Lords’ report looks to open new fronts in the gambling reform debate

Last summer brought a flurry of reports on the gambling industry, and a series of proposals for reform. None of the releases, from the All Party Parliamentary Group (APPG) on Gambling Related Harm, the Social Markets Foundation (SMF) and Peers for Gambling Reform were welcomed by the industry. 

Each set out a blueprint for new restrictions on the sector. These ranged from the extreme (such as the APPG’s call to prohibit in-play betting) to the controversial (the SMF’s £100 soft deposit cap) and provoked strong responses from groups such as the Betting and Gaming Council. 

The peers’ report, Gambling Harm – Time for Action, while containing elements that were not well received by the sector, felt as if it aimed to be less punitive towards the industry and set out a viable blueprint for reducing harm. 

However, last week’s follow-up, compiled by Nera Economic Consulting on the group’s behalf, certainly ramped up the controversy. 

It provided a costing of the reforms proposed in the 2020 report, concluding that measures such as stake limits, affordability checks and a ban on direct sponsorship would reduce industry profits by between £696m and £974m per year. 

While this would be higher than what the report lists as the sector’s overall profit, Peers for Gambling Reform chair Lord Foster is quick to stress that the profit estimates of £697m included in the report only cover Entain, Flutter, Bet365, William Hill and National Lottery operator Camelot. The actual figure for the wider industry, he believes, should be significantly higher. 

“We are still convinced that there’s good evidence suggesting that while the profits of gambling companies will go down, they may still be making a profit,” he says. “There’s no suggestion of wiping out all the profits. That we think [these] will exceed the impact of our reforms. […] It doesn’t include the salaries of executives, because that’s technically counted as an operating cost.”

The report goes on to claim that by reducing gambling harm – and in the process cutting participation – there would be a knock-on effect on other entertainment options – and the economy. This could help create up to 30,000 new jobs, and £400m in employee earnings, it estimates.

It makes further bold claims, such as estimating that the cost to the government for treating those suffering from gambling-related harm is between £270m and £1.17bn. All of this is deliberate, Foster explains, in an attempt to widen the debate beyond the Department for Culture, Media and Sport (DCMS), which oversees gambling, to other units of Westminster. 

He says that while the review of the 2005 Gambling Act is being driven by DCMS, the Department of Health and Social Care and the Department of Education have a significant role to play. 

“But equally important will be the Treasury, and to some extent our report was almost focused at the Treasury rather than DCMS, to demonstrate that they should not be alarmed by looking at proposals for reform of gambling.”

What shape these reforms take, however, should be a matter for government rather than campaigners, the report suggests. Unlike the APPG or SMF, Peers for Gambling Reform does not set out specific recommendations beyond the principle of structural limits such as stake curbs and spin speeds. Instead it models a range of different scenarios, and their impact on staking. 

“The whole purpose of doing this report was to give a clear indication as to what would be the likely impact and range of impacts on the introduction of reforms that were covered, at the sort of level that might be determined by the nature of the reforms,” Foster says. “We set out, as it were, headline details of the sort of reforms we want to see. 

“For example, in terms of stakes and prizes, speed of play and so on, there’s obviously so much detail to be gone into in terms of where we’ll end up. So in fairness, we’ve given a range to show that if you go to really high levels, this is what the effect would be. What we’re doing is very honestly showing the potential depending on the level government ultimately decides to go.”

He admits that this may ultimately prompt ministers to shy away from the strictest limits, considering the level of cuts to profits. It’s ultimately a drive to create a degree of parity between online and offline gambling controls, Foster says, but adds that the group recognises “there isn’t a complete similarity between the two”. 

“The whole structure of online is different to offline, so we’re not saying there should be exact parity,” he explains. That specific point sets the peers’ group apart from the APPG, which believes that total parity between the channels is the only option. 

But like the APPG, Peers for Gambling Reform is an advocate of swift action. While the government’s response to the call for evidence on the 2005 Act, launched in December 2020, is not due until the end of the year, Foster believes major changes can be made in the interim. 

He believes many reforms can be carried out without devising and passing primary legislation, which in turn would avoid a years-long legislative process. 

“I am slightly worried that if you look at history, the last major review of gambling was started in 1999,” he says. “The legislation that was eventually put into effect – not just enacted – it didn’t actually come into effect until 2007. 

“In other words, there was an eight-year gap between the start of the review and the implementation of the new legislation. 

“Since it is perfectly possible, and the House of Lords report has outlined, there are quite a number of reforms that can be introduced without the need for primary legislation, we will be urging the government to look at those areas, and get on with them rather than waiting for the conclusion of the whole review.”

