Before I call the first Member to ask a question, I should like to remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. For the record, would the new witnesses please introduce themselves to the Committee?
89 1 Jim Shannon (Strangford):
My big concern relates to those with gambling problems and vulnerable people in general, so this evidence session will be important. At Second Reading last week the Minister said she would be prepared to look at ISP and financial transaction blocking as a possibility. Do you feel that ISP and financial transaction blocking would be a good way to help those gamblers and vulnerable people?
Gareth Wallace: We certainly agree that ISP blocking would be extremely valuable. We welcomed the Bill at draft stage but now that it is going through the House, we feel it should have more teeth. It seems to be all carrot and no stick. The briefings which, for example, CARE has given out expand on how we think different forms of technology could be used to help people who have problems with their gambling.
Dan Boucher: We very much welcome the fact that the Government have said that this Bill is about consumer protection. Mindful of that, the failure of any enforcement mechanism in the Bill is of real concern. The effect of the Bill could be simply that there was more gambling advertising, enabling those who get licences to advertise—at the moment they cannot—from outside the UK and white-listed jurisdictions. At the same time, it would allow everyone who does not have a licence to continue to access the UK market. The Bill will tighten up consumer protection only if it does two things: first, it should insist that those who can advertise get a licence, but secondly it should prohibit those who do not have a licence from accessing the UK market. Financial transaction blocking is probably the most effective way of addressing that. I have heard some references to the effect that its results are mixed; I would like to suggest that in a mature and open market financial transaction blocking is very effective.
In closed markets, there is quite an incentive for punters who want to shop around for more competitive odds to use Paypal or other mechanisms to get around the financial transaction block, but in a relatively mature and open market, where the odds offered are pretty competitive, there is not the same incentive to try to evade financial transaction blocking. Similarly, from the supplier’s point of view, the cost implications of trying to deal with financial transaction blocking are such that at the end of the day it is actually cheaper to go and get a licence from the UK Gambling Commission.
We feel that the combination of the carrot provided by the advertising provisions plus the absent stick—the stick that we believe must be provided in the form of financial transaction blocking—will help to drive firms towards getting licences so that the stated intention of the Bill—namely, to enhance consumer protection—is in fact delivered.
2 Jim Shannon:
This morning, one of the witnesses mentioned that the gambling sector was quite keen to take action and work on improvements to try to stop gambling problems at an early stage. What actions do you think the sector should be taking to detect problem gamblers online? The witnesses are going to make a written submission to the Committee as to what they would like to see happen, but I would like to hear your ideas.
Professor Orford: There is a variety of good practices, I think, which some of the best sites are already offering. However, practice is very varied and the standard really ought to be raised so that all providers offer socially responsible gambling. There is a whole clutch of things really. Having a good self-exclusion system that is co-ordinated across different providers—the expression “one-stop shop self-exclusion” has been used—is very important.
Pre-commitment is another good practice whereby people commit to a maximum spend and maximum time when they start to gamble, probably voluntarily. In Australia people have been seriously talking about mandatory pre-commitment, so people would not actually be able to start engaging in online gambling unless they stated beforehand the maximum they wanted to spend. A very clear, well publicised, voluntary pre-commitment is probably very important.
There are also things such as arranging breaks during play. Part of the problem with online gambling, or with any dangerous gambling, is the immersive nature of it—the fact that it is fast and quick and you can gamble again straight away. On poker sites, for example, I think I have read that you can play 70 hands in an hour online, whereas otherwise you are lucky if you can play 30 hands in an hour. Breaks and pauses break up the immersive and therefore the addictive nature of it online gambling.
There is a whole clutch of other things as well. They are there in the literature as good practice. All licensed sites should adopt that good practice.
Dan Boucher: One of our concerns about the Bill as it is currently structured is that a number of companies that, for various taxation reasons, decide to leave the UK and locate themselves in white list jurisdictions find themselves in Gibraltar and Alderney with more robust licensing conditions than we currently have in the UK. If I could just quote quickly from the Gibraltar code, it says that
“the licence holder should initiate measures to assist the customer manage their gambling. This should include the generally available facility to set controlled, daily deposit, time or gambling limits, and self exclusion. The Commissioner will monitor local arrangements before considering whether specific standards for limits should be set.”
The UK code does not state that. Those are protections that UK consumers are currently able to benefit from. At the same time as introducing the Bill, we should review the protections provided by white list jurisdictions from which British consumers currently benefit, since so many gambling providers have relocated to white list jurisdictions. If our protections are not as good as theirs, in the context of the Bill, although everyone will have a UK gambling licence, the regulatory framework will not be as sensitive to the needs of problem gamblers as it is at the moment. That is another major concern that we have with the Bill.
