Financial Risk Checks for Gambling

I beg to move,

That this House has considered e-petition 649894 relating to financial risk checks for gambling.

It is, as always, a pleasure to serve under your chairmanship, Sir Edward.

The petitioners ask the Government specifically to stop the implementation of affordability and financial risk checks, saying:

“We want the Government to abandon the planned implementation of affordability checks for some people who want to place a bet. We believe such checks—which could include assessing whether people are ‘at risk of harm’ based on their postcode or job title—are inappropriate and discriminatory.”

The Government have responded:

“We are committed to a proportionate, frictionless system of financial risk checks, to protect those at risk of harm without over regulating. The Gambling Commission will set out plans in due course.”

There are, however, a number of perspectives on the purpose and delivery of such checks. I will do my best to present those to the Chamber today.

For context, the Gambling Act 2005 regulates gambling in Britain. On 8 December 2020, the Government published a review whose purpose was to examine whether the Act provided the right balance of regulation in the digital age. The review had about 16,000 responses. The Government response, in the form of the White Paper, “High stakes: gambling reform for the digital age”, was published on 27 April 2023. The proposals for the reform of online gambling included new obligations on operators to perform financial risk checks

“if a customer’s gambling is likely to be unaffordable and harmful.”

The documented stated that three types of risk would be targeted: binge gambling, significant unaffordable losses over time, and financially vulnerable customers.

The arguments for and against the implementation of the checks can be categorised according to three stakeholder groups: industry, reformers and consumers. I will present the case of each in turn, following several extensive evidence sessions with a range of individuals and organisations including the petition creators, the Jockey Club, the Betting and Gaming Council, Charlie Ritchie from Gambling with Lives, Dr James Noyes and the Gambling Commission.

Taking the gambling industry first, I understand the concerns that operators might have about the impact of checks on profits, not least because the top 10% of gamblers deliver 80% of operator revenue. In horseracing, the numbers are even more stark, with 85% of operator income coming from about 5% of online betting accounts. Operators argue that affordability checks are inappropriate and discriminatory, that in theory punters would be prevented from betting more than £1.37 per day, and that such checks push vulnerable gamblers into the black market. It has been suggested that online turnover is down 20% since non-statutory checks have been in place.

The issue of affordability is not a new one, though. The industry itself pushed for measures back in 2019 and has continued to recognise the need for regulation and markers of harm. The Government flagged an affordability check as a priority long before the White Paper, and the Gambling Commission has already consulted on it and accommodated it within changes to regulation. What is new is that since the White Paper was published, the Government and the Gambling Commission have proposed actual figures for such checks. Affordability is no longer abstract; it is tied to precise thresholds.

What are those thresholds? The Gambling Commission has consulted on two forms of check: first, background checks for financial vulnerability at moderate levels of spend, with proposed thresholds of £125 net loss within a month or £500 net loss within a year; and secondly, checks for harmful binge gambling or sustained unaffordable losses at higher levels of spend, with proposed thresholds of £1,000 net loss within 24 hours or £2,000 net loss within 90 days. In other words, the checks are threefold: for financial vulnerability, for significant losses over a short time, and for significant losses over a long time.

Background checks for financial vulnerability will be frictionless, using publicly available information such as credit reference data and negative indicators such as county court judgments or insolvency notices, while higher risk accounts will have enhanced checks using open banking and other options, with increasing degrees of intrusion the further into the journey that someone goes. It is said that the enhanced checks will be narrowly targeted, with only around 3% of online gambling accounts being affected; the vast majority of these checks will be frictionless, with the Gambling Commission advocating light-touch assessment, applying the data minimisation principle and focusing on publicly available data. Only 0.3% of account holders would be expected to hand over additional financial information. Industry bodies and operators point to checks that are already happening and suggest that they are far from frictionless, but these checks were introduced voluntarily by individual operators, and tare not necessarily the frictionless procedures being developed by the Government.

