1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Gambling Commission (the Commission) and Department for Digital, Culture, Media & Sport (the Department).
2.Around half of adults in Britain gamble through, for example, betting on sports, going to casinos, and playing arcade or bingo games. In 2018–19, commercial gambling companies in Great Britain yielded £11.3bn (that is, bets placed less winnings paid out), which raised around £3bn in gambling duties. The gambling industry has been transformed by social and technological changes and is now larger and more accessible than ever. Licensed gambling has grown by 57% (£4.1 billion) in real terms in the past ten years, due to a significant increase in licensed online and mobile gambling.
3.For some people, gambling can lead to serious harm, including mental health and relationship problems, debts that cannot be repaid, crime or suicide. People experience these problems in different ways, and their experiences can be made worse by the conduct of gambling operators, for example encouraging people to play more. ‘Problem gambling’ is gambling considered disruptive and harmful to a person’s health and wellbeing. Those who are not classified as problem gamblers but are considered “at-risk” can also experience similar harms, normally to a lesser extent, while harm can also affect friends, family, co-workers and others. There are an estimated 395,000 problem gamblers in Great Britain, of which 55,000 are children aged 11–16. There are a further 1.8 million people at-risk of problem gambling, who may also be experiencing gambling-related harm.
4.The Commission regulates commercial gambling. It aims to ensure gambling is fair and safe, and has a duty to protect children and vulnerable people from harm. The Commission issues licences to gambling operators, and sets and enforces the licence conditions and codes of practice they must follow. The Commission is a non-departmental public body and is funded by licence fees from gambling operators, which totalled £19 million in 2018–19. The Department for Digital, Culture, Media & Sport is responsible for gambling policy and the overall regulatory framework. It introduces legislative changes where necessary, sets licence fees and has an objective to ensure commercial gambling is socially responsible.
5.The Commission gathers and analyses intelligence from a range of different sources to try to identify consumer problems in the gambling sector. The Commission told us it collects lots of data, including information provided by gambling operators and insights shared by external organisations such as the Advertising Standards Agency. The Commission needs good quality, timely intelligence and insight to be able to intervene quickly and take decisive action to protect consumers.
6.The Commission told us that it relies on intelligence from local authorities that jointly license and regulate local gambling premises. Despite this, it receives very few intelligence reports from local authorities each year. Throughout Great Britain, in 2018–19, 119 out of 380 authorities did not conduct any inspections of the premises they license, including almost all licensing authorities in Scotland, and around 60 had not conducted any for the past three years. The Commission also recognises there is more it can do to gather and analyse intelligence relating to online gambling. It told us it is looking for opportunities to make more effective use of big data and technology to protect consumers. The Commission said it has a lot of information about how people gamble and what they gamble on, but it wants to build more sophisticated data to track consumer behaviour. The Commission works with banks and payment providers to access transaction data to support its work against anti-money laundering and unlicensed gambling operators. It does not access the same information to inform its consumer protection work, although it told us it is working with the banks on this issue.
7.The Commission has been collecting some additional data as a result of Covid-19, such as adding some questions to a YouGov poll to assess consumer responses to the pandemic. The Commission told us that, from this research, it has found that people who gamble a lot already are gambling even more, with about 60% of the most engaged, higher-risk gamblers increasing the time they spend gambling while on lockdown. The gambling industry has made 10 commitments regarding how operators interact with gambling consumers during the lockdown. The Commission told us it has not collected data to know whether operators are meeting these commitments in practice. The commitments are relatively new, and the Commission told us that there is inevitably a time lag before it can monitor any impacts.
8.The Commission sets the licence conditions and codes of practice that operators follow, which aim to protect consumers from harm. It told us it has worked to ensure regulations have kept up to date with developments in the industry, particularly relating to online gambling. We challenged the Commission on the slow pace of these updates and its decision-making process and how this was impacting consumer confidence in the sector. For example, after identifying problems in 2015, it took the Commission three years to change the rules to reduce the potential for consumers to be misled by terms and practices relating to online bonus promotions and to stop operators preventing customers withdrawing funds from their accounts. Public confidence that gambling “is fair and can be trusted” has collapsed from 49% in 2008 to just 34% on the most recent data. The Commission acknowledged that it has not been fast enough to update the rule book for operators when it has identified weaknesses or other issues. The Commission and the Department argued that this slow pace is due to the requirement to establish a sufficient evidence base to justify making changes to regulations, but this results in delays during which consumers continue to experience harm. This is a novel argument given that other regulators operate in a timely manner in equally, or more, complex markets, such as financial services. If applied to other regulators, it would result in considerable consumer detriment across regulated markets. Effective and efficient regulators must be able to produce an evidence base and act promptly.
9.The Commission uses a range of different tools to influence gambling operators to improve their practices, such as providing guidance and working in partnership with different stakeholders. The Commission told us it does not use reputational incentives such as league tables to influence operator behaviour proactively. League tables are used by other regulators to rank operators on a range of consumer-related issues, such as customer satisfaction scores or numbers of consumer complaints. The Commission said it will explore how it could use this approach in future to drive competition within the industry. However, it cautioned that league tables would need to be introduced carefully, to ensure they bring about the desired impact for consumers.