3 Jim Shannon:
You suggested that the one-stop shop was a possibility. Certainly the Minister last week in the Chamber said that he was prepared to look at that as well. How do you see it working? Do you see it as an advisory-type thing, maybe? I would perhaps say a wee bit tighter, in legislation if that is possible. In what way would you see the one-stop shop being more effective?
Professor Orford: I do not know the mechanism whereby it would happen, but many problem gamblers find self-exclusion very useful. I have spoken to a number of people who have said: “Yes, it has really been a saviour for me, being able to self-exclude from the place where I normally gamble”. However, if it is specific to one site, one operator or one place where you gamble, then it is comparatively easy to go to another site or place. Everybody is saying and everything I read about it says, “Self-exclusion is good. We must have self-exclusion”. But the more co-operation and co-ordination we can have on it the better. As for the mechanism by which it is done—and I am sure that it is difficult—I do not know.
Gareth Wallace: The fact that the internet is a technology that allows for a lot of data capture has many positive implications. While online companies can gather data on their customers, there is the opportunity for them to gather data on problem gambling and to pick up patterns. So there is an opportunity to use what might be seen as commercial data for marketing purposes but also to help people who have revealed potential problems in their play patterns and allow those people to self-exclude. Some friends from Gambling Reform and Society Protection—GRASP—who are recovering problem gamblers, have pointed out that while they welcome the opportunity for this technology, in some cases providers contradict the Gambling Commission’s code. When someone has self-excluded for a period, as soon as that period has expired, providers once again direct promotions and advertising to that person. Perhaps we need to look again at the methods of self-exclusion and the rules and enforcement of self-exclusion for online providers, so that this technology and information can be used to protect the vulnerable.
4 Mr John Leech (Manchester, Withington):
I want to pick up on something Mr Boucher said. If I heard you right, you suggested that the incentives for online providers to get a licence would probably encourage them to do so. What about the disincentives for consumers to use licensed online providers? If we bring everyone who is currently offshore within this regulatory system and then within the tax system as well, do you not think that there will then be an incentive for people to go searching for non-regulated providers in order to get better deals?
Dan Boucher: One of the benefits that we have in this country is that the gambling market is relatively mature and open. The odds that people can find here are fairly competitive. If we operated a closed gambling market, there would be a significant incentive for people to try to evade financial transaction blocking. However, mindful of the lack of security in using some of these codes, the lack of protection when you commit your money, and the fact that you should be warned that the company is not licensed when a financial transaction block takes place, one hopes that common sense will prevail in the majority of situations. I am sure that some people will try to evade, but at the end of the day, from a public policy point of view, one wants to try to frame the law in such a way that it will have a positive effect in the majority of cases. It will not necessarily deal with people who are deeply and profoundly committed to evading, but for most people that incentive will not be a strong one. Financial transaction blocking gives a strong incentive to companies, because it is cheaper for them to get a licence than to deal with the problems of financial transaction blocking.
Dan Boucher: If you are talking about having financial transaction blocking in place, yes. If there is no financial transaction blocking in place and we proceed with a Bill with no teeth—as Gareth said, all carrot, no stick—then no. One of our concerns is that those who get licences will be able to advertise, but those that do not will be able to continue to access the UK market as readily as they can today. The sense in which the Bill tightens regulation then becomes less than obvious, because its main effect will simply be to allow some companies that cannot advertise in the UK today to do so. It will continue to allow companies that cannot advertise and do not want to get a licence to continue to access the UK market. That will change if financial transaction blocking is in the Bill, and if it has a carrot and a stick—an enforcement mechanism.
Helena Chambers: May I make a simple point, going back to Mr Shannon’s question? I have spent lots of time looking at gambling websites recently, and the code of practice for terrestrial gambling currently says that displays about responsible gambling and help need to be prominent or very visible. I do not think the equivalent is in the code for internet gambling. On some of the sites, the link is tiny; it is in small writing at the bottom of the page in the terms and conditions. That is one obviously thing that needs to be in the code. People need to have their attention drawn to it.
7 Clive Efford (Eltham):
As Ms Chambers has raised that point, I will pursue it. Some have suggested that there needs to be a clearly identifiable standard kitemark on all websites, to show that the website is licensed by the Gambling Commission. That, in turn, could provide a link to the sort of information that you have just spoken about. Would that be welcome, and is it needed?
