Calls for online gambling spend to be capped at £100 a month
The think tank also called for a sweeping overhaul of the way gambling firms are taxed, to put financial pressure on companies registered abroad to bring their operations to the UK.
The SMF report Gambling review and reform: towards a new regulatory framework comes ahead of a government review of the 2005 Gambling Act, which ministers have said is not suitable for an era of online gambling.
Affordability checks and online stakes
The SMF report recommends new “affordability checks” to protect gamblers from serious financial harm. It proposes a “soft cap” on spending where anyone who wanted to spend more than £23 a week on gambling products would have to prove they could afford to lose the money without hardship.
The majority of gamblers already spend less than the proposed cap and would be unaffected but the SMF said the new limit would protect players on lower incomes from potential harm.
The report also said that the stake limits on online slot games proposed by regulators should be set between £1 and £5, and that non-slot online gambling games should face new restrictions on the way they are designed rather than financial limits.
Dr James Noyes, the report’s lead author, said: “For too long, gambling operators have talked about the need to protect their customers, but have not worked together in order to make affordability checks a reality. A fixed cap that applies across operators is the only way that consumers can be protected from harmful spend.
“Our proposed threshold sets the bar low enough to protect everyone, including those on low income, but is high enough to reflect the vast majority of gambling activity among the general population. Gamblers should be free to spend more than this threshold – but only after they show that their gambling is neither unaffordable nor harmful.”
Tax on gambling operators
The report also proposes a complete reform of the way gambling operators are taxed, to put greater burdens on firms based offshore in Gibraltar or the Isle of Man, and reduce the tax faced by companies that bring their operations “onshore”.
The SMF says gambling operators should be assessed according to their “onshore footprint”, a minimum threshold for their capital, human, social, legal and digital presence in the UK.
The smaller a firm’s footprint, the higher the levels of Remote Gaming Duty and Betting Duty they should face, the SMF said. The proposed system would reward companies that bring their operations to the UK, while increasing the costs of operating offshore.
“We need to see an end to the problem of offshore gambling tax avoidance. Gambling taxation should be redesigned around a system of incentives which reflect a company’s level of onshore presence,” said Dr Noyes, “This means that operators could still decide to base their headquarters in locations like Gibraltar, the Isle of Man, or Alderney, but that decision would carry significant tax implications. The message to online gambling operators should be clear: if you want to benefit from the British market, then make a commitment to being based in Britain.”