My speech to Demos, 18th June 2019
Thank you very much Polly for that introduction and to Demos for hosting us today.
In the early months of holding this policy brief I focussed on the clear harms being caused by the dreaded FOBTs. To me, the machines and the unacceptable lobbying and press efforts to defend them, represented an industry that had fallen beyond public accountability.
Secondly, I focussed on the health crisis created by the industry’s failure to prevent and adequately treat consumers who had become ‘problem gamblers’, declaring a ‘hidden epidemic of gambling addiction’. We shook the tree.
I have suggested that we will all be judged on how the harms caused - and by this I mean when recreational gambling tips into problem gambling - has been addressed. In short, the measure of whether the partnerships of government, regulators and industry are successful is whether they are preventing and reducing harm.
I also want to make a general observation about regulation and regulators.
It is my view, that a future Labour Government must audit every existing regulator to ensure that they put the interest of consumers at the heart of what they do.
The National Audit Office recently published a report that concluded regulators needed to do more to reassure consumers that their interests are protected and they are getting value for money.
If they do not, their work risks becoming disconnected from the real world and regulation becoming an academic and myopic activity.
Trust in markets requires consumers to be treated fairly but from rail, to energy, to financial services, it often feels like consumers are secondary in the minds of the regulators who are meant to govern in their interest.
Today represents the beginning of what I hope will be a more productive phase of gambling policy making.
When we think about gambling, and its place in society today, do we have an idea of what we would like it to be? Do we have a vision for change?
In February, I gave a speech about online gambling and the need for limits: reasonable and realistic limits that can be applied to levels of spending, to stakes and to the speed of games in order to prevent exploitation and harm.
The word I used to describe these limits was perhaps an unexpected one.
I talked about culture: a culture of gambling that is based on fairness, transparency and dignity, and never loses sight of the fact that people are more important than profits.
Now, believing in this kind of culture is not the same thing as being either for or against gambling.
Opponents of reform, most of whom seem to come from the libertarian Right, try to position the debate as a contest between free markets and the so-called nanny state.
I reject that position. It reduces the complexity of the question to a clumsy, binary dispute.
We have seen with Brexit the effect that binary disputes have on our political life. They diminish and they damage us. And the same goes for our domestic policies.
The policy of gambling reform is not a binary question. It is infinitely more complex than that.
When it comes to the gambling market, it is about instilling a culture of fairness and transparency.
When it comes to the governance of gambling, it is about establishing structure.
Structure that can accommodate both rights and regulations, both market forces and a common good.
Some have said that reforming the increasingly fragmented gambling industry is impossible. That the digital age has made it nigh on impossible to keep pace with an explosion of new products and market players.
Today, with the words of Voltaire ringing in my ears, I would like to talk about a new market structure that could accommodate a growing industry whilst protecting consumers. And in this approach, perfection really is the enemy of the good.
Structure is a difficult thing to get right. But when we do get it right, it becomes the fertile ground on which a culture of good market practice can thrive.
The “purposeful companies” Will Hutton has written about are such examples.
Companies with a clear social purpose such as doing business in a sustainable and ethical way, do better than those without a stated purpose.
They perform measurably better on investment and innovation and look beyond short-term financial targets towards lasting “relationships of genuine respect and reciprocity”.
And it is this type of structure that I want to talk about today.
In terms of gambling, at the heart of the question over structure is the so-called “tripartite arrangement” that oversees the regulation of operators and the treatment of people who have come to gambling-related harm.
This arrangement is a legacy of the 2005 Gambling Act, and has broadly remained along the same lines for the past few years:
an attempt at a working relationship between the regulator, an independent advisory board and a commissioner of research, education and treatment funded by voluntary contributions from the industry.
Now I am not here today to pick holes in the individual components of this arrangement.
I recognise the good work that is already being done within the existing structure.
For example, the tightening of rules around licence conditions and codes being carried out by the Gambling Commission.
The hard work of healthcare providers and professionals, both in NHS services like the National Problem Gambling Clinic, led by the inspirational Dr. Henrietta Bowden-Jones, and in essential services like Gamcare and the Gordon Moody Association, many of which are funded by GambleAware.
And the investment and expertise put in by GambleAware itself, with whom I was honoured to share a stage in February.
I see people in these organisations working hard to change the culture of gambling in the UK, and to limit the harm being done.
But the reality is that the anticipated introduction of a mandatory levy changes the situation completely.
Much has already been said about the need for a levy to fund research, education and treatment in a more formal, accountable, predictable way.
A wide range of cross-party MPs, academics, campaigners, the Gambling Commission, GambleAware and even the remote operators themselves support the introduction of a mandatory levy.
