Minister agrees to meet Peers after renewed concerns about affordability checks
My Lords, I join others in congratulating the Minister on her reappointment? We are discussing gambling harm among young people, but perhaps we should spare a thought to the trauma caused to the Ministers responsible for gambling policy. I apologise if I am about to add to that.
Children under 18 are prohibited from gambling, but we also need to protect young adults—the 18 to 25 year-olds who are permitted to gamble—from harm. Fortunately, problem gambling rates among young people remain low. The problem gambling rate for 16 to 24 year-olds, according to the NHS Health Survey for England, fell from 1% in 2018 to 0.5% in 2024. Gambling for young people is regulated, with additional safeguards, including lower online slot stake limits for under-25s, age-targeting restrictions, deposit-limit prompts and financial vulnerability checks.
We can debate the scope of these safeguards but I want to draw attention to the danger of making the wrong policy choice, with particular reference to horseracing. There is a strong case for saying that racing is different and should be treated differently when it comes to policy relating to gambling harm, which I fear it is not. First, British racing is financially dependent on a strong legal betting market. A long-standing, mutually dependent relationship exists between racing and betting, worth approximately £350 million annually to the sport through key revenue streams such as media rights payments, sponsorship and the horserace betting levy. Secondly, the potential harm from betting on racing is relatively low. It actually carries roughly the same risk as that of betting on lottery scratchcards.
Nevertheless, two weeks ago, the Gambling Commission announced that, following a protracted pilot period, there will be a phased introduction of financial risk assessments, known as affordability checks, on betting over the course of an implementation period of unspecified length. These checks will have severe financial implications for racing and the economy, as well as subjecting racing betters to unwarranted levels of intrusion. Independent modelling has suggested that British racing could lose up to £250 million in five years due to the checks, while customers refusing to provide financial documents will lead to significant reductions in betting turnover and an estimated loss of more than £13 million per year in horserace betting levy receipts. We were promised by the previous Government that the checks would be introduced only if they were “fully frictionless”, but the checks have been proven by the Gambling Commission’s own pilot not to be so.
“Far from protecting consumers, these checks will have the opposite effect ... they will drive more customers to the illegal market”
The crucial point of relevance to this debate is that, far from protecting consumers, these checks will have the opposite effect. They will drive more customers to the illegal market, which puts them at far greater risk of gambling-related harm, as well as starving the Treasury of much-needed revenue. Young people are rightly being taught about credit checks in school and will be increasingly worried about their credit rating. So now we have a new generation who will actually be incentivised to avoid financial risk checks and instead turn to the black market. Illegal operators can advertise without age controls and offer none of the protections required in the regulated sector. Black market advertising is extremely effective, not least because its prices are so much better because it does not pay tax or the levy. During the World Cup, several illegal adverts appeared using AI-generated versions of Harry Kane promoting wins on illegal sites. That is something that regulated UK operators are rightly not permitted to do.
Concerns about affordability checks for adults are shared by the betting industry, politicians, campaigners and policymakers, all of whom have repeatedly warned of serious unintended consequences for British racing. Those adverse consequences have been highlighted in this House and by concerned Members of Parliament. I find it difficult to understand why Ministers have allowed the Gambling Commission to proceed. Further, the policy has been signed off by the commission without key stakeholders in racing and betting being able to see vital evidence about the impact of the pilot. That is deeply unsatisfactory.
Perhaps I may ask the Minister two specific questions. How are the Government measuring the impact of affordability checks? When will the data from the pilots be available for all to understand? The perverse consequence of current policy is that people, including young adults, will be driven to the unregulated black market. Of course that is not the intention of the Government but it is the risk. Affordability checks were not this Government’s policy. The plan was inherited from the last Conservative Government. Even when shadow Ministers and the think tank architects of the policy now warn that the checks are not proceeding as they intended and should be halted, the Gambling Commission ploughs on regardless.
With a new Prime Minister and new priorities, I respectfully suggest that this would be a good time to recalibrate a misguided and ill-targeted policy, give clear direction to the Gambling Commission and focus on the real issue here, which is problematic and harmful gambling in other areas.
The noble Lords, Lord Herbert and Lord Evans, raised points around the importance and financial significance of gambling to horseracing, and the noble Lord, Lord Herbert, in particular, raised financial risk assessments. We support the recent announcement by the Gambling Commission about implementing FRAs for online gambling through a carefully phased approach, working with the sector in an implementation phase. This was a decision for the Gambling Commission, which has met stakeholders throughout the recent pilot process to ensure that implementation is focused on protecting consumers. The Government have encouraged the commission to continue and increase engagement with the gambling industry. Successful implementation is vital, and this requires engagement from all interested parties.
The vast majority of customers will never require an FRA. People who place an occasional bet or even regularly spend hundreds of pounds would be unlikely to need a check. I am happy to meet any Peer to discuss FRAs, as is the Gambling Commission. We can arrange that subsequently. The noble Lord, Lord Herbert, also talked about publishing data and measuring the impact of FRAs. The Government will work with the Gambling Commission to ensure successful implementation. There will be a significant implementation phase that will involve key stakeholders, including the horseracing sector and operators’ implementation groups. I will raise the point about what data can be released with the Gambling Commission. Where it can, we are encouraging it to do so.
Read the full debate here.