National Audit Office report on Gambling regulation: problem gambling and protecting vulnerable people

There are an estimated 1.8 million ‘at risk’ gamblers and 395,000 ‘problem’ gamblers – including 55,000 children, some of whom are as young as 11.1 Gambling addiction can lead to mental health problems, relationship difficulties, large-scale financial loss and, in some cases, crime or suicide. 

The NAO’s report looks at regulation of an industry which now yields over £11.3 billion2 for gambling operators every year. The Gambling Commission3, which regulates the industry, has annual funding of £19 million and almost all of it comes from licence fees paid by gambling operators. The Department for Digital, Culture, Media & Sport (DCMS) is the government department with overall responsibility for gambling policy and regulation.

The report concludes that while the Commission has improved regulation, there is much more it should do. It has increased enforcement against gambling operators that break rules, for example by revoking licences, and has also strengthened its rule book.4 But it needs to do more to incentivise operators to raise standards and be more systematic and detailed in recording and analysing information about gamblers to plug gaps in its knowledge. 

Even if the Commission makes these improvements, it is a small body that is unlikely to be fully effective in regulating a challenging and fast-changing industry within the current system. Gambling regulation does not have features seen in other sectors, such as an ombudsman, and the way it is funded is not flexible meaning the Commission cannot change licence fees to respond to new risks emerging quickly from changes in technology and demand.

The report’s recommendations include that the Commission and DCMS should:

• Be more strategic about getting gambling companies to better protect people. This could include incentivising companies to do more to make gambling safer beyond meeting minimum requirements. 
• Ensure gamblers are aware of services to resolve disputes, and review whether these arrangements are working effectively.
• Review how regulation is funded so they can keep pace with a fast-changing industry. 

Gareth Davies, the head of the NAO, said today: 

“Licensed gambling has grown by 57 per cent - £4.1 billion - over the last decade mainly due to a massive increase in online and smartphone gambling. The risks to gamblers are changing as technologies develop. 

“Yet the Gambling Commission is a small regulator in a huge and fast-evolving industry. While the Commission has made improvements, gambling regulation lags behind the industry. The Commission and government need to work together to ensure that regulation keeps pace with the risk to gamblers.”

Key facts 

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Notes for Editors 

1. Problem gamblers typically experience significant negative consequences from gambling, including addictive behaviour. The Gambling Commission estimates, based on bi-annual health surveys, that the number of adult problem gamblers is 340,000 , with research suggesting that around six additional people – such as friends, family and co-workers - are directly affected by each problem gambler.
    
2. £11.3 billion - total gross gambling yield (bets placed less winnings paid out) earned by gambling operators in Great Britain in 2018-19, excluding the National Lottery.
    
3. The Gambling Commission regulates gambling in Great Britain. All gambling operators must have a licence, and the Gambling Commission has powers to set licence conditions and codes of practice, and to monitor and enforce compliance with these. The total funding for the Gambling Commission in 2018-19 was nearly £19 million, excluding its work on the National Lottery.
    
4. The Gambling Commission rule book is its Licence Conditions and Codes of Practice, the latest version of which was published in January 2020.