My only other comment is that if the Gambling Commission has drawn up the rules that are in operation so far, which I think is what the Minister was saying, we should be saying to the commission that it needs to

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go away and have a rethink. The speed of play, the levels of stakes and so on are disproportionate and somebody needs to take action to reduce those.

I very much welcome the opportunity to have this initial debate, and I hope that we can carry on with it. This is an important issue. In the mean time, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Amendment 9

Moved by Lord Collins of Highbury

9: After Clause 1, insert the following new Clause—

“Review of connection between non-paying social networking media gambling activities and use of licensed remote gambling operations

The Secretary of State shall conduct a review into whether and how the existence of non-paid for gambling activities on social networking media interacts with use of licensed remote gambling operations, and whether such non-paid for activities can act as an inducement to participate in paying activities.”

Lord Collins of Highbury: My Lords, I will preface my remarks by repeating what my noble friend said in an earlier discussion, which is that the answer to all questions is more research. That is basically what this amendment is saying.

I will be really brief. It is widely believed among the public and people in public health and gambling regulation that online gambling represents the greatest challenge to be faced in the next few years in the prevention of problem gambling. As we heard earlier, problem gambling is often how you get started, how you become addicted—it is not necessarily the money; it is the addictive nature of the gaming system.

Of course, nowadays online gambling is not a social activity. It is not even about being in your own home; you are on the tube. When I am travelling on the tube I am struck by the number of people playing a certain game on their system. That is particularly true of young people but I confess that even I have the app on my iPad: Candy Crush Saga. There was a really interesting article in the paper last week by Mark Griffiths, director of the International Gaming Research Unit at Nottingham Trent University, who described it as,

“a bit like chocolate. You say you’ll just have one chunk, and you end up having the whole lot. So you say I’ll just play for 15 minutes, and you end up still there four or five hours later”.

Unbelievably, Candy Crush Saga has been downloaded 500 million times. Although it is possible to play this game for free, 40% of players pay for add-ons. As Mark Griffiths said, there is an overlap between online games that allow players to spend money on virtual accessories, or to access higher levels, and gambling. He said:

“It’s a psychological masterstroke that people pay money to buy virtual items. The next step is for gambling firms to say, maybe you could win back some of the money you’re spending”.

That is the hook, the encouragement, and it is young people who are doing this. They are doing it on the move on their mobile phones—God knows what their phone bills are like. Mark Griffiths also said:

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“Children who play these free games are more likely to gamble and more likely to develop problem gambling behaviours. These are gateway activities that can lead people down the gambling road. When you start winning, you start thinking that if I was playing with real money I could be doing quite well”.

I tend to share his view that there is nothing wrong with kids playing gambling-type games. I am not in favour of legislating or banning things all the time but we must accompany the use of these games with education. We must be much more aware of the consequences, and certainly children need to be much more aware of them.

Something that struck me on daytime television—which I do not watch a lot but occasionally I do—is the constant advertising by bingo companies. Bingo is no longer a social activity. It was something that people went to do once a week to meet people. Now they are being encouraged to do it in their own home in isolation and, what is worse, they are being told: “Have £10 or £20 free”. Actually, nothing is free; they have to lodge £30 or £40 to get that £10.

I would like the Minister to address this issue. Surely we need to better understand how these games interact with gambling. I urge him to look into this issue in more detail. I beg to move.

Lord Gardiner of Kimble: My Lords, I am grateful to the noble Lord for his amendment and indeed for raising the emerging area of social gaming. The Government fully understand and share the concern about the possible use of social media by gambling operators to attract new players to real-money gambling by offering them “free to play” gambling-like activities on sites such as Facebook. The noble Lord, Lord Collins, expressed particular concern for young people, and the Government also have concerns about the possible impact on underage users of social media who may become habituated to gambling-like activities and may start to pay, in effect, for more time—the so-called premium social gaming business model—or be tempted into real-money gambling as soon as they are able.

