19 March 2019
Iain Duncan Smith urges Government to tighten controls on the gambling industry

Iain Duncan Smith urges the Government to tighten controls on the gambling industry to tackle the industry's scandalous behaviour of incentivising vulnerable gamblers who rack up huge debts and become addicted to gambling.

Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)

It is a privilege to serve under your chairmanship, Mr McCabe, and I congratulate my friend the hon. Member for Inverclyde (Ronnie Cowan) on securing the debate—he is a fellow member of the all-party parliamentary group on gambling-related harm, and thus my honourable friend in this context. It is in order for me to follow the hon. Member for Swansea East (Carolyn Harris), which is pretty much what I do all the time when it comes to this subject—I would not change that for the world.

This is a vital debate. All those years ago, the then Labour Government—this is not a party political point; I am simply making the point that they were in government at the time—were seduced by the idea that, by releasing gambling and removing pretty much all restrictions on it, we could somehow recreate and help communities. I remember that one of the great arguments was, “This will be a fantastic load of investment into communities, because gambling will create jobs and produce a happier place.” I opposed it at the time. I set up the Centre for Social Justice, which looked into the matter. I said that an innate level of harm came from gambling and that deregulating it would be like saying, “We must increase drinking”, or, “It would be far better if we had more shops selling more drugs.”

The same idea applies with gambling, which ultimately is a harmful activity. I accept that is not the case for everyone, but it is harmful for some people, and “some people” is quite a large number. The latest figures I saw—I think they are understated, to be frank—show that 3 million people are what are called “problem gamblers”. I hate that phrase, because in every other area where there are such problems, we call them addicts. These are addicts. They are addicted to a course of action that in their right minds they would not pursue in the way they do.

Of course, the industry is smart. It has invested a lot of the extra money it has got—all those billions—into figuring out how people go about gambling. As the hon. Member for Swansea East said, we had this whole debate about fixed odds betting terminals, which were a problem. I am astonished that, given all the evidence, it took us so long to finally get movement, first from the Gambling Commission and finally from the Government. The onslaught from the gambling industry was a sight to behold. There was an onslaught of misrepresented figures and everything else. I will not go into the details, because I am sure that stands in history and testimony.

The issue is that a lot of money is at stake. That is what we are dealing with, but I prefer to look at the other side, which is that a lot of human beings are at stake, and they can little afford what is happening to them. Our single most important purpose as elected Members of Parliament, ultimately, is to fight for those who cannot fight for themselves. In this case, it is those who have found themselves trapped in a devastating downwards spiral of addiction.

Conor McGinn (St Helens North) (Lab)

The right hon. Gentleman is making a characteristically powerful and passionate speech. He made an important point. This debate is about addiction. Millions of people across the country enjoy a flutter on the horses, for example. It is a pursuit that contributes to our economy and human enjoyment. The debate is about those who suffer from gambling addiction. The problem is not gambling per se, but addiction, and he is very correct to make that point.

Mr Duncan Smith

I am grateful for that intervention. I fully understand that gambling is enjoyed by numbers of people who enjoy it every now and again and do not get caught up in that spiral. They might go to the races or bet on the odd football match or something like that. I am a genuine believer in free choice—people make those decisions themselves—but we have to look at whether the way the industry goes about its purposes perverts that process so that individuals end up caught in that spiral. That was a helpful intervention, because I want to talk about the industry and what it is up to.

We had some fascinating work done to look at some of the behaviour, and I was astonished by what is going on. First and foremost, anyone watching the plethora of adverts that floods every sporting event on television will see that they are all aimed at one particular type of person: young men. The adverts say, “You have to be smart, savvy, intelligent and clever. You are that kind of person because you beat the odds every time. You know what is going on. We give you special opportunities to do it, but you are so smart, you have to do it.” If someone is not gambling, the corollary is that they are not very smart and therefore incapable of doing it. The whole pattern of advertising is to drive people to gambling.