Gareth Wallace: I have to say, Mr Efford, that your speech on Second Reading was excellent. We welcome a lot of the comments you made, and we would certainly welcome a kitemark. Echoing Helena’s point, there should be larger, more prominent links to GambleAware to improve people’s knowledge of the treatment provided by, for example, GamCare. There should be a simpler, more obvious way to find the excellent information on the Gambling Commission website as people are playing, so they do not have to search the Gambling Commission website separately for it.
Dan Boucher: I very much would have hoped to have seen, first, a clear enforcement mechanism. My preference is for financial transaction blocking, but ISP blocking is equally acceptable. At the moment, people in the UK access online services to a large degree from white-listed jurisdictions, where they are able to benefit from codes of practice that exhibit a greater concern for problem gamblers than our own codes of practice. At the same time as trying to domesticate our licensing provisions, and to license companies based abroad within the UK, the Bill should provide for researching or reviewing the licensing provisions that UK consumers currently benefit from when accessing gambling services from white-listed jurisdictions; and seek to review our code of conduct to ensure that its regard for vulnerable problem gamblers is as strong as the best white-list jurisdiction provisions. Any changes to our code consequently needed would be made on the back of that.
I would also want to see a clear commitment to a one-stop shop provision. The point of the Bill as currently construed is that it will increase the amount of advertising available for online gambling. That would be its effect. Online gambling is a form of gambling with a higher problem prevalence figure. Looking at slot machines, it is 9.1% problem gambling, which, on an annual basis, is a very high figure.
In that context, I would have expected that, at the same time as effectively liberalising advertising, a step would have been taken to afford greater protections to vulnerable problem gamblers, with a recognition that self-exclusion does not work in an online context. It can logically work in an offline context. You can self-exclude from the four gambling shops in your local town, but it is completely useless and meaningless in an online context—well nearly useless and meaningless. Because if you exclude yourself from four sites in your bedroom, there are hundreds and thousands out there that you can still go to. The one-stop shop principle is, in our view, imperative, because if this Bill is really about consumer protection, that principle needs to be at the heart of the Bill.
Professor Orford: I would like to see much more attention given to the dangers posed to children. The protection of children is a major aim of the Gambling Act 2005, but there are a lot of things going on with online gambling that present a danger for children, and we know that online gambling is particularly attractive to children. We know that a lot of under-16s manage to engage in online gambling. We know that there is an enormous grey area growing up around social networking and the use of social network sites and interactive television. All that is going to develop very fast over the next few years, and children may be particularly at risk.
Free play sites and practice sites are a particular worry to us. A lot of those sites are not so well protected. In effect, they are providing gambling and almost certainly training the next generation of adult online gamblers. There are matters to do with advertising and the pre-watershed. On Friday night, when England play Chile, there will be children sitting with their parents, encouraging their fathers to bet immediately on Rooney scoring the next goal in the second half. We think in-play gambling is particularly dangerous.
All our information is that parents are not well clued up about the dangers for their children. They know about drugs as well as a number of other worries, and they now know about internet pornography, but they do not yet know much about the dangers of gambling and internet gambling. I would like see protection for children against such dangers and information for parents and families made much more prominent in the Bill.
Gareth Wallace: I would like to point out that there is a restriction in football on having a gambling advert on a youth strip, but not the adult strip, but that is nonsense when you can have pre-watershed advertising. It is an anomaly that is exemplified in the different types of strip that an adult and their child would wear on the terraces. We would want to look more closely at the fact that people can access the internet freely and children can see what is happening online. We would have a closer look at the impact of gambling advertising on children.
Helena Chambers: May I pursue Professor Orford’s point about practice sites, to give a bit of evidence? The Ipsos MORI inquiry into children’s gambling that the national lottery commissioned in 2011—I am not aware of anything more recent—said that
“playing free online gambling games in the past seven days was the single most important predictor of whether a child had gambled for money in the seven days preceding their interview, and one of the most important predictors of problem gambling among those who had gambled”.
That was particularly in the context of vulnerable children, so the effect of these practice sites on children is tested.
Gareth Wallace: May I make a point about research? The point was made that about 9.1% of people who play online slot machine style games have a problem with their gambling. On Second Reading, the Minister said that less than 1% of the population as a whole have a problem with their gambling. There is obviously a huge discrepancy in the addictive nature of online slot machine style games. As we go forward, and as this appears to open up the online market, we need more research and more funding for research into the impact of online gambling and online problem gambling.
