Scathing report outlines serious flaws with gambling regulation

Thirteen years after the creation of the Gambling Commission, gambling regulation is still failing to protect the consumer. 

That's why Gambling Commission CEO Neil McArthur, and Sarah Healey, Permanent Secretary at the Department of Culture, Media and Sport (DCMS), recently came under heavy scrutiny by MPs on the Public Accounts Committee (PAC).

The PAC is the body that examines whether government agencies deliver value for money by drawing on the work of the National Audit Office (NAO), whose damning report into the Gambling Commission was published in February.

Simon Thompson and Alexander Kallman have analysed Mr McArthur and Ms Healey's responses at the PAC hearing for Clean Up Gambling. The full report can be accessed here but some of the key points are summarised below.

They argue that what emerged was "a picture of regulation which has focused on permitting gambling, rather than ensuring a reasonable degree of safety and that consumers are protected", to which they conclude "raises significant questions as to whether DCMS is the appropriate department to regulate a harmful product."

They go on to highlight that:

• Ms Healey, permanent secretary, appeared unaware of the principle of prevention of harm through regulation to reduce costs.
• Ms Healey attributed the government’s lack of evidence on gambling addiction and harms to this affecting a relatively small number of people. She was unaware this compared to the numbers dependent on drugs or alcohol.
• She suggested the harms caused by gambling have not been a concern for the government. This is despite evidence from consumer complaints and people with lived experience, across many years, including of suicide.
• When pressed, Ms Healey's responses suggest the department has neither engaged with the significant challenges confronting gambling regulation, nor the evidence of harm caused over the last decades that is still ongoing.

The responses of Mr McArthur, as CEO of the Gambling Commission, further substantiated the findings of the NAO report. He even repeatedly indicated he agreed with the NAO.

• While certainly hampered by insufficient resources, Mr McArthur demonstrated he is CEO of a regulator that has not been proactive at identifying solutions and advising the government on the significant challenges gambling regulation faces.
• The Gambling Commission is leading the National Strategy to Reduce Gambling Harms. This is peculiar for a regulator: coordinating the actions of government departments and stakeholders to address the harms which result, in part, from a lack of effective regulation. It is unclear why DCMS has not initiated such a strategy.
• The Gambling Commission has increased use of enforcement but has failed to make use of other standard and proven regulatory mechanisms to drive up standards, such as league tables or publishing complaints per operator, and so is not being transparent and open to consumers.
• Nor has the Gambling Commission made full use of the powers it does have under the Gambling Act 2005, to impose license conditions, to revoke licenses and to institute criminal proceedings.
• It is a regulator that seems to be outmaneuvered by, and is less powerful than, the industry it regulates. It appears to serve industry rather than consumers.

Government has not invested in evidence and data on gambling problems and harms, and then when challenged, in particular to put in place hard limits on industry to protect consumers, it maintains it is unable to do so due to lack of evidence and data.

The regulator and DCMS have not invested in big data analytics, evidence from consumer complaints or lived experience or local authority evidence from inspections. While Mr McArthur claims gambling executives telling him what he wants to hear is evidence of the effectiveness of regulation.

So the Gambling Commission and DCMS place high or impossible standards for evidence in some areas, such as stronger controls on industry. But not for others, such as demonstrating the success of regulation.

Between the DCMS and the Gambling Commission changes have been slow and conservative. It seems ‘evidence-based and proportionate’ means favourable to the gambling industry rather than weighted to consumer protection from risk and harm.

• Action on basic consumer rights, such as allowing people to withdraw their own money, and misleading terms, has taken several years.
• It is unclear why so much evidence gathering and effort to generate regulation is required for gambling, when these are basic consumer rights and protections generic to any area of regulation.
• When asked why the delay with online stake limits, and whether this is repeating delays in addressing fixed-odds betting terminals, the response is other measures are being taken, focused on other product characteristics, and industry ‘knowing their customers’.
• However, they do not show evidence this is the case, meanwhile dismissing challenges and calls for hard limits as not having clear evidence.
• It is by no means evident regulation is keeping pace to protect customers, with increased online platforms and gambling or gambling-like mechanisms appearing in video and social games.

Most striking is the absence of redress for individual consumers in the current regulatory framework.

Despite receiving thousands of complaints from individuals in a year, the Gambling Commission has not made any recommendations to close this gap.

• This is particularly problematic, as there has been no move to put in place hard restrictions on online gambling, such as limits to stakes, on the basis that the industry has data on each gambler and so must ‘know their customers’ and intervene on an individual basis. This is clearly of benefit to the industry.
• Meanwhile, if an individual experiences harm through a failure of the gambling operator to follow social responsibility codes, they can obtain no redress at the individual level.
• DCMS and Commission have also not invested in capability to undertake its own analysis of industry data, to check for itself industry and consumer behaviour.
• Together, these gaps seem to significantly undermine the ‘know your customer’ approach to online gambling regulation.

The report highlights a quote from Sir Geoffrey Clifton-Brown MP who sits on the PAC, illustrating how gambling appears to be a "special case" that lags behind in the most basic of consumer protections:

"In an age where we are expecting more and more openness and expecting government to be responsive to people's complaints, it's unacceptable for our constituents, for their complaints not to be properly investigated, and for them not to be told what the outcome of that investigation is."

Ms Healey said the review of the Gambling Act would take place but could not give a timetable. Write to your MP using this template asking them to back a comprehensive review of our gambling laws as soon as possible.

Download the full report here.