The Secretary of State for Culture, Media and Sport already has the power to conduct such a review and the Gambling Commission has already started the process. It has commissioned and published a review of what was known of the potential risks from social gambling on social media and has been working with the Responsible Gambling Strategy Board and the providers of social gaming, some of which are licensed gambling operators, to analyse the data on players and assess the potential impact in relation to problem gambling-type risks. This approach should help us to decide whether there are elements of social gaming that need to be addressed by either the Government or the regulator. We believe that to legislate on this issue at this stage would be premature.

However, the Bill will enable the Gambling Commission and/or the Secretary of State to impose any improved protection measures on all overseas operators that wish to engage with British consumers. I hope that the Committee will understand that work has already started on some of this process and we await more reporting on it. For those reasons, I hope that the noble Lord will feel able to withdraw his amendment.

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Lord Collins of Highbury: In the light of the Minister’s comments, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendments 10 to 15 not moved.

Amendment 16

Moved by Baroness Jones of Whitchurch

16: After Clause 1, insert the following new Clause—

“Dormant accounts

(1) The Secretary of State shall consult on appropriate ways to require licensed remote gambling operators to disclose (as a condition of their licence) the amounts held by them by way of—

(a) winnings of UK customers unclaimed for a period of more than one calendar year, and

(b) sums in dormant accounts of UK customers.

(2) A dormant account shall for this purpose be an account which has been inactive for at least one calendar year.”

Baroness Jones of Whitchurch: My Lords, this amendment concerns the issue of dormant accounts and the use of the money that resides within them. There are currently millions of pounds tied up in accounts that represent unclaimed winnings or, for example, bets placed on horses that do not run but are never reclaimed. However, the actual sums involved are difficult to express accurately because it has never been in the interests of the industry to disclose them. The amendment would introduce a greater level of transparency about the sums involved by requiring disclosure as a condition of the licence. This could be a prelude to an agreed plan to use the money more constructively. When this was discussed in the Commons, it was reported that Don Foster had produced a report in 2011 identifying the levels of funds involved and that on the back of that an attempt was made to reach a voluntary agreement with the industry but, perhaps unsurprisingly, this was unsuccessful.

Meanwhile, there is considerable scope for this money to be put to good use—for example, into research on treatment for problem gambling, or perhaps to invest in the development of grass-roots sports—so these investments could in turn prove to be to the benefit of the industry in the longer term. This strategy would be consistent with the policies of this Government and the previous Government for the use of dormant accounts in other sectors. For example, dormant bank accounts and unclaimed lottery winnings are used to support good causes.

Our amendment is a reasonable first step to identify the sums involved. Obviously, there would need to be further dialogue with the sector about how the sums were identified prior to putting into action a plan to use the funds for good use, which is why our amendment would require the Secretary of State to consult on the arrangements. This is very much a first step.

When this was discussed in the Commons, the Minister, Helen Grant, argued that such an amendment was not necessary because she would be considering Don Foster’s proposals after the Bill was passed. That statement does not fill me with confidence. If Don Foster’s report was received in 2011 and it is now 2014, one could ask why it has taken the Government quite so long to get around to considering it. It seems that

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the Government need some encouragement to act, which is precisely what our very modest amendment hopes to achieve. I beg to move.

7.15 pm

Lord Gardiner of Kimble: My Lords, I thank the noble Baroness for her amendment reflecting dormant accounts. While in the Government’s view there is no need for further primary legislation to enable the Government to undertake a consultation, we have already said that we will consider the recommendations of the Foster report after this Bill has been enacted. The Bill will make significant changes to the regulation of a large number of betting accounts, so it is right that we consider the report’s recommendations after the implementation of our remote gambling proposals.

The Government already have the power to impose a specific licence condition to gather information if we choose to do so following appropriate consultation. I am happy to confirm that if in due course we consider it necessary to progress the report’s recommendations, we would act to gather this information. On that basis, I hope that the noble Baroness will withdraw her amendment.