Gareth Wallace: When we have responded to Government consultations, we have previously been in favour of a levy. Online gambling is worth approximately £2 billion a year, and yet there is a voluntary contribution to research, education and treatment of £5 million from the industry. With this huge growth area—it is a £5 billion gross gambling yield industry in the UK—the industry could be a lot more generous in its provision of funding for research, education and treatment.
Dan Boucher: There is some interesting technological developments called adaptive behavioural analytics, which is a technology that has been developed by the Harvard medical school, Buddy and Featurespace for monitoring people’s gambling habits and enabling them to pick up immediately if someone is beginning to exhibit problem gambling behaviour, so that interventions can then be—
Dan Boucher: The companies can then make appropriate adjustments and intervene and have conversations. It is very important preventive health care for problem gamblers. It is obviously always better to try to prevent a problem from coming to fruition and potentially costing the taxpayer a lot of money as well as the individual and their family an awful lot of pain. The Government in Ontario recently conducted a literature review, which is well worth looking at in relation to the use of this kind of technology, and found that although there were some sites that were doing it voluntarily, for which they must be commended, the take-up was very low. Certainly, promoting this kind of technology in tandem with tightening up our own codes of practice and trying to emulate the better level of care provided in Gibraltar for problem gamblers would help to make the UK’s approach much more robust in terms of our regard for problem gamblers.
We must remember, picking up on Gareth’s point, that 1% of the population is a huge number of people in absolute terms. Proportionately, it might not seem like a lot of people, but it is 450,000. Obviously, no man or woman is an island, and all those people are surrounded by families who are also affected, so we should not underestimate the significance of this problem. If we are looking narrowly at online gambling, online slot machine problem gamblers amount to 129,000 people. I do not have a figure for the total number of online problem gamblers, but just on slot machines it is 129,000. That is 129,000 people with 129,000 families. It is a significant challenge for us, and if we are a humane society we should be doing our absolute utmost to put in place these mechanisms to help prevent problems from emerging in the first place, by using technologies such as adaptive behavioural analytics.
Helena Chambers: I understand that the Gambling Commission is receptive to the possibilities of using this kind of technology for safety purposes. This is another area for research, and it is important for it to be properly funded. When we made proposals about research on other aspects of gambling which are of concern to us, particularly regarding certain types of gaming machine, we were told that there is a very limited research pot. This really does need to be addressed. I made the point in my submission that the Gambling Commission was looking to receive £9 million for research, education and treatment by 2011. This simply has not happened.
The other point concerns the use of messages to tell someone about how much they have spent and for how long they have been playing. This is something which we are already doing, but which could be more robust in the code of practice.
Professor Orford: The simple answer to the question of whether the operators are doing enough is that the picture seems to be very variable. Some operators are behaving very responsibly and doing very well, but a large number of them are not. This is why I think that we are all agreed that the level ought to be put up.
Dan Boucher: I certainly do not think that the code is stringent enough in terms of protection. This relates to my point about trying to bring our codes up to the level of the best white-list codes. I am looking particularly at Gibraltar and Alderney, which represent the imperative for doing this now. Presumably, one of the hopes of the Bill is that companies that might previously have located themselves in places such as Gibraltar and Alderney might come back and locate themselves here, or may continue to locate themselves abroad but will need to have a licence from the UK Gambling Commission.
Dan Boucher: If you are saying that this is an initiative in two halves, with half of it in the Bill and the enforcement half of it in the Gambling Commission, what is required is a pincer movement. The Department and the Gambling Commission need to move at the same pace, so that when the Bill is published, at the same time the Gambling Commission is setting out everything it is going to do in order to give the Bill teeth. If you are saying that it would be better to pass the Bill and wait, and at some point in the future get around to thinking about what to do about enforcement, in my view that is not a very acceptable way forward. I would encourage a pause, perhaps, for the Gambling Commission to publish the details of what it is going to do and how it is going to enforce the provisions in the Bill. Members could then make a decision about whether or not they feel able to support the Bill.
Professor Orford: I think that as legislators MPs need to steer the Gambling Commission. I do not envy the Gambling Commission its task. It is required under the Act to permit gambling and make it as facilitative as possible for operators to provide gambling, but you as legislators are dealing with something that I would term a risk to public health if it goes wrong. It is therefore important that you make it clearer to the Gambling Commission what it has to do; otherwise, they are torn in many directions as a regulator.
