We need a new Gambling Act fit for the digital age: My speech to the IPPR

 

 

An Analogue Act in the Digital Age

A Worcestershire MP once said: “there are people today who think you can cure the ills of the world by legislation: but you must examine the legislation they propose to see whether it is adapted to the practical experience of daily life. 

Those words were spoken by Stanley Baldwin in 1926. You may be surprised to hear me quote a Conservative Prime Minister. I might not share his scepticism of legislation, but I am reminded of Baldwin’s emphasis on the importance of its practicality when I think about the regulation of online gambling today.  

 

The word “Internet” is mentioned only twice in the 2005 Gambling Act, alongside “telephone” and “radio”.  

The word “email” is used just once, and social media” not at all.  

By contrast, betting through the postal service is mentioned five times. And there are over a dozen mentions of the football pools, which were popular at the time but are now in decline. 

We have a 14 year old Gambling Act which is clearly out of date.  

It is a piece of analogue legislation failing to meet the needs of the digital age. 

Technology has transformed since 2005, and gambling has changed with it. 

Today we have a world of social media and trading skins, of blockchain and mobile pay. Games of roulette are streamed from overseas studios into homes in the UK.  

We have virtual casinos and bingo apps, esports odds and bet-in-play, all marketed by algorithms and influencers that have few limits to their audience or reach. 

A third of bets are now made on a smart phonei – a platform that didn’t even exist back in 2005 when our current legislation was written.  

We have an ecosystem of online gambling products that has outgrown its legislative landscape.  

And although some changes were made to remote gambling rules in 2014, the world has moved on since then too – in social media, in mobile technology and in rising markets like China. 

We have a disconnect between the legislation of yesterday and the innovation of today, and it must be addressed. 

Because it’s an industry that is growing rapidly - both in terms of profits and participation 

The online gambling industry generates around £5 billion a year. One in ten adults gamble online, making the UK the largest regulated online gambling market in the world.  

And when our legislation is not fit for purpose, it causes people real and lasting harm. 

Just look at the story of a problem gambler who spent up to £60,000 a day using stolen money and was then made to sign a non-disclosure agreement with a major operator, preventing him from informing the Gambling Commission.  

Or the young man with a brain injury who lost £210,000 over a four-month period gambling online. The gambling companies did nothing to limit his losses and when he informed the gambling company of his brain injury they refused to return the money he’d lost.  

Another recent case found the UK’s biggest online operator giving cash rebates to high-stakes losing gamblers, encouraging them to carry on spending.  

Problem gambling is Britain’s hidden epidemic. There are over 400,000 problem gamblers in the UK, and 2 million more people are at risk.  

The severity of the harm caused cannot be overstated.  

Last year we heard the tragic story of Daniel Clinkscales, who battled a severe gambling addiction before killing himself in 2017 after losing £43,000 gambling. 

And sadly, he is not alone.  

We need to call this what it is: a public health emergency. It cannot go on.  

Online gambling presents policy makers with a new set of challenges.  A new study found that gambling apps may be even more dangerous than FOBTs.  

The loopholes in our legislation are allowing powerful companies to exploit vulnerable people. 

We recently heard the story of 13 year old boy who used his father’s business credit card to gamble £80,000. He said ‘’It was like this monster in my head calling me to go back’’. 

And all too often, those who suffer from gambling addiction have great difficulty accessing the help and support they need.  

Our task as policy leaders is to give license and order to a changing world.  

We need clear perimeters for industry to prevent these harms from happening. We need agile policy that can keep pace with innovation.  

This cat-and-mouse game of industry excess and regulatory chasing has to stop. 

Labour will introduce a new Gambling Act fit for the digital age, building on our Gambling Review which was published last September.  

We will introduce legislation that matches the “practical experience” and reality – to use Stanley Baldwin’s words again – of today’s online industry. 

 

Gambling and Surveillance Capitalism 

Before I go into the detail of what our New Gambling Act will involve, I would like to consider the market conditions and changes that got us to this point 

The problems we are seeing in the online gambling industry are part and parcel of the issues facing the online market as a whole.  

We have a distorted digital market which is dominated by a small number of data monopolies, and as a result we have a corporate culture that facilitates predatory behaviour, including by gambling companies 

I have been engrossed recently - often in horror - by Professor Shoshana Zuboff’s masterful book ‘The Age of Surveillance Capitalism’.  

