June 20, 2022   6 mins

When Tony Blair’s government liberalised gambling, smartphones were still the stuff of science fiction. Sir Alan Budd, who wrote the 2001 review that the 2005 Gambling Act was based on, recently conceded in a House of Lords inquiry that “no one had even thought about the possibility that someone might be holding something in his or her hand and be allowed to gamble freely”. The legislation, then, rapidly proved obsolete: nowadays smartphones facilitate the majority of gambling that happens in the UK.

At long last, the Conservatives are clearing up the mess New Labour made of our gambling laws. In December 2020, the current government promised the most comprehensive revision of them since 2005 — to ensure they are “fit for the digital age”. The White Paper is reportedly due to be published at the end of this month.

When Blair’s permissive legislation came into force in 2007, it shifted gambling from being an activity that was tolerated to something that was actively promoted and marketed, in order to stimulate demand. The attempt to “modernise the regulation of gambling for today’s world” had apparently good intentions. In 2004, Blair demanded that opponents of his reforms “go and talk to the people of Blackpool who urgently need the regeneration” that he claimed would be brought about by resort-style super casinos. Gambling, in his eyes, was a vehicle for economic development. He did not represent public opinion in this respect; the vast majority opposed the introduction of more opportunities to gamble.

Gordon Brown ditched the plans for Las Vegas-style super-casinos when he became Prime Minister, meaning Blair’s “modernising” legislation achieved just three notable things: it legitimised Fixed Odds Betting Terminals (FOBTs) in betting shops, which had previously operated outside of the law. This gave bookmakers permission to offer machines of up to £100 every 20 seconds on every high street. It also loosened the restrictions on gambling advertising, while also removing the need to prove there was demand for a new gambling outlet in order to acquire a license to open one.

There were no provisions to adequately regulate gambling websites based offshore, which accounts for practically all of them. The justifying logic was that the gambling took place where the server was located: people accessing these sites from Britain were supposedly gambling in Gibraltar or the Isle of Man. This ludicrous loophole enabled massive betting brands to base themselves in tax havens, advertise to consumers in Britain and build their businesses free of tax or proper regulation — without even providing jobs in the country it had market access to. Britain was exporting billions of pounds every year to these companies, and all we got in return was a massive upswing in the most harmful effects of gambling.

Public Health England (PHE) estimates there to be at least one gambling related suicide a day, with gambling harms impacting not just finances but relationships, employment prospects, mental wellbeing and physical health. PHE calculate the resulting cost to government to be in excess of £1.2 billion a year. YouGov’s polling of 18,000 people suggested that 2.8% suffered from a gambling addiction — scaled up across the UK, this is the equivalent of 1.4 million people, with a further 1.5 million at-risk.

Labour did very little to rectify some of the more obvious downsides of its gambling legislation. It wasn’t until 2014, under the Tory-Lib Dem coalition government, that a “point of consumption” tax was levied on all gambling profits derived from this country. Sadly, it couldn’t be backdated to 2005. Many of the firms remain offshore to this day, which means they still don’t pay UK corporation tax. The coalition government also stipulated that online gambling firms had to be licensed by the Gambling Commission if they wanted to advertise in Britain — a totally obvious regulation New Labour never bothered to insist on.

True, it was Labour that formed the Gambling Commission, but it did a pretty poor job of it. The regulatory body has been criticised by the National Audit Office, the Public Accounts Committee, the House of Lords Gambling Industry Select Committee and MPs from all parties — the running theme being that the Gambling Commission has been “outgunned” by the sector it’s supposed to have a handle on.

“Light touch” regulation doesn’t work in online gambling. As even the most ardent neoliberal would recognise, the sector cuts across the logic of the free market: it is a win or lose contract between the consumer and the vendor. Given the unlevel playing field between individual and corporation, regulation that upholds consumer protection has to be rigorous.

Yet the Gambling Commission has seen its role as to facilitate the industry’s growth. Consumer protection has been abysmal. Even free bets aren’t free, with gambling firms insisting on obscene so-called “wagering requirements” before people can withdraw their winnings. There have been many cases of people being credited a bonus when they deposit funds into a gambling account, only to find that they are unable to withdraw their winnings unless they bet the total value of what they deposited 99 times — and on products like slots, which have a fixed margin, meaning it’s impossible to win. The Competition and Markets Authority called this “a con”, but the Gambling Commission still permits these unfair terms and conditions.