In fact, the only thing holding it back is the Government. Although I note that one erstwhile, now ex-Tory leadership hopeful, the current Secretary of State for Health and Social Care, was quoted in the Sun newspaper as being in favour of a levy – I hope the remaining candidates will follow suit.
The Labour Party has called for a hypothecated levy set at 1 per cent of the industry’s Gross Gambling Yield, while others are calling for a New Zealand-style system which draws an amount in response to a needs-based assessment.
Whichever of these two models is eventually implemented, the overall consensus is that a significantly-increased amount of funding is required.
This would in all probability see over £100 million per year being brought into research, education and the treatment of problem gambling.
That is a significant amount of money.
It means this: we do not have the option not to reorganise the way that we structure the relationship between the regulator, healthcare providers and consumers.
A mandatory levy necessitates the restructuring of the tripartite arrangement.
In no other area of government would it be reasonable to have an industry levy of over £100 million without formal processes of auditing, impact assessments, training and clinical standards attached to how that levy is spent.
We simply would not allow that to happen with other sectors. And nor should we allow it for gambling. Not when the stakes are so high.
A recent British Medical Journal article by Gerda Reith and Heather Wardle argues that simply saying we face a public health crisis is not enough. We need to actually treat it as one, through what they call “the development and implementation of a sustainably-funded strategy for preventing harms among the population”.
And this kind of strategy should also make sense to the industry.
The present system depends on arbitrary and often recalcitrant contributions. But a smart levy – whereby the amount reflects verifiable metrics of harm, and is allocated by healthcare professionals in a systematic way using formal, clinical standards – would demonstrate that every penny reclaimed from the industry is spent in an effective way.
Done like this, I know that many industry chiefs would have no problem with increasing their contributions.
In other words, the mandatory levy is the catalyst for structural change.
That is why today I am setting out the blueprint for a new tripartite arrangement which, under a Labour government, would be necessitated by the introduction of a mandatory levy and would be achieved through a new Gambling Act.
A New Tripartite Arrangement
The 2005 Gambling Act was based on 3 principles: to prevent disorder and crime, to ensure that gambling is conducted in a fair and open way, and to protect the vulnerable from harm.
These are important principles. But too often they have been used by both the regulator and the industry to define what gambling should not be. They have been interpreted as punitive rather than aspirational.
If we are to change our gambling culture, we need a structure based on transformative principles.
Three new priorities.
A regulator that champions purposeful companies. An ombudsman that safeguards market integrity. And a healthcare system that upholds our public health.
With these guiding principles, decisions will then be made about how the levy is allocated.
This should be done by a Gambling Levy Board, sitting within the Department of Digital, Culture, Media and Sport and made up of four constituent expert panels:
the Advisory Board for Safer Gambling, which already works with the regulator; a specialist NHS Gambling Programme, made up of healthcare professionals; a Gambling Ombudsman, which I shall speak about in more detail; and representatives from UK Research and Innovation.
In addition to academics, specialists and practitioners, the Gambling Levy Board should also include those “experts by experience” who have experienced gambling related harm, such as recovering gambling addicts and families who have lost someone to gambling-related suicide.
The allocation of the levy would then be reflected in a tripartite arrangement, as follows:
First, the Gambling Commission as regulator, responsible for the oversight of operators and the license conditions and codes.
Second, a Gambling Ombudsman, responsible for customer protection.
And third, a specialist, ring-fenced NHS Gambling Programme, responsible for the commissioning of research, education and treatment.
Labour is the party of the NHS and it is right that we put it at the heart of a new arrangement.
Crucially, the work of these three entities would need to be supported by independent research, undertaken by organisations that are free of conflicts of interest and are open to democratic processes of scrutiny.
As Professor Rebecca Cassidy has argued, this means that gambling research should become an integral part of Britain’s exceptional network of Research Councils through UK Research and Innovation.
The days of the industry using discredited reports in order to influence policy-making – as we recently saw with the Government’s use of an ABB-commissioned dossier on Fixed Odds Betting Terminals – must now be over.
Instead, the methods used to commission research and measure gambling-related harm should be of the same standards and transparency as those adopted for other key policy areas.
In short, I am calling today for a new tripartite arrangement of three equal partners.
A regulator, an ombudsman and a specialist health body, each integrated within a formal, accountable structure that is based on real resources, standards and statutory authority. And which is backed by a framework of transparent, independent research.
I believe that such a structure would unlock great change in our gambling culture.
The NHS Gambling Programme
In terms of commissioning services, it would ensure that the NHS is made responsible for triage.
This is essential if we are to disentangle the present complexity of commissioning processes and service provision, and reposition gambling as part of a formal process linked to the NHS Long Term Plan, based along the favoured model of hub-and-spoke.