In it, Professor Zuboff outlines how the internet is changing our economy and the very basis of capitalism itself.  

The mega corporations of our age Google, Facebook, Twitter, Amazon - in her words ‘claim human experience as free raw material for translation into behavioural data’ which is then turned into predictions of what you will do now, soon, and later.  

Then these companies trade these predictions with marketeers and corporations, translating your whole life into devilishly sophisticated advertising that plays to your deepest desires, experiences, needs and weaknesses.  

What does this have to do with gambling? 

I believe online betting, gaming and gambling is the canary in the mine of surveillance capitalism. Online betting platforms use surveillance capitalism to track and understand and - yes - to predict and change the behaviour of users.  

They use this information to enrich themselves by making their games addictive.  

They use this information to sell tailored advertising and to cross-market their products.  

They use this information to extract money from their customers, and they fail, appallingly, to use it to intervene when it is clear that their users have developed a problem with gambling. 

A Guardian investigation found that the gambling industry was using third parties to harvest data in order to target ads at poorer people and ex-gamblers, potentially luring back gambling-addicts in recovery. 

The truth is that surveillance capitalism has transformed gambling - giving the ‘house’ an advantage that Las Vegas casinos would kill for: the ability to know and to predict the minds and the actions of their users, sometimes better than their users themselves. 

Surveillance capitalism is the underlying condition of our current crisis.  

Earlier this month I announced how a Labour Government would tackle this – a strong Duty of Care, new competition laws to fix our broken digital market, and regulatory powers to break up harmful data monopolies.  

Today I’d like to explain how Labour will tackle the symptoms, as I see them, in the online gambling world.  

We can create a regulatory code that properly balances people’s right to enjoy themselves with their right not to be reduced to a resource to be mined and exploited to the point of exhaustion 

That is what Labour’s new Gambling Act will do. 

 

Putting Online Limits in Place 

I’m approaching this task with two guiding principles 

First, that online gambling must have stricter limits when evidence shows they’re needed 

And second, that these online limits should be commensurate with those we find offline. 

These limits will be applied in three ways: on the levels of spendstakes, and speed. 

Protecting vulnerable consumers from over-mighty companies is at the very heart of our approach.  

First I’ll set out what Labour will do in terms of limits on the level of spend. 

At the moment, the checks that are carried out in physical gambling venues are not always reflected online.  

This means that with some online operators, a single bet might be made for thousands of pounds, without adequate verification of the person’s identity, or that they can afford the sums they’re gambling. 

According to the Gambling Commission, around 80% of online gamblers have disposable income of less than £1,000 per month, with a third having less than £125.  

And yet, under our current legislation, these customers can gamble many times that income with an online bet, and they can make that bet using a credit card. 

Earlier this year, Kelly Field bravely went public with her story of problem gambling. She had debts of £10,000 within 6 months of being introduced to online bingo and slot machines. She will be repaying her gambling debts until 2021.  

Online operators say that their automated systems can detect and intervene when someone is spending more than they can afford.

But automated systems are often reactive, kicking in when the damage has already been done.  

We have seen this with the 72-hour delay on age verification, and with the scandalous way some operators only carry out due diligence on customers who want to cash out their winnings, instead of on those who want to place deposits.  

These interventions are far too litte, far too late. 

The Gambling Commission recently announced measures for tightening the rules on online age verification 

I’m glad to hear this, but age verification is only one part of a customer’s identity. We need tighter preventative perimeters, especially on affordability.  

And this can no longer be left to the discretion of the operators.  

Radio 4’s You and Yours’ investigations have shown how gambling addicts are regularly made VIPs by gambling companies, offered perks like football matches and concert tickets that fuel their addiction 

We’ve seen time and again that when facing a choice between company profits and customer protection, many operators will choose to protect their bottom lines. 

There needs to be a system of thresholds and due diligence that check affordability before a gambler can start placing higher deposits. 

Just yesterday, I was contacted by a woman who, by using different spellings of her name and different email addresses, was able to pass the identity checks of many online companies and spend thousands of pounds across various websites.  

She used 4 different credit cards, and when payment was declined, instead of questioning whether she had a problem, the operators advised her to use an alternative payment method and made her a VIP 

In November, she tried to take her own life as a result of her addiction.  