This may be complicated further by upheaval at the Gambling Commission, in the wake of Neil McArthur’s departure from the CEO role, and the upcoming retirement of its chair, Bill Moyes. 

“Clearly we hope that is not going to inhibit the Commission from getting on and doing the things they can do within existing legislation,” Foster says. Despite the uncertainty at the regulator, he says senior figures there have assured him that any suggestion that affordability will not be at the forefront of the Commission’s mind are “simply incorrect”. 

He points to the regulator’s interim comments on its remote customer interaction consultation as giving credence to the claim that the Commission will not be “muzzled” on the issue. 

And Foster is also cautiously positive on Neil McArthur’s tenure, in contrast to reform campaigners who have condemned him for being too cosy with the industry and toothless. 

Foster does acknowledge the Football Index collapse could lead to further criticism of the ex-CEO – “clearly something very badly went wrong,” he says – but believes the Commission did “move up several notches” in its social responsibility efforts under McArthur’s leadership. 

“I think given that there was this sudden ‘waking up’ of the Commission to the need to do much more, it’s a shame that he has gone,” Foster says. “That’s why I am nervous we are in a period of some uncertainty, both in terms of the chief executive and the chairman posts. 

“I hope they will be filled as soon as possible so we can get that stability as needed, and the people in post will be able to take action to implement the reforms proposed by Peers for Gambling Reform.”

Further change at DCMS, with John Whittingdale replacing Nigel Huddleston as the minister responsible for gambling, add an additional element of uncertainty.

“People have said he’s perhaps closer to the industry and less likely to be willing to make reforms that are needed,” Foster says of the former culture secretary. “I’ve talked to John Whittingdale about these issues. He’s certainly taking them seriously. 

“I’m a little unclear how strongly he’s willing to move at the moment, and we will continue to work with whoever is the minister in charge.”

Who that is may change further, Foster adds, saying a cabinet reshuffle is “very likely before very long”.

And beyond the lack of permanent leadership at the Commission, and the potential for yet more changes with the minister responsible, the proposals also have the industry to contend with. 

The Betting and Gaming Council’s response was swift and blunt. The report’s claims were “economically daft”, “fantasy” and the work of “prohibitionists”, according to CEO Michael Dugher. 

Foster is not surprised that Dugher has rubbished the report. He agrees with what the former Labour MP details in his response, that the amounts paid by the gambling industry in tax and number of the jobs the industry creates, are factually correct. 

“But it doesn’t make what we’ve said fantasy,” he argues. “What we’ve said, very simply, is that it’s probably axiomatic that if you are going to put curbs on gambling, the level of profits on the gambling industry will be reduced and the number of jobs in turn may also be reduced. 

“If we’re going to put curbs in, then it’s because we want to reduce the level of gambling harm that currently exists, so the question then is what is the impact of that change,” he explains. “Not just on the lives of individuals, which is obviously the most important, but to the overall economy.”

Should consumer spend shift away from gambling, that money will largely be spent on more labour-intensive industries such as tourism and travel. “That overall has a net positive impact on funding to the Treasury, and additional money to fund research education and treatment.”

In Foster’s view, the onus is therefore on the BGC to prove that the peers’ report is indeed fantasy. 

“[It’s] up to Michael to demonstrate what’s actually wrong with the research. It was done by an independent organisation with no influence from us in terms of the way they did it, the conclusions they came to. We’re content that it is a very solid piece of research.”

Furthermore, he rejects Dugher’s accusation that the report is the work of “prohibitionists”. 

“Peers for Gambling Reform are not against gambling,” he argues. “However, we do believe, and the research we’ve carried out and the witnesses who testified before the select committee demonstrated very clearly, that significant reforms are needed. 

“We’re pretty confident that those reforms will reduce, not stop completely, the level of gambling harm in the country and all of the damage that brings to individuals and society. We wanted to look at the same time at what the economic impact could be, as that inevitably is going to be a factor in the government’s decision as to whether to go ahead with any reforms.”

“We wanted to be open and honest with people,” Foster adds. 

Whether the report ultimately forms the blueprint for regulatory change, and whether these in turn have the positive knock-on effect on society, remains to be seen. But by modelling the financial impact on various measures, Peers for Gambling Reform has arguably started to move the reform debate beyond simply putting out recommendations without any acknowledgement on the impacts they may have.

Whatever the industry’s reaction, this approach could provide a blueprint for its retort. Since the fixed-odds betting terminal fiasco, the BGC has largely succeeded in developing a more effective public affairs strategy. A similar costing of the industry’s jobs, tax creation and positive impact would be hard to ignore, especially considering the reform campaigners’ response to the Peers for Gambling Reform document.

“We’re content that it is a very solid piece of research,” Foster says of the report. It’s now up to the industry to provide its own.