We then discovered that the way this works behind the scenes is quite scandalous. For example, bet365 has recently revealed that players who rack up huge losses are rewarded with weekly cash returns of up to 10% so that they can carry on playing. In training sessions for new staff, a bet365 worker gave an example to a reporter. They said:

“If they’ve lost, say, £15,000 in that week, then we’ll give them a weekly rebate, normally on a Tuesday, and we’ll give them maybe 10% of that back.”

That is quite sinister. We can see exactly what they are after: those who habitually gamble and lose. They are not really interested in those who win. In fact, they do not like it very much—I can understand the reason—if people actually win, so they do everything they can to discourage people who ever manage to win.

There are all sorts of delayed payments and other mechanisms. Sometimes people will not even be allowed to gamble again with a particular organisation. We are taking evidence on that in the all-party parliamentary group. It is clear that the gambling companies quickly pull away those who habitually gamble. They gamble almost by impulse, and thus they become incredibly profitable for the companies. They are induced to gamble even more, because they have this habit. The idea of targeting someone who has the habit is key.

The work done by the Centre for Social Justice, which I set up, shows that such targeting not only destroys the lives of those locked into the downward spiral of misery, but drags whole families into despair. We have already heard examples of people who have committed suicide and people who have lost all their family connections. Some have lost loads of money belonging to their families and are unable to carry on a normal life.

The hon. Member for Swansea East made much of the PwC report for the Gambling Commission, which found that 59% of the profits for a remote gaming company come from those with a gambling addiction or problematic behaviour. The model is based not on any long-term relationship with loyal customers, as would be common for most business models, but on sifting out those who gamble from those who fundamentally lose. When we watch the advertising process, we can begin to realise that the companies are going to that very selective targeting. My general view is that they are completely out of control. What has been going on for some time is a front. They are trying to pretend somehow that they are reasonable and are behaving well, but they are behaving appallingly. They have set out fundamentally in the pursuit of money, and they do not care if they destroy lives.

Richard Graham (Gloucester) (Con)

My right hon. Friend is making a characteristically powerful speech on a subject dear to his heart. Here we are: another week, another debate on online gambling, which only goes to show how important the issue is to us all. Does he agree that a powerful start to righting some of the problems that the gambling companies have created would be a mandatory 1% levy on gross profits to fund decent research and help set up more gambling clinics?

Mr Duncan Smith

I agree with my right hon. Friend—[Interruption.] No? He is right hon. in my book. I agree with him, because what has happened so far is too much about the voluntary. I am not one for constantly regulating—far from it—but we see the level of harm and the lack of knowledge about how deep the harms go, and it is time for the Government to do something.

I want to pick up on loot boxes, which the hon. Member for Inverclyde talked about in his very good speech. Almost the most sinister thing going on at the moment is the inducement of young people—kids, really—to get into the habit early. They are locked into their rooms—often their bedrooms—often until quite late at night. Sometimes parents do not realise what is going on, but they get into this process where they are often gambling money, but not money as we might term it; it is an alternative form. Sometimes they are gambling for clothing, which eventually become a monetary derivative.

Interestingly, I saw a report by Macey and Hamari for the University of Tampere on participation in skins and loot boxes. Worryingly, the report concludes that almost 75% of those participating in gambling related to e-sports were aged 25 or under. What is going on is clear: it is highly addictive and very fast. People build up a box of prizes. They get used to a process of inducement when they go on to bigger gambling. They hear about a 10% gift or going to a fancy party somewhere and it becomes a part of their lives, because they understand it from the gambling process that they were engaged in in the gaming.

My apologies, Mr McCabe, if I have gone slightly over my time. I will conclude by saying to the Minister, for whom I have huge respect—no one is more pleased than I am that she is on the Front Bench—that the Government need to right a wrong. The wrong was that we opened the whole of the regulatory process to gambling. It does not matter which Government did it; it was done. Now we need to bring the beast back under control. I simply say to her that there are recommendations—I will not read them all out—from the all-party group, and I hope that she will give them full consideration. It is time now to demand more of an organisation of companies that derive profits and in too many cases cause harm. There are good people who gamble occasionally, but others are locked into a spiral of harm. We look to the Government to change their circumstances.