Baroness Jones of Whitchurch: My Lords, I very much thank the Minister for that contribution. On the basis of the further work that is taking place, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

Amendment 17

Moved by Baroness Jones of Whitchurch

17: After Clause 1, insert the following new Clause—

“Remote gambling licensees and customer protection

Holders of licences for remote gambling operations shall be required to participate in a programme of research into and treatment of problem gambling in accordance with arrangements to be determined by the Secretary of State in regulations in the form of a statutory instrument approved by both Houses of Parliament, and a levy for that purpose may be imposed under section 123 of the Gambling Act 2005.”

Baroness Jones of Whitchurch: My Lords, we have already touched on the lack of research, particularly into problem gambling. I want to make a couple of quick points in support of our amendment. We have said that there is not enough research, which I think we all have acknowledged. It also seems that the industry is spending relatively small sums of money on research. At the moment, the amount of money paid by the sector is disturbingly small. It is estimated that the industry as a whole is worth some £6 billion a year, yet the amount available to the Responsible Gambling Trust through the voluntary levy is just over £5 million a year, with only 10% of that being spent on research.

When this was debated in the Commons, my colleague the Shadow Minister, Clive Efford, pointed out that when he looked on the Responsible Gambling Trust’s website, a lot of its activity seemed to be involved in fundraising. That is all very worthy but you would think that there was enough money around in the

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sector that it did not have to spend its time fundraising to pay for its activities. There should be a firmer way to fund this through a more consolidated levy. More work needs to be done. We need that research and we need to ensure that the funding is available. I beg to move.

Lord Gardiner of Kimble: My Lords, I am grateful to the noble Baroness for her amendment. I entirely agree that the gambling industry should play its part in contributing to the research, education and treatment of problem gambling. The Government believe that the best solution is for the industry to recognise its responsibilities voluntarily. The industry must continue to help to tackle problem gambling. The current voluntary arrangements were revised only in 2012 and the Government are satisfied that the system is working as was intended in the Budd report of 2001, which recommended the arrangements.

As the noble Baroness said, at present the voluntary industry funding scheme provides around £5 million a year, 80% of which goes to bodies like GamCare, the Gordon Moody Association and the Soho clinic to provide advice and treatment. This funding has supported the introduction of a free-to-use national telephone helpline and the development of GambleAware, a general gambling information website. Useful work has been done in this area by the Responsible Gambling Trust and its predecessor body with local clinics or advice centres, to see how those developing problems can be identified and helped. In addition, the Soho clinic has piloted ways in which the NHS can help those with severe problems. The Responsible Gambling Strategy Board and the Responsible Gambling Trust are also considering how best to capture evidence of the actual harm from gambling to strengthen the case for greater support from local government, from NHS resources and, importantly, from the industry.

I hope that the Committee will be reassured that problem gambling and research into its prevention and treatment continue to be high on the agenda for the Government and the Gambling Commission. The Government will continue to monitor the effectiveness of the voluntary arrangements, and will of course take appropriate action if necessary. On that basis, I very much hope that the noble Baroness will be prepared to withdraw her amendment.

Baroness Jones of Whitchurch: My Lords, I thank the Minister for that. We have identified that there is not enough money available for research and for helping those who have an addiction and problems with gambling. I understand what the noble Lord is saying about the voluntary levy. We think that our suggestion for a compulsory levy is still worthy of merit and would like to lay that on the table for further consideration. However, in the mean time, I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

Amendment 18 not moved.

Clauses 2, 3 and 4 agreed.

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Amendment 19

Moved by Baroness Howe of Idlicote

19: After Clause 4, insert the following new Clause—

“Review of social responsibility provisions of codes of practice

(1) The Gambling Commission shall review the social responsibility provisions of the codes of practice and technical standards of—

(a) EEA states, and

(b) the places to which section 331(2) of the Gambling Act 2005 has applied,

insofar as they relate to remote gambling.

