambling overall, and an increase in problem gambling in relation to online gambling specifically. That there is international as well as national evidence, provided by a Government body authorised to regulate the licensing regime of remote gambling in the UK, to show that more needs to be done to regulate remote gambling and that, while there has been movement on the issue both at EU and UK Governance level, little has yet been done to protect the people who are suffering as a consequence of addition to gambling in relation to remote gambling.

Therefore we recommend that the Government moves more swiftly to implement the proposals that it indicated it wants to make as described by the consultation document on remote gambling through any legislative change that would be require.

Furthermore, as per the European Parliament opinion on gambling integrity regarding self-regulation, we would ask that given recent evidence in the form of the Gambling Prevalence Survey 2010 which has shown that problem gambling figures have increased, the code of conduct for licensed websites be independently reviewed, so as to measure the effectiveness of the codes of conduct.

In summary we recommend:

1) That the Government implement the proposals in its remote gambling consultation, including the provision to block financial transactions to and from gambling service providers that do not have a UK based license.

2) That the Government appoint Dr. Jim Orford of Birmingham University to conduct a n independent review of the efficacy of the current licensing c ode of conduct enforced by the Gambling Commission.

3) That the Government, through the Gambling Commission stipulate the requirement for remote gambling companies to have their compliance with the licensing code of conduct independently reviewed each year and for this review to be published on the Gambling Commissions website as a part of the regulator licensing regime.

Finally we would like to thank the committee for conducting the review.

June 2011

[1] (accessed on 17th June 2011)

[2] Internet gambling: a secondary analysis of findings from the 2007 British Gambling Prevalence Survey October 2008 (p.12)

[2] (accessed on 17 th of June 2011)

[3] UK Gambling Prevalence Survey 2007 (p. 76) (accessed 17 th June, 2011)

[4] British Gambling Prevalence Survey 2007: Secondary Analysis (executive summary p. 6) (accessed on 17 th June, 2011)

[5] UK Gambling Prevalence Survey 2010 (accessed 17 th of June, 2011)

[6] Ibid. p. 96

[7] What are the most harmful forms of gambling? Analyzing problem gambling prevalence surveys

[7] CEFOS Working Paper 12, 2011 Abstract (accessed 17th June, 2011)

[8] European Parliament resolution of 10 March 2009 on the integrity of online gambling (2008/2215(INI)) clause 2

[9] ibid.

Prepared 1st August 2011