The second group of stakeholders are reformers, and they include researchers, campaign groups and the Government themselves. They have long supported the call for affordability checks on the most vulnerable gamblers and harmful betting, saying they are needed. The reformers point to the research showing the disproportionate nature of gambling, whereby 80% of profits come from 10% of accounts, and highlight the well-accepted belief that disproportionate profits lead to harmful losses. In addition, campaign groups are keen to point out that different forms of gambling carry different risks. Activities such as playing bingo or the national lottery, or even the vast majority of horserace betting, are vastly different from activities such as gambling in online casinos in terms of the experience and potential for harm.

I congratulate the hon. Member on securing this significant debate; she can tell from the number of Members here in Westminster Hall today that there is a great deal of interest in the subject from across the House.

The hon. Member just mentioned horseracing. Will she press the Minister to give what reassurances he can to the horseracing community—I speak for Ludlow racecourse, which is an important employer and source of entertainment in my constituency, well known to Opposition Members—that this industry will not inadvertently be threatened by measures to introduce the affordability checks for vulnerable gamblers that I think we all want?

I thank the right hon. Member for making that very valid point. I am sure that the Minister is listening, as he always does.

I am grateful to the hon. Member for giving way and allowing me to reinforce the point just made by my right hon. Friend the Member for Ludlow (Philip Dunne). I represent Epsom Downs racecourse and more particularly the training industry in Epsom. In a smaller centre, in which the owners are not wealthy Arabs but simply people who enjoy participating in racing, the impact on the trainers of measures that really damage the industry would be enormous. It is not just about the racecourse; it is about the livelihoods of the people who do the training and who operate the training stables. Will the hon. Member impress on the Minister that there are genuine problems around things like online casinos, but tackling those must not come at the expense of the racing industry, which is so important to so many communities across the country?

I thank the right hon. Member for making another valid point. I am sure the Minister listened and will respond in due course. The number of hon. Members who have turned up to speak is an indication of how important this topic is to our constituents and constituencies.

As I was saying, activities like playing bingo or the national lottery, and even the vast majority of horseracing betting, are vastly different from online casinos and fruit machines in terms of the experience and potential for harm. Researchers understand the importance of carefully considering the figures around the threshold for checks. They need to be appropriate, but also meaningful and preventative. Campaigners rebut the claim that such checks are inappropriate by pointing out that checks that reduce harm are highly appropriate. An example often cited is that people would not want to produce documentation to purchase a gin and tonic; that is true, of course, but there are many examples where the family of a harmful drinker might ask their local shop not to sell alcohol to them or, indeed, where someone is refused another drink because they are drunk. Nor are the checks discriminatory: they are no different from the checks undertaken almost instantly when a consumer clicks to purchase a product online using the Klarna three-payments procedure.

Finally, we must consider the voice of the consumer—the punter. Most gambling is not harmful and most bets are small, proportionate and affordable, such as a lucky dip on the lotto, a lucky 15 on the horses or a flutter once a year on the grand national.

Many of my constituents enjoy the time-honoured tradition of having a bet at the races at the fantastic Uttoxeter racecourse in my patch. They are concerned that the proposals for an annual £500 net loss threshold, which, as the hon. Lady has already said, equates to just £1.37 a day, will lead to intrusive checks, limiting their freedom to spend their money on an activity of their choosing. Does she agree that if affordability checks are to be implemented, they should be carefully and deliberately targeted at those who are most at risk of harm?

I thank the hon. Member for her intervention. I am getting a tour of constituency racecourses—this little woman from Wales is learning all about geography today. I agree that the proposals should be measured.

The proposed checks will not affect such customers at all. It is important not to conflate the views of industry with the views of consumers. Affordability checks are not about attacking consumer rights or curbing individual liberties, but about upholding consumer protections and curbing operator excess.

The hon. Lady says it is not about anything other than protecting consumers, but can she think of any other activity where the Government check how much money someone has?

Payday loan sharks might be an example, but I am sure the Minister will respond in due course—I think I slipped out of that one, or I tried to. The responsibility lies with industry and operators, not customers.

In summary, it is understandable that industry bodies, operators and the horseracing community have concerns about the introduction of financial risk checks, but the idea of introducing checks is not new, and the need for regulation against harmful betting is supported by industry and consumers alike. The issue seems to be that such checks need to be frictionless, without negative impact on punters or operator revenue, and without pushing vulnerable gamblers into the black market. It would be useful if the Minister took this opportunity to outline how frictionless checks will work and when pilot schemes will be introduced.