(2) The Commission shall amend the codes of practice and technical standards issued in pursuance of section 24(2) of the Gambling Act 2005 so that the code and technical standards reflects the strongest social responsibility provisions identified in subsection (1).

(3) In this section, “social responsibility provisions” means a provision of the code identified as—

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

(b) protecting children and other vulnerable persons from being harmed or exploited by gambling, and

(c) making assistance available to persons who are or may be affected by problems related to gambling.”

Baroness Howe of Idlicote: My Lords, the Bill proposes widening the scope for advertising online gambling in the United Kingdom. Henceforth, not just operators based in the European Economic Area or whitelisted jurisdictions will be able to advertise. Any provider anywhere in the world will be able to advertise in the UK, so long as they get a UK Gambling Commission licence. As such, the Bill will make problem gamblers more aware of opportunities to gamble and of opportunities to gamble associated with a higher problem gambling prevalence figure.

It would be quite wrong for us to sanction such a Bill without at the same time comparing our own codes and technical standards with those of other whitelisted and EEA jurisdictions to identify where ours fall short and to make good the difference. We should not countenance exposing British consumers to yet more gambling advertising without first making sure that the protections we offer problem gamblers are second to none. This is the purpose of the proposed new clause, which I introduce today for two principal reasons.

First, the proposed new clause would prevent the Bill having the effect of eroding protections that some UK consumers have come to enjoy since 2005. To understand the possibility of an erosion of protections flowing from the Bill one must first recognise that it is part and parcel of a Treasury initiative to correct a perverse tax incentive created through the Gambling Act 2005, which resulted in all but one online gambling provider leaving the UK for a whitelisted or EEA jurisdiction, from which they could continue to access and advertise in the UK market without paying UK tax. The Treasury very understandably wants to correct this by requiring all companies accessing the UK market to pay tax. The Bill provides them with a basis for doing so by stipulating that all holders of UK Gambling Commission licences must pay UK taxes.

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In this context, there is a real possibility that companies that were previously based in the UK and relocated for tax purposes to EEA or whitelisted jurisdictions will now return to the UK. In any event, they will definitely be subject, as far as their UK consumers are concerned, to a UK regulatory framework. This will result in erosion of protections for those UK consumers who have depended on the regulatory frameworks of whitelisted and EEA jurisdictions where those frameworks are better than those offered by the UK, unless of course the UK protections are brought into line with the best whitelisted and EEA protections.

Secondly, the proposed new clause is important because the UK, especially since the 2005 Act, has rightly aspired to have the very best regulatory framework in the world, one which other countries would desire to emulate. In this context, there is every reason to review our codes and technical standards internationally to check that our regulatory framework, especially as it relates to the vulnerable and the care of problem gamblers, is as good as the very best framework of any whitelisted or EEA jurisdiction.

In the other place, the fact that regulatory frameworks with respect to problem gambling are weaker than those of the best whitelisted and EEA jurisdiction was called into question, but such questioning simply does not stand up to scrutiny. Let us consider the evidence.

I want to begin by considering a whitelisted jurisdiction, Alderney. People who gamble on websites licensed in Alderney can request that any number of limits be put on their accounts. Crucially, this is currently not the case in the UK, where the technical standards specify that software operated by a licensee should allow players to set some limits, but the technical codes do not specify, as the law does in Alderney, that a player may choose how, when and in what way those limits should be set. The UK technical standards documents set out examples of financial pre-commitment such as deposit limits, spend limits or loss limits, but it does not require all these examples to be part of the financial pre-commitment of the software.

The Gambling Commission told the Committee in the other place that the UK technical standards require giving players the opportunity to pre-commit to the amount of time spent gambling. They may have meant the amount of money spent in a given period, but that is not the same as pre-committing to an amount of time spent gambling. The amount of time that a person gambles can also be part of the problem. We need to arm problem gamblers or at-risk gamblers with real solutions.

