Online gamblers should prove they can afford losses, report finds

Rob Davies and Alex Mistlin
·4-min read
<span>Photograph: Alamy Stock Photo</span>
Photograph: Alamy Stock Photo

Online gamblers should not be able to lose more than £100 a month without proving they can afford it, according to a report that will also call for betting websites that base themselves offshore to face stiffer taxes.

Proposals from the Social Market Foundation (SMF) thinktank build on growing clamour for the government to make sweeping changes to how the industry is regulated, following a string of high-profile stories about problem gambling.

Among wide-ranging recommendations due to be published on Wednesday, the SMF will call for:

  • A £100-per-month “soft cap” on online losses.

  • Tax breaks for firms that move onshore.

  • Limits on how much can be staked online.

  • A regulatory shake-up, including a new ombudsman.

  • A kitemarking system for firms that uphold standards.

  • A clearer sanctions regime for those that don’t.

The report recommends online gambling should be regulated much more like land-based bets, include a stake limit of between £1 and £5 on online slot machines, echoing similar proposals from a group of MPs.

The maximum stake on fixed-odds betting terminals (FOBTs) was cut from £100 to £2 from 2019 but at present there are no stake limits online.

“Remote gambling is on the rise, yet remains outside the same controls applied to its land-based equivalents,” the SMF said.

“It makes no sense that the same ‘obligation’ to reduce harm through limits to stake and speed should not be applied to an online sector which provides the most accessible content of all.”

One of the most eye-catching proposals is a £100 “soft cap” on monthly losses, with customers who want to spend more subjected to strict affordability checks by an independent gambling ombudsman.

The SMF said the cap was well within average gambling spend and would help limit the number of addicts who experience financial difficulty, or who turn to crime to fund their habit.

Industry trade body the Betting & Gaming Council (BGC) said its members already carry out affordability checks in some cases.

“We disagree with the suggestion of an arbitrary and random low cap on spending and can think of no other area of the economy where the government determines how much an individual can spend,” the BGC said.

“Measures must be proportionate, evidence-led and fully thought through so as not to jeopardise the 100,000 jobs the industry supports or the over £3bn in tax revenues it generates for the Exchequer.”

But the report questions whether the industry is paying its fair share, outlining reforms that would have significant ramifications for betting firms.

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The government levies a duty on online bets to ensure at least some tax is collected from firms that base themselves in offshore centres such as Malta and Gibraltar.

But the SMF proposed tax incentives for companies that have a minimum “footprint” in the UK, to boost corporation tax receipts.

The report’s authors said this would also create jobs and promote compliance with British gambling licence conditions, including the protection of vulnerable people and addicts.

A similar proposal would bring an end to so-called “white label” agreements, where foreign firms with little incentive to protect UK consumers can buy access to the British market via an existing gambling licence holder.

The SMF added its voice to calls for an overhaul of the 2005 Gambling Act, introduced under Tony Blair’s Labour government, citing changes in technology that “could not have been foreseen when the legislation underpinning that regulatory framework was first drafted”.

The government has pledged to review the law and the public policy thinktanks called on ministers to consider redesigning the regulatory architecture it created.

The report proposes a more strictly defined framework of sanctions available to the regulator, the Gambling Commission, which has admitted it is underfunded and has come in for criticism in two parliamentary reports.

Changes would include a kitemarking scheme to promote good behaviour and additional regulators to beef up scrutiny of the sector and engage multiple government departments in oversight of the sector.