10.In February 2018, as part of the government’s triennial review of stakes and prizes on Fixed Odds Betting Terminals, the Commission recommended a £2 per spin limit for slots games and a maximum £30 limit for non-slots games. This was up to 15 times the eventual £2 limit for all games determined by Parliament. It was also higher than some in the gambling industry had suggested. Despite the rapid increase in online gambling, the Commission has also not brought forward proposals for any effective harm reduction for online fixed odds betting.
11.The Commission identified increased risks to consumers due to the Covid-19 lockdown, including the risk that vulnerable people would gamble more than usual. It told us it has taken a number of actions to mitigate the risk of harm. For example, it warned operators not to exploit the circumstances, communicated to consumers what they should expect of operators during this time, and gathered some data from operators to monitor developments. The Commission argued that these actions, taken alongside its recent action to ban gambling online with credit cards, constituted a proactive response. However, it did not pre-emptively place any direct requirements on the industry to prevent harm to consumers. During the pandemic, part of the industry made its own decision to remove the advertising of gaming products on TV and radio for a six-week period. The Commission told us that it did not request this action from industry.
12.There is concern that the distinction between gaming and gambling is being blurred with loot boxes, skins, social casinos, and other techniques. This is a particular issue affecting children. Under the Gambling Act, to be gambling individuals need to be able to cash out and win a prize in money or money’s worth. The government has committed to launching a call for evidence to assess the links between gambling-like behaviour and excessive in-game spending. The review of the Gambling Act should consider whether the current legislative framework is fit for purpose to prevent harm from this blurring of activity.
13.There are an estimated 395,000 problem gamblers in Great Britain, of which 55,000 are children aged 11–16. A further 1.8 million people are at-risk of problem gambling and may also be experiencing harm. The Commission told us that the numbers are too high and need to drastically reduce, and that it is unacceptable that any children or young people are problem gamblers. 16 and 17 year olds gambling was an area that the Gambling Commission, in evidence to the Committee, appeared to fall between the “child” and “adult” areas and there was limited evidence gathered around the impact of gambling on this group. The Department added that it would also like to see a reduction in problem gambling. We asked both the Commission and the Department what reduction in levels of problem gambling are required to consider regulation to be effective. Neither organisation would set a specific target for how much problem gambling rates should reduce by, or by when. The Department told us that it does not consider targets to be an appropriate method of establishing regulatory progress, partly because of the challenges in accurately measuring rates of problem gambling.
14.The Commission’s existing performance measures are not comprehensive, are not set against clear benchmarks to indicate overall performance and do not, for example, assess how effectively the Commission’s work reaches consumers most at risk. We asked the Commission what metrics we should use to judge its performance in protecting consumers, thereby holding it to account. The Commission told us that it uses a broad performance reporting framework that measures various performance indicators, such as the activities that the Commission undertakes and long-term data on problem gambling rates. The Commission accepted that there are weaknesses with its performance measures. In particular, the Commission said it finds it challenging to get indicators and metrics that demonstrate its performance in a timely fashion, due to the long time between large-scale estimates of problem gambling rates. The Department also called for a broader set of performance measures, rather than focusing on headline numbers.
15.The Commission told us that it also needs to do more to measure the impact of its own actions and assess whether it is achieving its objective to protect consumers. For example, it increased the value of the financial penalties it enforced from £1.4 million in 2014–15 to £19.6 million in 2018–19, but does not know whether this increase has strengthened the deterrent on operators to break rules. The Commission noted that it undertakes some assessments of its effectiveness, in areas such as anti-money laundering, but wants to strengthen its evaluation processes to assess the direct impact of its work protecting consumers from harm. The Commission recognised that measuring impact is a challenging task for any regulator, and said that it plans to work with the Advisory Board for Safer Gambling and the National Audit Office to improve its current approach.
1 C&AG’s Report, Gambling regulation: problem gambling and protecting vulnerable people, Session 2019–20, HC 101, 28 February 2020
2 C&AG’s Report, paras 1, 1.1, 1.6
3 Qq 89, 105; C&AG’s Report, paras 1.2, 1.3, 9
4 C&AG’s Report, paras 1.4 - 1.5
5 Qq 13, 96; C&AG’s Report, para 3.3 - 3.5
6 Qq 70, 63
7 Q 96, 97. 98
8 Q 2, 3, 4, 7
9 Qq 33, 49 – 53; C&AG’s Report, para 3.9
10 Qq 73 - 78; C&AG’s Report, para 3.14
11 C&AG’s Report, Figure 12
12 Government response to the consultation on proposals for changes to Gaming Machines and Social Responsibility Measures, May 2018, para 3.16 – 3.17
13 Qq 107 - 110
14 Qq 2 – 6, 49, 90 - 91
15 Qq 111, 114 - 115
16 Qq 20 – 27, 28, 36 - 37
17 Qq 28, 35
18 C&AG’s Report, para 16
19 Q 19, 29, 32, 39
20 Q 30 - 32; C&AG’s Report, para 3.11
21 Qq 32, 29
Published: 28 June 2020