There is a very real risk that British consumers buying access to online gambling from Alderney will experience an erosion of consumer protection when Alderney providers are subject to the weaker UK regulatory framework. Surely it is not acceptable that this Bill should contain such a potentially retrograde step. We need to plug this loophole through the new clause proposed in Amendment 19.

Next, I want to consider an EEA jurisdiction, Sweden. In so doing, I want to make it clear that, since no online providers accessing the UK market are located

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in Sweden, there can be no question of British consumers experiencing an erosion of the protections that they have come to enjoy, as in relation to operators based in Alderney.

The point I am making here is that those jurisdictions provide us with regulatory frameworks which exhibit better care for problem gamblers than our own. Considering them thus provides us with an opportunity to raise our game such that we can sustain the claim that we provide a regulatory framework that is among the best in the world, which is incumbent upon us at a time when we are introducing legislation that proposes making problem gamblers more aware of gambling opportunities with a higher problem-prevalence figure than gambling on average.

In Sweden, players are given the option of using technology called play scan. Play scan is a programme that uses behavioural analytics which, when implemented, will prompt a player about behavioural change indicating that a problem might be developing. The prompts give them information about how to limit their gambling or where to find help, but this is not the only social responsibility measure in place in Sweden. If the gambler wants to play online poker, they need to apply for a membership card, which has a specific number associated with it and is linked to the player’s bank account. The gambler authorises the transfer of funds from a linked account to a card and any winnings are paid automatically into the gambler’s account. To play, customers are required to set time and money limits. The setting of limits is the main function of the card but it also offers play management features, including a summary of player history for the previous 12 months; allows for time-out periods; and offers risk assessment features on an opt-in basis.

I am not trying to argue that the UK’s code and technical standards are worse than all whitelisted or EEA jurisdictions—far from it. My point is simply that the Bill should not have the result of effectively eroding protections on which some British consumers have come to depend, nor should it miss the opportunity of enhancing our protections so that they are as good as the best whitelisted or EEA jurisdictions. I submit that this is vital if we are with integrity to propose widening the scope to advertising, a form of gambling with a significantly higher problem prevalence than average. I beg to move.

7.31 pm

Committee adjourned for a Division in the House.

7.38 pm

Lord Browne of Belmont: My Lords, I am pleased to speak in support of the proposed new clause in the name of the noble Baroness, Lady Howe. The new clause is important because since 2005 a significant number of online gambling providers have moved outside the UK to European Economic Area and so-called whitelisted jurisdictions, from which they can continue to access the UK market and advertise but, crucially, avoid paying tax. The Bill, in tandem

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with the Treasury initiative, will plug that loophole, resulting in British consumers having to depend once more on British regulation.

In that context, the proposed new clause is vital for two reasons. First, we need to be sure that no British consumer will experience an erosion of the protections that they have come to rely on as a result of coming under UK regulation, at least so far as UK consumers are concerned. Secondly, we should always be working to ensure that the protections that we afford consumers, especially in relation to problem gambling, are the very best.

As the noble Baroness, Lady Howe, has explained, Alderney is particularly important because it is a jurisdiction to which a number of UK operators have relocated. The better protections provided for problem gamblers in Alderney, in terms of the setting of limits, are certainly something that we should look at and maybe amend our codes and technical standards to emulate.

I would like to look at two EEA jurisdictions, Finland and Denmark, which in some important respects provide better regulation and consumer protection than we do here in the UK. Finland’s regulator has implemented a mandatory daily loss limit and a monthly loss limit, as well as setting a maximum amount of euros that can be in a gambling account of €5,000. The maximum daily loss is set at €500. Innovatively, they have also produced an actual boundary, something that is so often lacking in online gambling. Transfers from bank accounts to a gambling account cannot be made between midnight and 6 am. This creates a natural boundary that is similar to betting shop opening and closing times. Implementing such a provision would create a level playing field across the industry in general, and would help to protect people from unhelpful and impulsive all-night gambling sessions.