In her letter to me, she said: ‘’I am now fighting to take control of my life and want to prevent this from happening to another person. These casinos must take adequate steps to apply responsible gaming and help combat addictions in other gamblers. So many lives are being destroyed and lost everyday.’’ 

She’s right, and that’s why Labour will apply limits to the level of spend. It’s about enhanced due diligence and customer protection. 

Labour will also take action on the level of stakes, based on the same principles.  

Stake limits should be enforced on certain products when evidence shows they are linked to higher rates of problem gambling.  

That’s what we saw during the debate over Fixed Odds Betting Terminals.  

The evidence on FOBTs showed that allowing gamblers to bet up to £100 per stake was inconsistent with other "Category B” machines and also led to higher rates of loss, addiction and harm.  

In the case of FOBTs, it was clear that there was a need to place a limit on the stake of a particular product. 

Swhy not apply it to other products, too? Why would a limit to a game offline not apply to the same game online?  

The Association of British Bookmakers made this same point when they tried to stop the reduction of the FOBT stake. They told us it would push people to use the same product online, with more dangerous consequences.  

We were on opposite sides of that arugment, but I think they have a point 

Offline slot games, so-called B3 machines, have a maximum stake of £2. Online, that limit does not exist, even though many of the games are essentially the same.  

And for online table games, the stakes are often even higher. 

Of course, this doesn’t mean that we should have a blanket framework of stake limits across all products, but we should keep the option open for any product, if the evidence demands it.  

The regulator should have a full range of options.  

The same goes for limits to speed. For some games, like roulette, it makes no sense to only condemn a 20-second spin on a FOBT, when a player can make the same spins online.  

For some games, we need consistency of speed.  

Through these limits to spend, stake, and speed, Labour will ensure that there are options available for the regulation of online gambling.  

This would encourage the Gambling Commission to push forward their review into whether particular product characteristics pose greater risk of harm than others 

At the momentwe have categories for physical machinesso-called A, B, C and D gambling products. These categories facilitate limits on the maximum stakes, prizes and venues of different games.  

By contrast, for online games we only have the catch-all label of remote gambling 

want to see a category for online products that builds on the existing A, B, C and D criteria 

Labour would introduce an “E” category, that like its B counterpart could be broken down into separate components, E1, E2, or E3,  depending on the stake or speed of the product. These could each represent different types of remote slot, social and table game.  

I want to see consistenregulation and coherent categories.  

This must start with limits to spend, to stakes and to speed, so that all options are on the table when it comes to curbing the excesses of the online industry. 

 

Gaming and Gambling: Blurred lines 

I have talked this morning about the need for a culture of limits in online gambling. 

I want to end by addressing when those lines become blurred : specifically the limits between gaming and gambling.  

In many cases, tech disruption has led to great advancements. The development of motion capture and rendering technology has paved the way for blockbuster games that attract performances from A-list actors and reach huge audiences. 

And the development of online collaboration tools and supportive online communities have fostered the creation of indie games that otherwise may not have been made, that take on importance social issues like grief and mental health.  

But in other cases, the benefits of disruption are less clear cut.  

There is growing concern over loot boxes and the trading of skins: those collectable, virtual items like enhanced knives or guns that are sold on a range of platforms, with rare examples attracting high prices. 

I must admit that the gamer and the socialist in me recoils from the idea that buying advantage in this way is now the norm across games. 

And I’m sure many of you will have heard the analysis that suggests a “psychological kinship” between the use of loot boxes and more pernicious forms of gambling.  

And the concern that some games are creating a culture of “addiction by design”, by introducing elements of gambling into the gaming experience. 

I recently read about the experiences of a young man who at 16 years old lost between 2000 and 3000 pounds gambling online, including on loot boxes and skins trading. For him, loot crates were clickbait. 

This is an opaque world, one which too many policy-makers know too little about.  

There is enough unease about this issue for the European group of gambling regulators to have signed a joint declaration on their concerns about “the blurring of lines between gambling and gaming” – including skin betting, loot boxes, and the use of gambling-themed content in video games available to children. 

That joint declarations is welcome, but there is still inconsistency in regulation.  

While Belgium has introduced tighter rules on loot boxes, our Gambling Commission only intervenes when traded items are “cashed out”.  

And while the Washington State Gambling Commission has put pressure on Valve to end skin trading linked to unlicensed websites via Steam, there is also an argument that Steam’s “community market” function itself is the problem.  

We need to understand more about this.  