I remind Members that they should bob if they wish to be called. We have three hours, which is quite a long time, but I want to get everybody in and I do not want to impose a time limit at the moment. Perhaps, those who are called early can look around them, see that a lot of people are trying to take part in this debate, and keep their speeches brisk, which is always the best policy, and certainly not take more than 10 minutes. I am sure that I can rely on the first Member I call, Philip Davies, to give a brisk speech.

It is a pleasure to see you in the Chair, Sir Edward. I am not renowned for brisk speeches, but I will try my best. I am sure the people of Market Rasen are delighted to see you taking such an interest in this debate.

I start by referring people to my entry in the Register of Member’s Financial Interests: I have occasionally accepted hospitality from the betting industry and the horseracing industry; I am an unpaid board member of the Racehorse Owners Association; and as I always mention on these occasions, I am the modest owner of racehorses and the owner of modest racehorses.

I thank the hon. Member for Neath (Christina Rees) for opening the debate and the Petitions Committee as a whole for allowing it to take place. I particularly thank Nevin Truesdale from the Jockey Club for launching this petition and everyone who signed it, enabling this debate to take place. I the Racing Post, which not only did a tremendous job getting behind the petition but has done sterling work in highlighting the damage that the proposed affordability checks could do to punters and the sport of horseracing. I also commend the Minister, my constituency neighbour, who inherited this policy and whose engagement with all stakeholders has been exemplary.

Let me make it clear at the outset that I am speaking up for two groups today: one is the horseracing industry, but first and foremost I am speaking up for punters—the people who have been largely ignored in this long-running debate and tug-of-war over affordability checks. They often get caught up in the crossfire of the arguments between the well-funded betting industry and the well-funded anti-gambling campaigners.

I have no intention of speaking up for bookmakers, partly because most of them in the industry are big enough to speak up for themselves, and partly because their position on stake restrictions is inconsistent—that is the kindest word I can use. On the one hand, bookmakers say it is wrong for the state to restrict how much people can gamble; on the other hand, though, they are the most guilty of all of restricting the stakes of punters who have the audacity to back too many winners, often to pennies rather than pounds. I have warned them time and again that trying to have their cake and eat it on punter restrictions would backfire. Until they abandon that anti-punter mentality, what they say on this issue will always be subject to some level of ridicule.

My hon. Friend does not even need to talk about products that are that addictive. As one of my constituents has pointed out, no one checks on him if he spends £150 on a dinner for two people. Would he accept that, even if the principle is conceded that there should be some checks, the level at which this has been set is far too low?

I very much agree with my right hon. Friend, as I happily do on most things. Of course people spend more than they should on all those other things, but the Government are snobbishly only treating punters as some kind of pariah, which I do not appreciate.

In Parliament, we should stand up for people’s freedoms. I was not elected to Parliament to stop everyone else doing all the things I do not happen to like myself, but some Members seem to think their job is to do nothing other than that. It is unacceptable that the Government, the Gambling Commission and the bookmakers will basically, between them, decide how much each individual punter can afford to spend on their betting, and the punter gets virtually no say whatsoever. It is completely outrageous. The Conservative party used to believe in individual freedom and individual responsibility, and some of us still do.

If we asked how much responsibility each group should take for determining how much somebody can afford to spend on betting, I doubt anyone would say that the individual concerned should have 0% responsibility, but that is the route down which we are in danger of going. It is absurd to think that bookmakers and regulators should be able to decide how much each individual person in the country should be allowed to spend on betting. When people open an online betting account or the next time they log in, perhaps they should be forced to enter how much they want to limit their spend over a fixed period. The responsibility for ensuring that they do not go over that should rest with the bookmaker, but not the decision as to how much they can afford in the first place.

Does it not strike my hon. Friend that there is a degree of hypocrisy, when a large proportion of problem gamblers who really are in great difficulty are just using national lottery scratchcards? The figure is about four times higher than that for those who gamble on horseracing.