The Social Market Foundation (SMF) has released a new report into online gambling, with the main recommendation being that a £100-a-month spending cap should be implemented.

SMF, a cross-party think-tank, also calls for a sweeping overhaul of the way gambling firms are taxed, to put financial pressure on companies registered abroad to bring their operations to Britain.

SMF proposed a comprehensive new framework of regulation and oversight for a gambling sector increasingly dominated by online playing. Its report comes ahead of a Government review of the 2005 Gambling Act, which ministers have said is not suitable for an era of online gambling.

The 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 report also said that the stake limits on online slot games proposed by regulators should be set between £1 and £5. Non-slot online gambling games should face new restrictions on the way they are designed rather than financial limits, the SMF said.

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 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 Britain, while increasing the costs of operating “offshore,” the report said.

“Gambling taxation should be redesigned around a system of incentives which reflect a company’s level of onshore presence. 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,” SMF said.

The report also calls for a comprehensive shake-up of Whitehall and the public bodies overseeing gambling and gamblers. The structures created by the 2005 Gambling Act are “no longer fit for purpose,” SMF said.

The Department for Digital, Culture, Media and Sport should no longer have sole responsibility for gambling policy, being replaced by a new cross-government Gambling Quartet, SMF said.

The lead author of the report is Dr. James Noyes, a leading authority on gambling policy and a former adviser to Tom Watson MP.

James Noyes 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.”

On tax:

“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. 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.”