The responsibility codes go further in Finland. On marketing, there can be no registration bonuses, deposit bonuses or activation bonuses, and no rewards can be given based on gaming volume. Indeed, payment using credit cards is forbidden. It is possible in every game to activate a short 12-hour gaming ban that covers all games. This short self-imposed gambling ban can be activated by pressing a panic button that is located in the bottom half of the screen. Given that problem gambling is often associated with impulse, the provision of a button like that would help many people tremendously.

The Danish model of regulation, meanwhile, requires gambling companies to obtain information about the customer’s intended gambling volume at the same time as the customer provides identification information by opening an account. Players are allowed to set daily, weekly and monthly limits, and all three options must be given to the player. If a player chooses to self-exclude permanently, they must be given the option to be added to what in Denmark is referred to as the register of self-excluded players. This is a central list, much like the proposed one-stop shop for self-exclusion. If a player chooses to be added to that list they will not be able to gamble on any website that has a Danish licence, since every company, before allowing a player

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to gamble or open an account, must check the list to see if that person has entered their name to the register. To this end, as I have already explained, Amendment 3 is vital.

I very much support the proposed new clause. I hope that the Government will warmly endorse it, and I particularly look forward to hearing what the Minister has to say about the protection that is afforded in Alderney, Sweden—as we have heard from the noble Baroness, Lady Howe—Finland and Denmark, compared with those provided in the UK.

Lord Gardiner of Kimble: My Lords, I thank the noble Baroness for her amendment. The Government are confident that the British regulatory system is a model of international best practice and that the Gambling Commission’s requirements are robust and of the highest standard. It is the commission’s job to ensure that the British regulatory system is the best that it can be, and to that extent always has its licensing conditions and technical standards under review. As the noble Baroness will be aware, the commission has just concluded its consultation into its licensing conditions and codes of practice, and we await its response. It is fair to say that the commission is internationally respected and continues to disseminate best practice, extensively engaging with overseas regulators. I am most grateful to the noble Lord, Lord Browne of Belmont, for illustrating what is happening in Finland and Denmark.

In preparation for the new licensing regime, the commission has had a series of meetings with regulators in Gibraltar, the Isle of Man and the States of Alderney to establish ways to minimise duplication. It will be using the recently developed multijurisdictional business form for those applying for remote operating licences, which enables operators to provide and update information, once in a form, that can be provided to multiple jurisdictions without duplication.

The commission continues to explore the scope for expanded collaboration. It also has memorandums of understanding in place with several regulators, including Alderney, for the sharing of information between regulators. This will enable the commission to use any licensing, compliance and enforcement information to determine the suitability of an operator to hold, and continue to hold, a British licence. Neither the Government nor the Gambling Commission is complacent about these matters, and should either feel that such a review would be appropriate, sufficient power already exists under the 2005 Act to enable that to take place. For that reason I ask the noble Baroness to withdraw her amendment.

Baroness Howe of Idlicote: My Lords, I am grateful to the noble Lord, Lord Browne, for his comments and of course to the Minister for what he has said and his assurance about the effectiveness of the powers that both the Government and the Gambling Commission already have.

I would like to know whether the Minister has a date for when the report that is under way will be published. That would give us a clearer idea of whether we will have further information by Report and so on. If that is not available at the moment, perhaps he

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could write to all of us in the Room and bring us up to date. It is quite important, because it will clearly help to inform whatever stance we take on Report. In the mean time, I thank noble Lords for having taken part and beg leave to withdraw the amendment.

Amendment 19 withdrawn.

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Amendment 20 not moved.

Clause 5 agreed.

Bill reported without amendment.

Committee adjourned at 7.47 pm.