It also fails to protect the most vulnerable. Online gambling firms derive 86% of their profit from the 5% of people who are addicted or at-risk. In “VIP schemes”, personal account managers encourage people, including those known to be addicted, to gamble as much as possible. Firms profile their customers using third party data and betting history, in order to tailor marketing to gambling addicts who will spend the most. The accounts of gamblers who consistently beat the bookmakers are closed or restricted.

And the most addictive product, online slots, is persistently promoted. Our outdated gambling laws mean there are no limits to stakes online as there are on machines, meaning people are able to gamble thousands in seconds. More than half of the sector’s £7 billion annual profits come from online slots, which are more harmful than any other product — 45% of those who engage with them become problem or at-risk gamblers.

Compared to the revenues of gambling companies, fines from the regulator are paltry. When they are levied, companies simply see them as a cost of doing business. 888, which is in the process of acquiring William Hill, confirmed that the latter has set aside £15 million in anticipation of a fine. (William Hill is the subject an ongoing license review related to social responsibility and money laundering obligations.) 888 has agreed to pay £2.2 billion for William Hill’s betting shops and its two million online customers based in Britain.

Having unleashed this hellscape, Labour sought to make amends under Jeremy Corbyn’s leadership by proposing to review online gambling and to cut the maximum stake on FOBTs from £100 to £2 a spin. But it was Tory Minister Tracey Crouch who delivered the latter policy in 2019, which has led to a 50% reduction in people citing these machines when they present for gambling addiction treatment. This correlates with a 40% reduction in revenue from FOBTs, with no commensurate uptick in other products. Police call outs to betting shops were also down by 38% in the year after the stake cut was enacted.

Building on the success of this, Boris Johnson’s government introduced the ongoing gambling review. But while its scope chimes with policies proposed by Tom Watson when he served under Corbyn, the Labour Party is currently very quiet on the issue.

Watson proposed a series of radical reforms to gambling laws, to bring them into the digital age. This included the introduction of a Gambling Ombudsman to improve consumer protections and the requirement that online slots, like physical machines, have stake limits. He also suggested forcing all gambling companies to reapply for their licenses, and a statutory levy on gambling firms to fund research, education and treatment. This agenda has been adopted practically wholesale by the Conservatives. Since leaving Parliament, Watson has joined as an adviser to the board of Flutter, the betting giant that owns SkyBet and Paddy Power.

He is part of a trend. Former Labour MPs Michael Dugher and Anna Turley have respectively become CEO and consultant to the Betting and Gaming Council. Former Ed Balls adviser Gary Follis also works there. Meanwhile, Keir Starmer’s refusal to publish donors to his leadership campaign until after the contest had concluded meant contributions from Peter Coates, the founder of Bet365, couldn’t be taken into account by party members until it was too late. Perhaps Labour’s ongoing silence on the issue of gambling reform is the price paid by a cash-strapped party not wanting to upset too many billionaires who might be able to bail them out come election time.

It won’t help them win votes, though. YouGov’s tracker consistently shows that over 60% of people feel unfavourably towards the gambling industry, while just 7% have a favourable attitude. There is also huge public support for limiting stakes for online slots, and for affordability checks when someone loses more than £100 in a month, which would prevent harm in the middle of a cost of living crisis by curtailing escalating losses in accordance with what’s affordable to an individual. Polling from Survation found support for these reforms to cut across geographical lines, with substantial appeal in “red wall” areas. The pollster also found that 70% of Tory MPs agree that unaffordable losses should be prevented, 64% agreed that gambling should be more regulated, and 68% agreed with introducing stake limits online.

In other words, while Labour remains silent, gambling reform is actively supported by Boris Johnson’s backbenchers. It could therefore become a populist dividing line, putting the government on the side of the public while the opposition appeases offshore corporations. And if Labour does choose to sit idly on the sidelines while the Tories rectify Blair’s mistakes, it will be clear to the public that no lessons have been learned by a party seemingly more interested in working with the gambling lobby than challenging an industry that’s exploiting the nation.

Matt Zarb-Cousin is a former spokesman for Jeremy Corbyn, and is now spokesperson for the Campaign for Fairer Gambling.