Even low levels of gambling linked to financial hardship, study finds

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People who bet even relatively small sums are more likely to suffer financial hardship and unemployment, while heavier gamblers die earlier, according to a landmark study analysing data from millions of bank customers.

In a report thought to be the largest of its kind carried out in the UK, academics tracked the links between gambling spend and problems experienced by 6.5 million Lloyds Banking Group customers over seven years.

They found that the likelihood of missing a mortgage payment, taking a payday loan or being pursued by debt collectors escalated rapidly the more someone gambled, while there were longer-term links to job loss and mortality.

The study, led by academics at Oxford and Warwick universities, will intensify concern about the volume of gambling company profits derived from people in financial difficulty. The industry is already under scrutiny amid a government review that could yield tougher regulation.

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The research gives the most detailed insight yet into how the £14.5bn that the industry wins from punters each year can translate into damaging real-world outcomes.

The chances of financial harm rose with any level of gambling but were “notably stronger” once someone spent 3.6% of monthly outgoings on it, equivalent to £91.37 for the average household.

At that level of spend, gamblers were one-third more likely to miss a mortgage payment, 22% more likely to use an unplanned overdraft, and 19% more likely to take a payday loan.

Those who devoted £1 in every £10 to gambling – putting them among the top 10% of the industry’s highest-spending customers – were twice as likely to miss a mortgage payment as someone who did not bet at all.

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The researchers also traced gambling spend over a seven-year period, identifying increased rates of unemployment, disability and “substantially increased mortality” at the highest levels of gambling.

While the findings do not prove that gambling causes those results, the research shows that higher spending on betting often goes hand in hand with negative outcomes. Longer-term monitoring also showed that gambling spend can escalate very quickly, but typically diminishes more slowly.

The industry has repeatedly defended its impact on society by pointing to figures from the semi-regular NHS digital health surveys, which chart levels of addiction. The surveys have shown that fewer than 1% of the population are gambling addicts, with the proportion relatively stable. However, the figures rely on self-reporting from gamblers, who studies have shown are unreliable judges of their own spending.

They also offer no insight into the real-world impact of their spending, while the study from Oxford and Warwick researchers draws on actual transaction data to show whether gambling correlates with financial hardship.

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Peter Tutton, head of policy at the debt charity StepChange, said that while most clients identify other causes for their debts, “The financial effects of problem gambling do make people more vulnerable to problem debt. We hope the gambling sector and government will work hard ahead to break this link by ensuring proper protections are put in place.”

The Labour MP Carolyn Harris, who leads a cross-party group of MPs examining gambling-related harm, said the study demonstrated the need for the government’s review to result in a much stricter gambling regime. “These findings are the most conclusive evidence yet of the gambling industry profiteering from the vulnerable and those in severe financial hardship,” she said. “The government needs to get a grip and properly regulate this toxic industry.”

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The industry’s lobby group, the Betting & Gaming Council, said its members had recently introduced safety measures such as “enabling customers to self-exclude completely from gambling, closing tens of thousands of online accounts, encouraging the banks to enable customers to opt out of using their cards for betting transactions, as well as implementing the ban on the use of credit cards for betting”.

The BGC had earlier released a report estimating that the number of people using black market betting sites had doubled since last year to £2.8bn. It warned that the problem could worsen if the UK cracks down too hard on regulated operators.

An earlier version of the same research, carried out by accounting firm PwC on behalf of firms including William Hill and Ladbrokes owner Entain, was criticised as “exaggerated” by the Gambling Commission.

‘I’d gamble my monthly wage in a couple of days’

View image in fullscreenAdam Wood gambled on football at first but lost more when he turned to horse racing. Photograph: Adam Wood

Adam Wood, a 23-year-old from Sheffield who works in an optician, experienced first hand how increased gambling can lead to financial troubles. He had gambled on football a bit before he turned 18, but began to place bigger bets after getting into horse racing.

“I gained quite a grasp of the sport and was picking winners. It was coming naturally to me,” he said. “That made me think I should bet more.

“I went on a good streak, but when I started betting more, that streak came to an end. That was confusing to me because I was using the same methods and tactics. Instead of stopping, I just got more aggressive and upped the stakes, gambling on races I knew nothing about.

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“I was desperate to get back the money I’d lost and the situation got violently out of control. I had £7,000 of savings and blew that in a couple of weeks. I’d gamble my monthly wage of £1,500 within a few days.

Soon, Adam began taking out payday loans with companies such as Wonga, Sunny and Satsuma. “The loans started off quite small, £200 or £300. The loans were my way of getting out of this mess and funding my expenses during the month but I’d gamble every single penny. I repeated it 13 or 14 times and the interest was phenomenally high.

“My parents had to help me get the outstanding loans settled, about £7,000 or £8,000. They bailed me out, which I’m very grateful for, and I’m paying them back now.

“My credit history is ruined for the next seven or eight years. I added up all of my accounts and I was down about £80,000 over four or five years. That’s a car, that’s a deposit on a house. It should have been mine for the future and it wasn’t.”

Adam has now gone 10 months without placing a bet.