Gareth Wallace: The Gambling Commission needs to be adequately resourced for this task as well. We have worked with it for many years, and it has only 199 employees, while I think more than 90,000 people are employed in the gambling industry in the UK. In the Second Reading debate, I think Mr Davies claimed that the Gambling Commission might be building an empire, but the only empire is the gambling industry empire and if the Gambling Commission were better resourced for its task, it might be able to help with this a lot more.
16 Clive Efford:
I was going to come to that, and I will ask for comments on that in a minute, but before that, I want to pursue whether the industry is doing enough. There is clearly an incentive to develop the best forms of technology and software to get people to gamble, but do you think that there are enough incentives to develop the best forms of software to detect problem gambling?
Dan Boucher: The software is there with the adaptive behavioural analytics technology. Perhaps if our gambling codes enforced the same requirements as the Gibraltar code, for example, in terms of requiring companies not simply to log certain forms of behaviour, which is what our code requires at the moment, but to follow through with specific obligations on what the company must do, that would provide a real incentive and reason for companies to take up the technology provided by adaptive behavioural analytics.
Clearly, at the moment the technology is out there that companies can use, and the really responsible ones do. Whether it would be in order to create some statutory obligation to require gambling operators to use it, or whether it would be more appropriate simply to make demands of them that would be best serviced by their using that technology without expressly stating that they should use it, I do not know. But certainly if one went down the Gibraltar road, one would be asking of companies the kinds of things that adaptive behavioural analytics could provide, which would generate an incentive for companies to do that.
Gareth Wallace: I must confess that I am no expert on adaptive behavioural analytics—I have to defer to Dan on that. Based on a simpler piece of technology, for many years some of the groups to my right have often said that you should not gamble on credit—money that you do not have. On the other hand, credit, or credit cards, can provide useful age verification. So one simple piece of technology that we could encourage or enforce gambling websites to implement would ensure that people had to register a credit card to prove that they were over 18, but then for them to gamble only on a debit card so that they were gambling with money they had in their bank account.
That would seem a very sensible and simple way of using technology online so that people could set a budget and ensure that children were not gambling. After all, it is no fun losing your money and if people in the gambling industry want to see gambling as a form of entertainment, it is important that people are protected from overspending.
Professor Orford: I notice it said in the notes that the additional costs will be met out of the hoped-for additional licence fees. I do not know whether that is actually true or whether the cost of regulating in this difficult area will exceed the new fees coming in. I am not an expert in that, but it seems an assumption that new money coming in will be sufficient for the new task. I wonder whether that will be the case.
Professor Orford: Yes, I think I was the one who mentioned it earlier. Yes, I do. Just taking the scenario of Friday night when England played Chile, it combines all the things to do with children being present with adults who will convey great excitement about the game that is going on. There is even the sense now that one is being somehow loyal to the English team if one bets on England winning, despite the fact that they are losing at half-time. The way the technology is developing, it will not be long before you can bet using your television remote control. Perhaps you already can: I am not sufficiently technological to know that. But if you cannot it will not be long before you can, so pre-watershed advertising will just be part of making it very difficult for parents to resist the pressure from their children to take part in online gambling. So, yes, I do think it is a risk.
Gareth Wallace: In 2011 there were 154 complaints to the Advertising Standards Authority about gambling adverts; in 2012 there were 873. There is clearly an increase in people complaining about this. There is clearly an increased visibility of advertising in the public’s mind, particularly gambling websites on television. This needs to be looked at again. This anomaly, as evidenced by the adult versus child football strip, is something we should look at online. I realise there is no watershed on the internet, but there needs to be greater protection online for children and a greater realisation that sports sponsorship, as well as sports advertising, has an impact on the normalisation of gambling around football.
20 Clive Efford:
We have spoken about free gambling on social media websites. We now have real money gambling on social media websites. Do you have any concerns about that? That tends to be somewhere where young people spend a lot of time. I know from my own family that that is true. What are your views on that?
Professor Orford: It is developing very fast. The whole area is developing so quickly that it is difficult to predict what the next technological changes will be. There is a whole variety of different ways in which online activities—to which children and young people have easy access—are either gambling in themselves or are clearly training people in the ways of gambling. It may actually be roulette but it is free. You may be betting on something that is not roulette or it may be a social game that enables you to earn the coinage of the game. But the coinage of the game can be transferred into prizes or it may even have a value on the market. There have been recent cases—I do not know the details—where social game coinage has a value of hundreds of thousands of pounds on the market although it is not actually pounds and pence.
I have one quick question to all of you. It has been very interesting to hear what you all have had to say. I have been listening very carefully. Do you believe that consistency of regulation is important in strengthening player protection in this country?