With the NHS as commissioner, clinical standards would be ensured. A model of addiction would be analysed and established. The evidence base would grow.
Service providers such as clinics, universities and organisations from the third sector, including many of the existing services I have mentioned today, would then be able to bid for tender.
It would be a national strategy, locally delivered, with the treatment of problem gambling given “parity of esteem” when compared to other services.
For the regulator, this new arrangement would free up the Gambling Commission to do the job that it should be doing best: ensuring that operators comply with their license conditions and codes.
At the moment, it feels like the Commission is trapped between a rock and a hard place.
On the one hand, it is being asked to do things that it cannot do, such as provide compensation to consumers. On the other hand, it feels duty-bound to do things that it should not have to do, such as advising on strategies of public health.
We need to take this burden off the Gambling Commission. It is vital that the regulator is able to concentrate on performing its core function of overseeing licenses and operator compliance.
To achieve this, I am today proposing the creation of a new entity, equal to the regulator but focused entirely on consumer protection.
A Gambling Ombudsman that investigates the terms and trading practices of operators, and provides compensation to customers who have been treated unfairly.
Each week, I am contacted by people whose gambling losses have been fuelled by opaque systems of data analytics, algorithmic targeting and bonus offers that encourage the continuation of losing cycles even when the consumer is indicating that they wish to exclude themselves from gambling.
Take, for example, the story of the woman who featured in the recent BBC documentary, “My name is Katie”. One night she worked her way through over a dozen credit cards, spending £40,000 until they were eventually declined. Even when one credit card was declined, the gambling company let her use another.
The operators like to say that their systems of harm prevention pick up this kind of activity. But not for Katie. When she tried to exclude herself, after all the credit cards had finally dried up, the operator offered her free bonuses.
Or take the case of a young man bombarded with bonus offers and made a so-called VIP, even though he was steadily sinking into a mire of crippling debt.
When these debts came crashing down, and he tried to take his own life, the operator agreed to write them off – but on one condition: that he signed a Non-Disclosure Agreement forbidding him from telling his story to the Gambling Commission.
Where is the structure in that? What kind of system allows a dirty deal to be struck between an operator and a vulnerable person?
Where is the framework of consumer protection?
Or take the example of the man whose grandson stole his bankcard and used it to spend over £3,000 in a single session.
Technically speaking, that money should have been refunded as the bets were placed by a minor. But the operator refused to enter into an Alternative Dispute Resolution and told him instead to take the matter to the courts – knowing full well that he could not afford to engage in an expensive legal process.
When these sorts of abuses happen, the Commission says that it cannot perform the role of Ombudsman.
Instead, consumers are directed to alternative options like ADRs, the Independent Betting Adjudication Service, the courts, or volunteer groups like “Justice for Punters”.
Now, I am not saying that these various organisations do not do good work. But that is not the point.
I cannot think of a single other type of transactional arrangement for goods or financial services that would allow this type of situation: unclear terms and conditions, a lack of transparency, a lack of framework – and fuelled by predatory bonus offers.
Why should gambling be so different? Why should there be proper ombudsmen for other areas of our consumer lives, but not for gambling?
That is why today I am announcing that under a Labour government, this gap will be filled.
A Gambling Ombudsman would not replace the regulator, but instead would work alongside it.
The relationship would be symbiotic – one focused on operators, the other on consumers – with the ombudsman doing the casework that the regulator cannot do.
The role of the ombudsman would be two-fold.
First, it would investigate cases when consumers have not been protected and, if the evidence demands it, should ensure financial compensation.
For this to be meaningful, I believe that compensation should also extend to the victims of crime perpetrated by losing gamblers, for example in cases of theft or money-laundering.
The industry must understand that harm extends across family networks, workplaces and communities.
Second, instead of the present arrangement, whereby ad hoc “subject access requests” are made by consumers seeking information from operators on their transaction histories, an Ombudsman would provide a formal system for accessing and auditing the data that operators have on customers.
This need for transparency has already been highlighted by both the Gambling Commission and the Competition and Markets Authority in a recent joint letter sent to the industry.
It is only through a structure of transparency that a culture of trust can be fostered.
Transparency is essential if we are to trust the way that the industry uses data analytics.
Just like it is essential if we are to trust the independence of research, or the commissioning of treatment services.
In fact, it goes to the heart of what it means to have trust in a market economy. In the words of the Organisation for Economic Cooperation and Development: an ombudsman is an institution that acts as the guardian of citizen rights, and is a “crucial actor” in an open democracy.
That is the vision that I am putting forward today.
The regulator as the hallmark of industry. An Ombudsman as the safeguard of consumers. And an NHS that is the defender of public health.
A culture of gambling that is based on trust, and a structure that is built on partnership and relational prosperity.