Prem Sikka: Gambling inflicts misery – we need more regulation

Credit card gambling has been banned - but we must go further.

This week’s report from the National Gambling Treatment Service makes depressing reading.

Gambling is a big money spinner for few but inflicts misery on many. Gambling is available 24/7, 365 days a year on smartphones, tablets, and computers and in shops and casinos.

We are bombarded with relentless advertising and promises of easy riches. The industry continuously devises addictive games, which often appeal to children. Sports fans are enrolled because their favourite teams and events are sponsored by casinos and gambling companies. You can bet on the outcome of almost anything.

The annual gross gambling yield is around £14.3bn from some 9,745 premises. Some 10.5 million people are estimated to gamble online. Unsurprisingly, some of the highest paid business executives are found in the gambling industry. For example, last year the chief executive Bet365 bagged a package of £323m, consisting of £277m salary plus dividends.

The glossy pictures in brochures and claims of corporate social responsibility hide pain and misery. A recent Parliamentary report stated that one-third of a million of Brits are gambling addicts, and another study puts the figure at 1.4 million.

The parliamentary report says that problem gamblers include 55,000 children aged 11–16 even though it is illegal for companies to permit them to gamble. The gambling industry spends £1.5bn a year on advertising, and some 60% of its profits come from the 5% who are already problem gamblers, or are at risk of becoming so.  

The outwardly visible signs of addiction to smoking, alcohol and narcotics encourage people to call for controls and reforms; the destruction wreaked by gambling is less visible and rarely gets the same media and public attention. 

Problem gamblers often lose jobs and face relationship problems. 26% had debts up to £5,000 and 45% had debts over £5,000 or were bankrupt or in an Individual Voluntary Arrangement.

They spend around £2,000 a month on gambling before receiving any treatment. Corporate claims of helping problem gamblers are rarely fulfilled and the task falls upon the hard-pressed National Health Service (NHS).  

Just 9,008 people received help and care in the year to March 2020. On average, one gambling addict commits suicide every day, devastating the lives of many. An estimated two million people are affected by the break-up of families, loss of jobs, homes, savings and life. This is a private as well as a public tragedy which requires greater spend on the NHS, welfare, loss of taxes and lower economic output. 

Much of the responsibility for social harm rests upon neoliberal ideology and its focus on individualism. Inevitably, it encouraged demands for deregulation of gambling too. Until 2005 gambling was strictly controlled, but entrepreneurs saw new profit opportunities in the emerging online era and expansion of the use of debit/credit cards.

The Gambling Act 2005 loosened the shackles and gambling debts became enforceable in law. The use of debit/credit cards was encouraged and companies offered all sorts of enticements, VIP treatments, prizes and incentives to hook customers. 

The Gambling Commission, the regulator, has failed to check the industry’s excesses or enforce its promises of helping the addicts. Puny fines have rarely been effective deterrent.

The Commission has done little to check the marketing of addictive games. Major players in the gambling industry use all sorts of financial engineering to escape the social cost of their trade. They use a variety of profit shifting strategies to dodge UK taxes and book their profits in offshore tax havens. Yet none of this is taken into account in granting gambling licences.

Following pressure from reformers and parliament, from April 2020 nobody in Great Britain can use a credit card to gamble. This may provide relief to around 800,000 users of credit cards; some 22% of these are problem gamblers or addicts. But this is not enough. The House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry has over fifty recommendations for reform. These include:

  • Ban on direct marketing and all inducements and an end to sports sponsorship by gambling operators;
  • An enforceable “duty of care”;
  • The Gambling Commission should establish a system for testing all new games against a series of harm indicators, including their addictiveness;
  • Stake limits for online gambling products;
  • A mandatory levy on the industry to fund the costs of treatment and research;
  • Effective regulation, withdrawal of licences and closure of offending companies; and
  • The remuneration of employees should not depend on the length of time or frequency that a customer they have had personal contact with gambles, or the amount spent or lost, or the profit made by the operator from that customer.

The parliamentary report deserves to be read by all suffering from the misery of gambling. People should take the opportunity to expand the range of reforms. For example, following meetings with individuals who have blown their salary on gambling, I would like to see a ban on the use of debit cards for gambling too. Of course, the industry would object, but people’s welfare must come first.

Prem Sikka is a Professor of Accounting at the University of Sheffield and a Labour member of the House of Lords. He tweets here.

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