We need to understand more about the viewbots that push virtual casinos to the top of Twitch TV trends, about the transactional relationship between games, Steam and skins, and about the ways in which a game’s programming can open loops for external trading. 

And we need to understand more about the effect of loot boxes themselves.  

Those experts which suggest that the exposure of young people to loot boxes is psychologically akin to gambling also acknowledge that the evidence base is still in its very early stages.ii  

That is why GambleAware has recently launched a tender to support more research on the blurred lines between gaming and gambling.  

It is why the DCMS Select Committee has recently launched an inquiry into immersive and addictive technologies,  

And why the Chief Medical Officer will lead a “systematic review” of the relationship between social media and the mental health of young people. 

I want the Labour Party to play a leading role in this conversation.  

It feels like there is a frustration within the gaming community that their views on this subject are being overlooked. For a topic as complex and opaque as skin trading, we need to listen to gamers too 

That is why today I am launching a Labour Party consultation, asking gamers for their views on the increasing prevalence of gambling in their gaming lives, including the way they use loot boxes and skins.  

I want the gaming community to know we’re listening, and to have the opportunity to offer their insights.  

Our Consultation will run over the course of the next two months, in time to inform the forum of European gambling regulators at their next annual conference. 

 

Conclusion 

In the 14 years since the current Gambling Act was written, our economy and our behaviour have fundamentally changed. 

The rise of surveillance capitalism in our distorted digital market is helping predatory companies take advantage of vulnerable consumers, and our gambling legislation is no longer fit for purpose. 

This cannot continue, and a Labour Government will make sure that it doesn’t continue.  

Company profits have come before consumer protection for far too long.  

Gambling operators tell addicts that they are VIPs, while completely ignoring their best interests. 

Labour have led the way on gambling reform, from leading the fight to lower the FOBT stake, to proposing policies now being accepted by Government and industry – such as a ban on credit card betting and a ‘whistle to whistle’ gambling advertising ban during live sport.  

Next, we need to see a culture of limits introduced to internet gambling: a system of thresholds placed on the spend, stake and speed that will give safeguards to consumers. 

Labour’s new Gambling Act will put due diligence and consumer protection at the centre of the online gambling industry.  

This will require commitment from all of us, as well as political will from Government.  

Righting power imbalances that allow for exploitation is at the heart of the Labour Party’s ethos. 

With the help of industry, academics, experts, and consumers, we will build a legislative framework for online gambling that is fit for the digital age.

 

 

Endnotes

i Gambling Commission (2018), Combined Health Survey. Note that this latest survey uses data from 2016. ii Following the Gambling (Licensing and Advertising) Act 2014, Great Britain now has the largest regulated online gambling market in the world. It generates £4.7bn gross gambling yield (GGY) per annum (Gambling Commission figures, 2018), and “appears set to increase from the current 34% to 50% of the total British market by GGY over the next few years. In addition to consumer behaviour and technological factors, this growth will be driven by attracting new groups of consumers and by increased product personalisation”. iii See Gambling Commission (2018), Review of Online Gambling; and Gambling Commission (2018) Strategy 2018-2021. iv The 2014 Act ensured that remote operators were regulated at the point of consumption (the UK), regardless of where they might be based in the world. v Ofcom (2017), Adult’s Media Use and Attitudes Report. vi Example: the Gambling Commission said in 2018 that gambling on credit cards “increases the risk that consumers will gamble more than they can afford” and it would “consider prohibiting or restricting the use of credit cards” in order to protect gamblers from racking up debts that they cannot pay. One year on, and the Consultation is yet to lead to a change in the law. vii Note that problem gambling rates for online casinos exceeds the average rate for some products: for example, Gambling Commission (2018) figures show that problem gambling rates with online casinos is 12% (compared to a 0.7% average). viii Note that this would not be possible in a land-based venue, where a spend limit exists of 2,000 Euros before due diligence is carried out (this rule is linked to anti-money laundering measures). ix Note that this echoes a recommendation in Gambling Commission (2018), Review of Online Gambling. x See Professor David Forrest and Professor Ian McHale of the University of Liverpool in Gambling Commission (2018), Review of Online Gambling. xi Note: stake limits were not stipulated in the 2005 Act, but was introduced in the 2007 legislation. So any changes to stake would in likelihood require secondary legislation. xii For example, see Dr. David Zendle on this question.