The explosion in online betting has left the Gambling Commission struggling to protect “problem” gamblers from harm, the Whitehall spending watchdog has warned.
The National Audit Office (NAO) said the commission lacked the powers or the resources it needed to regulate a “huge and fast-evolving” industry.
Licensed gambling in Great Britain has grown by 57% over the past decade, yielding £11.3 billion-a-year for the operators, the NAO said.
The commission now estimated there were 395,000 “problem” gamblers – including 55,000 children, some as young as 11 – while a further 1.8 million were considered to be “at risk”.
Addiction could lead to mental health problems, relationship difficulties, large-scale financial losses and, in some cases, crime or suicide, with the cost to public services put at up to £1.16 billion a year, according to one estimate.
But the NAO said the commission remained a small body with a budget of £19 million almost entirely funded by licence fees paid by the operators which were set by the Department for Digital, Culture, Media and Sport (DCMS).
It relied heavily on local councils to carry out inspections on gambling premises, but 119 authorities had not conducted any inspections in 2018/19 and around 60 had not carried out any for the past three years.
At the same time, the NAO said the Government lacked the level of evidence it had on other public health issues such as obesity or alcohol dependence.
“The risks to gamblers are changing as technologies develop. Yet the Gambling Commission is a small regulator in a huge and fast-evolving industry,” Gareth Davies, head of the NAO, said.
“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.”
Meg Hillier, chairwoman elect of the Commons Public Accounts Committee, said the number of child gamblers was “horrifying” and called on the Government to give the commission the funding it needed.
“Gambling firms make billions a year, often profiteering from addicts,” she said.
“The Gambling Commission needs to up its game. It is not doing enough to make gambling safe and ensure firms raise their standards.”
A commission spokesman said they had made progress in making gambling safer but acknowledged there needed to be a reduction in the numbers experiencing harm.
“We agree with the report’s assessment that we face the significant challenge of regulating a dynamic and developing industry,” the spokesman said.
“It also underlines the constraints that our current funding arrangements present and we are developing proposals to discuss this with DCMS.
“In addition to a programme of tougher enforcement and compliance activity, in the last two years we have strengthened protections including online age and ID verification, customer interaction and most recently we banned gambling on credit cards.”