Labour would set up a new gambling ombudsman to protect consumers, deputy leader Tom Watson will say on Tuesday, citing a string of scandals that have raised concerns about “predatory” practices in the industry.
In a speech at the thinktank Demos, Watson will unveil the latest plank of a plan to overhaul betting regulation via a new Gambling Act, following a party review published last year.
The review has spawned a string of policies that Labour has said would help bring down problem gambling rates, including banning betting on credit cards.
Watson will say that the new ombudsman would form part of a tripartite system alongside industry regulator the Gambling Commission and the NHS, which would commission research into, education on and treatment of problem gambling.
He will say that the existing regulatory regime encourages gambling firms to do “dirty deals” with vulnerable people to avoid falling foul of the Gambling Commission.
A Guardian investigation last year exposed how Ladbrokes accepted millions of pounds in bets from a problem gambler who had stolen the money.
The bookmaker later agreed to repay the victims of his theft, on condition that both it and the addict signed a non-disclosure agreement that involved withholding information from the regulator.
Watson will also highlight the story of a woman who was encouraged by online betting firms LeoVegas and Casumo to keep gambling, with offers of bonuses and free bets, even after she lost £40,000 on a dozen credit cards.
He will say: “I cannot think of a single other type of transactional arrangement for goods or financial services that would allow this type of situation: unclear terms and conditions, a lack of transparency, a lack of framework – and fuelled by predatory bonus offers.”
Under the current regulatory regime, the commission can seek to impose financial penalties on firms that breach the terms of their gambling licence, but cannot be the arbiter of whether consumers are compensated.
The new ombudsman would be able to impose financial penalties, including redress for individual customers, if bookmakers or online casinos fail to live up to their obligation to prevent problem gambling. It would also oversee clarity of terms and conditions and ensure transparency around how companies use the data they hold about gamblers to target them with offers.
Brian Chappell, of campaign group Justice for Punters, said: “It’s nearly three years since we first discussed an ombudsman for gambling with the powers that be, so we’re delighted it’s now been considered seriously in parliament. It should make gambling fairer and safer, so good for the consumer.”
Labour has already proposed a mandatory levy on gambling companies to raise about £100m a year to pay for research, education and treatment of problem gambling, a measure the government has said is not necessary.
The industry currently pays about £10m under a voluntary donation system that has allowed some firms to pay far less than the suggested 0.1% of revenue, or in some cases nothing at all.
Watson will say that the new regulatory structure would be required to ensure that money raised from a mandatory levy was well spent and the system properly audited.
